The Right Amount Of Stocks To Own At Every Age

Throw Out The Old Rules And Embrace These New Guidelines For Portfolio Allocation.

- Ian Salisbury

IF YOU WANT A SECURE RETIREMENT, YOU can’t just save. You also need to make sure your investment portfolio keeps pace with inflation. For most Americans, that’s going to mean investing in the stock market, whether inside a 401(k) or at an online brokerage. But determining how much of your money to put in stocks can be tricky.

When you’re young, the hardest part may simply be getting started. In your forties, it’s riding out the market’s ups and downs without losing your cool. After you finally retire, you need to make those hard-earned savings last.

Understanding some simple investing precepts can make the job a lot easier—and up your odds of success. To get started finding the right balance of stocks and bonds for you, read on.

STARTING OUT

THE CONUNDRUM

THIS IS THE TIME when you are supposed to invest fearlessly, taking big risks, so you can reap big rewards years down the road. But it’s easier said than done.

The generation that came of age during the Great Recession hasn’t had an easy time financially. After graduating into the weakest job market in memory, you’ve found yourselves saddled with record amounts of student-loan debt, as well as soaring rents and home prices.

As a result, many young people don’t have a lot left over to invest. One recent study by the National Institute on Retirement Security found two-thirds of millennials have nothing saved for retirement.

Even millennials who are ready to invest don’t necessarily favor stocks. Blame, perhaps, memories of the 2008 market crash, which took place when the oldest millennials were in their mid-twenties. “Just when they entered the workforce, they lived through the second-largest stock market drop in history,” says Brian Schmehil, a financial planner in Chicago.