Asset Allocation for Investors Age 45

Posted by Grace under Investing on November 17, 2014

Here is the asset allocation for investors age 45. A 45 year old investors has different priorities and obligations compare to an investors age 30. If you are at age 45, here are the suggestions how your investments should be distributed. We expect the lifestyle cost of a 45 year old at high expense, compare to the cost of living of an investor age 30 year old and below. The things that makes the lifestyle costs expensive are kids education, maybe a 40 year old and above has a kid studying in a university, paying for a home mortgage and other things. But at this age, a person must have lot of assets compare to young ones. To understand this topic, know the asset allocation definition.

If you are an investor age 45 years old, it is important that you allocate your assets carefully and wisely. Why? Assuming your assets are all in the stock market, and at your age, you experience a stock market crash, what would you feel? Of course, disappointed and frustrated. But if you properly allocate your assets whatever happens to the stock market, you are just calm because some of your assets are doing great.


Your other investment will not get affected if there is a stock market crash, what if a real estate market and the stock market are all down, still you have other assets that can give you possible income such as bonds and money market type of mutual funds.

If you want a comparison between how a 30 year old investor should allocate his asset, kindly read the guide at asset allocation for investors age 30, to know the difference.

If you are at age 45, you still be able to take risk moderately so that you can maximize the growth of your fund. As we have discussed previously, cash is very important that serve as an emergency funds, keep cash equivalent to your 6 months income.

Asset Allocation for Investors Age 45

If you are planning to invest $1,000,000 today, where and how your investments should be distributed? See the pie chart to give you an idea on how to allocate your investments.

5% Cash Investment: $50,000
5% CDs/T-Bills and Short/Medium Term Bonds: $50,000
30% Equity Mutual Funds and other High-Growth Securities: $400,000
20% Balanced Mutual Funds and Blue Chip Securities: $200,000
30% Business Ownership: $200,000
10% Real Estate Properties and/or Fixed Income Long-Term Bonds $100,000
100% Total Investments= $1,000,000

  • Low Risk Investments: Cash, CDs/T-Bills and Short/Medium Term Bonds, Real Estate, Fixed Income Long-Term Bonds
  • Medium Risk Investments: Balanced Mutual Funds and Blue Chip Securities
  • High Risk Investments: Business Ownership, Equity Mutual Funds, and other High-Growth Securities

Reference: Making Your Money Work 2, by Francisco J. Colayco, Colayco Foundation for Education, Inc., Anvil Publishing, Inc. 2005-2012, page 150

40% for Equity Mutual Funds when you were at age 30-44, why? It is because you can take as high risk as possible, but when you hit 45, you have to slowly allocate your assets in equity mutual funds (from 40% to 30%) to other investments.

At this time, you should have your own business and according to the pie chart, at least 30% of your total assets belong to your business. You can start your business by buying a franchise, it is easy to franchise rather than starting a business from scratch because a “business system” you need to operate is already available.

However, although starting your own business is very risky, it will give you great rewards especially you built a business system that really works, that way, you can also make a huge profits for franchise fees.

Simply means, it is your choice when it comes in minding a business, to buy a franchise or to sell a franchise. The last option is the most profitable but risky.

If you are planning to invest in equity mutual funds, it is a good decision to invest only with the best and top performing mutual fund companies. If you are planning to invest in the stock market, it is a great move to buy a blue chip stocks.

As a Guide: 2014 Mutual Fund Awardees and How to Start Your Own Business?
See Also: Different Types of Investments

Disclaimer: The data are for information purpose only. It is a good decision if you ask the financial experts or the registered/certified financial planner personally and ask how your investments should be distributed. The ideas written here if came from other person, a proper credit will be use by means of writing the references and the original sources.

Keep Learning Financial Education
Now you know how to distribute your investments properly by following the asset allocation for investors age 45. In my next topic, I will write about the asset allocation for age 65, and age 66 and above. Stay tuned to, if you find this article useful, share it please. Thank you.

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