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Asset Allocationby life stage
THE GOAL
The goal is not to have the most aggressive portfolio. It is to have the right portfolio for your life today—and the life you are building tomorrow.
Move the slider to your age and see how your portfolio can evolve over time.
The dark portion represents growth assets—primarily stocks, which have historically generated higher long-term returns but can be much more volatile along the way. The lighter portion represents protective assets—primarily bonds, which generally provide more stability and help cushion a portfolio during periods of market volatility.
As retirement gets closer, the mix gradually changes—not because of your age, but because your time horizon is getting shorter.
Your portfolio should age with you.
Life, stage by stage
These are starting points, not prescriptions. Two people the same age may need very different portfolios because their goals, savings, income and ability to live with market swings are different.
Your 20s and 30s
Start the engine
The exact mix matters less than getting started. Open the account, automate the contribution and invest the money rather than leaving it sitting in cash.
Retirement money has decades to recover. Money for a house, tuition or another goal within five years does not.
The biggest risk is not starting.
Your 40s
Build with intention
This can be your most powerful wealth-building decade. Income may be higher, but so are the demands on it.
Use raises to increase savings. Do not let every dollar of additional income become a dollar of additional lifestyle.
The biggest risk is not saving enough.
Your 50s and early 60s
Protect the progress
Retirement is no longer a distant idea. The portfolio begins shifting from pure growth toward a balance of growth and protection.
This is also the time to use catch-up contributions and test whether your retirement plan is truly on track.
The biggest risk is arriving at retirement after a major market decline.
Retirement and beyond
Make the money last
Retirement does not mean removing all risk. You may need this money to support you for another thirty years.
Enough stability can help fund near-term spending, while continued exposure to growth helps fight inflation and longevity.
The biggest risk is becoming too conservative too soon.
How institutions think differently
Professional investors begin with structure.
Most people ask
“What stock should I buy?”
Institutions ask
“How much risk should we take, and when will we need the money?”
That is why pension funds, endowments and wealthy families spend far more time on asset allocation than on chasing the next hot investment.