The 3-5-7 Rule in Investing: What You Need to Know
Corgage Team · · 1 min read
The 3-5-7 rule is a portfolio-management guideline designed to control investment risk. It generally suggests limiting a single investment to about 3% of your portfolio, keeping exposure to a sector or asset category near 5%, and reviewing or selling a position after a loss of roughly 7%. The exact definitions vary, so the rule is not a universal investing standard. A fixed 7% stop-loss may cause unnecessary selling during normal market volatility. Investors should also consider their goals, time horizon, diversification, taxes, and risk tolerance.
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