Asset Allocation
To determine the right mix of investments in your portfolio is very important. The decision for what percentage of assets you should put in stocks, and the remainder into low risk instruments like bonds and treasuries, is not an easy one.
Suggested Asset Allocation for your Retirement Account
| Your Age |
% of high growth investments |
% of low risk fixed investments |
| 20 |
85% |
15% |
| 25 |
80% |
20% |
| 30 |
75% |
25% |
| 35 |
70% |
30% |
| 40 |
65% |
35% |
| 45 |
60% |
40% |
| 50 |
55% |
45% |
| 55 |
50% |
50% |
| 60 |
45% |
55% |
| 65 |
40% |
60% |
The underlying principle of this chart is that the older you get, the less amount of riks you should be exposed to. The more that you depend on your retirement savings for income, the more conservatively you should invest because asset preservation is key. However, depending on the size of your savings, it may make sense to invest a portion of your savings more aggressively. If you can afford to take more risk, you can invest a larger portion of your savings in higher risk investments, the potential higher returns could help you grow your savings during retirement or at least provide more monthly income.
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