Investment strategies by age

January 14, 2021

Your plans and goals change as you move through your life. So, too, should your investing strategy.

Select your age to learn more about potential asset allocations and investment strategies to consider.


Investing in your 20s

A potential investment mix to consider:

  • Stocks: 70%
  • Bonds: 20%
  • Cash: 10%

Be aggressive

Allocating a majority of your investments into stocks carries risk because equity investments are generally more volatile than bonds. But stocks may also have more potential for growth, and young investors have more time to recover from any potential losses.

Build a financial base

Two words: compound interest. Money you invest in your 20s will benefit from decades of interest. Consider this hypothetical example: $10,000 invested at age 25 — with a 5% return, compounded annually — can net you $70,400 at age 65.

Join an employer-sponsored retirement plan

If you have access to one, investing through an employer-sponsored retirement plan is the easiest way to begin investing. Contributions are directly withdrawn from your paycheck and many plans offer the ability for both pre-tax and after-tax Roth contributions. Many employers will match those contributions up to a certain amount. If available, selecting a target date fund option can help keep your asset allocation in line with your age.

And don’t forget to roll over your 401(k) if you change jobs.

Pay down debt

High-interest credit card debt should go first but paying off lower-interest student loans may also help you save more in the long run.


Investing in your 30s

A potential investment mix to consider:

  • Stocks: 70%
  • Bonds: 20%
  • Cash: 10%

Focus on the long game

You’re still decades away from retirement, so you may want to continue allocating your portfolio primarily toward stocks.

Try saving 15-20% of your pre-tax income for retirement, through an employer-sponsored retirement plan or individual retirement account (IRA).

And don’t forget about a Health Savings Account (HSA). An HSA can be funded with pre-tax or tax-deductible contributions, grows tax-deferred and can be used tax-free for qualified medical expenses pre- and post-retirement. While there are annual contribution limits, an HSA can move with you through employer changes and into retirement.

Factor in other goals

This is a good time to start setting aside money for other goals, as well. For example, if you want to buy a house, consider saving up to 20% of the purchase price for a down payment. The more money you put down, the less you’ll pay in interest, fees and monthly mortgage cost.

Work on your emergency fund

The general rule of thumb is to have three-to-six months’ worth of your household income set aside for emergencies, such as job loss or medical bills.

Think about family finances

If you start a family, consider planning for your children’s financial futures — even as you budget for their day-to-day costs. A college savings plan, such as a 529 plan, can help pay for qualified education expenses, even K-12 tuition.


Investing in your 40s

A potential investment mix to consider:

  • Stocks: 50%
  • Bonds: 40%
  • Cash: 10%

Mix in moderate risk

As your investment portfolio grows, consider reallocating some funds — maybe 40% — into fixed-income investments, such as investment-grade bonds. Though these may offer less gains, they may provide less volatility than equities. Lowering your risk in your 40s can help keep you on track for retirement.

Pay down your mortgage

Your mortgage may have many years left on it but putting extra money toward your mortgage can help you chip away at principal and reduce what you pay in overall interest. If you’re paying private mortgage insurance, prioritize this step to help you eliminate that added expense.

Take full advantage

If your employer offers a sponsored retirement account, work to max out your contributions. Make sure you’re taking advantage of an employer match if it’s offered, and if possible, try to contribute up to the IRS limit each year. If you have an HSA, consider maxing out your contributions here, as well.

Broaden your portfolio

If you’re maxing out contributions to your retirement accounts and have extra income to invest, consider opening a brokerage or automated investment account.  


Investing in your 50s

A potential investment mix to consider:

  • Stocks: 30%
  • Bonds: 60%
  • Cash: 10%

Maximize your contributions and lower risk

Consider reallocating more of your portfolio to investment-grade bonds. Now is the time to start thinking about boosting your retirement fund contributions and taking advantage of catch-up contributions to your 401(k) or IRA. 

Think realistically, envision your retirement costs

When you’re around 15 years away from retirement, you can start to envision your costs in retirement. Build a clear budget to see just how much more you need to save to reach retirement.

Consider downsizing

This may be a good time to downsize to a smaller home for retirement or to make sure the family vacation home is transferred to the next generation.


Investing in your 60s

A potential investment mix to consider:

  • Stocks: 20%
  • Bonds: 70%
  • Cash: 10%

Maintain low risk

This is the time to allocate the bulk of your savings into fixed-income bonds to lower your market risk and create a steady income for your distributions.

Plan your withdrawal strategy

While the 4% rule may be the most common strategy, how you withdraw your retirement income isn’t a one-size-fits-all solution. Make sure to factor taxes, other income sources and life expectancy into your plan.

If you’re able, try living off your projected income for a few months prior to retirement to see if your strategy will work for you long-term.     

Consider your legacy and next generations

Before your 60s, you should have the basics of your legacy plan mapped out, such as your will and other estate documents. Once you’ve reached retirement, starting your wealth transfer and yearly charitable giving may help lower the tax burden for your estate.


Diversification is an important part of any investment strategy. Here are 7 diversification strategies for your investment portfolio.

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