John C. Bogle, founder of The Vanguard Group. was very well known for his techniques using asset allocation with index funds by the appropriate age. Though the final decision respectfully concludes on the individual investor, let’s take a quick look of what may be recommended depending on your age group.
Ages 20 – 35
If you are customizing your own retirement portfolio in the younger years of your life, Bogle recommends having a set stock and bond mix of 80/20 or 60/40 for new or younger investors. Younger investors have more time on their side for time compounding to work into their investments. An aggressive mix of stocks (80%) and a conservative mix of bonds (20%) would fit the younger investor.
If you are customizing your own retirement stock portfolio in the post-retirement or older years of your life, Bogle recommends a stock and bond mix 70/30 or 50/50. Unlike younger investors, older investors (reaching retirement) are reaching to the age of a fixed income may require a conservative portfolio strategy. A stock portfolio with a lower volatility may be suitable for the older investor.
Bogle created this strategy for a balanced portfolio for the new or seasoned investor to use. As supported in Benjamin Graham’s book, The Intelligent Investor,
“Furthermore, a truly major investor will be satisfied with the gains shown on his portfolio in a rising market, while in a severe decline he may derive much solace from reflecting how much better off he is than many of his more venturesome friends.”
This strategy has two fundamental factors: (1) your ability to take a risk and (2) your willingness to take such risk. Your risk depends on your financial ability and your future liabilities (reaching the age of retirement). While some investors may be able to handle the high volatility of the market, but to others, the high volatility may be too much for them to risk. Depending on the individual investor, this portfolio strategies can be used at any age. In today’s investing styles, many investors add cryptocurrency or a large portion of ETFs in their portfolio. But young or old, find a strategy that works for you and fits your needs.