Here’s an age-based look at when you should buy stocks


People in this age group likely will have decades before needing to withdraw money from an investment portfolio, such as a 401(k) plan. Because this money won’t be needed for such a long time, I typically recommend at least 80 percent of an investment portfolio in stocks.

By way of example, a 30-year-old who invests $1,000 per month and earns an average 7 percent return on her stock portfolio will have accumulated about $1.2 million by the age of 60. At a 5 percent average return, her portfolio would be $830,000, so this extra return compounded over many years does add up.

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For millennials looking to retire early, there is an argument for owning part of their portfolio in more conservative investments. I’ve worked with successful young executives who plan to exit the workforce by age 50, if not earlier. To achieve this goal, they will need a mix of bonds, real estate, cash or alternative investments to protect their principal in bear markets while they are building their wealth. Young executives in this situation can trim the percentage of stock in their portfolio by 10 percent to 20 percent to make room for these other assets.

Parents in this age group should use the same philosophy for investing in their children’s college savings accounts. People who begin investing shortly after the birth of a child can invest this money more heavily in stocks. But as the child gets closer to enrolling in college, you want to invest more conservatively to cushion any drop in the market and ensure the cash is available when the first tuition bill arrives.

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