Breaking down the average portfolio mix by investor age (2024)

FAQs

Breaking down the average portfolio mix by investor age? ›

Investors in their 20s, 30s and 40s all maintain about a 41% allocation of U.S. stocks and 9% allocation of international stocks in their financial portfolios. Investors in their 50s and 60s keep between 35% and 39% of their portfolio assets in U.S. stocks and about 8% in international stocks.

The Rule of 100 determines the percentage of stocks you should hold by subtracting your age from 100. If you are 60, for example, the Rule of 100 advises holding 40% of your portfolio in stocks. The Rule of 110 evolved from the Rule of 100 because people are generally living longer.

The 70/30 portfolio targets a 70% long term allocation to equities and 30% in all other asset classes – the actual portfolio allocation at any point in time will fluctuate to reflect prevailing investment opportunities.

At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).

What is the 60/40 rule? The 60/40 portfolio is a simple investment strategy that allocates 60 percent of your holdings to stocks and 40 percent to bonds. It's sometimes referred to as a “balanced portfolio.” The 60/40 rule has been widely recognized and recommended by financial advisors and experts for decades.

If you are a moderate-risk investor, it's best to start with a 60-30-10 or 70-20-10 allocation. Those of you who have a 60-40 allocation can also add a touch of gold to their portfolios for better diversification. If you are conservative, then 50-40-10 or 50-30-20 is a good way to start off on your investment journey.

The three-fund portfolio consists of a total stock market index fund, a total international stock index fund, and a total bond market fund. Asset allocation between those three funds is up to the investor based on their age and risk tolerance.

In investing, the 80-20 rule generally holds that 20% of the holdings in a portfolio are responsible for 80% of the portfolio's growth. On the flip side, 20% of a portfolio's holdings could be responsible for 80% of its losses.

A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds.

60% stocks/40% bonds gives you about half the volatility you're going to get from the stock market but tends to give you really good returns over the long term. Over the last 20 years, it's been a great portfolio for investors to stick with.

Should an 80 year old be in the stock market? ›

You're not too old to grow your money

Keeping stocks in your portfolio is a great way to generate ongoing retirement income, which you'll need to live comfortably and meet your goals. If you're not comfortable holding a lot of stocks in retirement, go light on them.

But now that Americans are living longer, that formula has changed to 110 or 120 minus your age — meaning that if you're 75, you should have 35% to 45% of your portfolio in stocks. Using this formula, if your portfolio totals $100,000, then you should have no less than $35,000 in stocks and no more than $45,000.

In your later years, a conservative allocation of 30% cash, 20% bonds and 50% stocks might be appropriate. Diversified portfolios typically include a core of at least 50% stocks in part because equities alone offer the potential to generate long-term returns exceeding inflation.

The 5% rule says as an investor, you should not invest more than 5% of your total portfolio in any one option alone. This simple technique will ensure you have a balanced portfolio.

“For most retirees, the 60/40 asset allocation mix represents a balance between the need for long-term return and meaningful protection from short-term market volatility risks,” said Peter Sullivan, a vice president and CFA at Segal Marco Advisors in Boston, in a message.

Because 60% of $3,000 is $1,800, that's how much you should spend on living expenses like rent, utility bills, gas and groceries each month. Because 20% of $3,000 is $600, you'd put that much into some type of savings, investment or retirement account. The remaining $600—the last 20%—is yours to allocate as you choose.

The 60/40 rule is not very different from the 70/30 rule. The only difference here is that the exposure to equities stands at 60%, while the allocation to bonds stands at 40% exposure. Essentially, this rule gives greater importance to stability and is suitable for risk-averse individuals.

College SAVE's age-based options are ready-made portfolios that adjust based upon your child's age. That means, when your child is younger, your portfolio may include aggressive investments with a higher potential for growth as well as risk.

The conservative allocation is composed of 15% large-cap stocks, 5% international stocks, 50% bonds and 30% cash investments. The moderately conservative allocation is 25% large-cap stocks, 5% small-cap stocks, 10% international stocks, 50% bonds and 10% cash investments.

80:20 Portfolio. Similar to the 70:30 portfolio, the 80:20 portfolio yielded slightly lower total returns but provided better protection in volatile markets. This balance suggests that even a small proportion of debt can significantly impact risk mitigation.