The United States is home to approximately 25 million individuals who have amassed wealth exceeding one million dollars, a group steadily increasing in number. Achieving such financial standing offers substantial security beyond what is typical for the average individual; however, reaching millionaire status is not a universal accomplishment. Investing is a critical path toward this goal, utilizing the power of compounding where returns generated can be reinvested to further expand wealth.
For those aspiring to build their own seven-figure portfolios, it is instructive to examine the investment habits of those who have already achieved millionaire status. Recently published data from Empower offers an informative look at how millionaires allocate their investment portfolios according to age demographics.
| Age Group | Cash (%) | U.S. Stocks (%) | U.S. Bonds (%) | International Stocks (%) | International Bonds (%) | Alternative Investments (%) | Other (%) |
|---|---|---|---|---|---|---|---|
| 20s | 16.20 | 53.30 | 2.40 | 8.80 | 0.40 | 2.60 | 16.40 |
| 30s | 15.10 | 50.40 | 3.30 | 9.90 | 0.60 | 2.80 | 17.90 |
| 40s | 14.60 | 47.90 | 5.00 | 10.10 | 0.90 | 3.00 | 18.60 |
| 50s | 14.80 | 45.70 | 8.60 | 10.30 | 1.60 | 3.40 | 15.80 |
| 60s | 16.80 | 43.20 | 12.50 | 10.10 | 2.30 | 3.90 | 11.30 |
| 70s | 21.40 | 41.70 | 12.70 | 8.70 | 2.30 | 3.80 | 9.60 |
| 80s | 26.00 | 42.10 | 11.60 | 7.40 | 2.00 | 3.10 | 7.90 |
These figures underscore a clear trend: younger millionaires have a predominant portion of their portfolios invested in U.S. stocks, often exceeding 50% of their assets. This heavier stock allocation reflects a greater capacity and willingness to assume elevated risk levels in exchange for the potential of higher investment returns over time. Conversely, holdings in cash and bonds are relatively smaller in this group, highlighting a strategic preference for growth over preservation.
For example, investors in their 20s typically keep about 16% of their assets in cash, balancing liquidity with market exposure through equities and lower allocations in alternative investments and bonds. As investors age, the allocation shifts markedly.
By the time millionaires reach their 70s and 80s, their asset allocation criteria demonstrate an increased preference for liquidity and capital preservation. Cash allocations rise to over 20% among septuagenarians and increase further in octogenarians to about 26%. Simultaneously, investment in U.S. stocks diminishes to roughly 42%, with bonds—both U.S. and international—gaining a greater share, reflecting a more conservative, income-oriented strategy. These shifts align with the reduced investment horizons and the necessity to safeguard principal to meet ongoing income needs or to avoid forced sales during adverse market conditions.
This age-appropriate shift in investment strategy aligns with conventional wisdom regarding risk tolerance and time horizon. Younger investors can endure volatility and potential short-term losses because they have time to recover. In contrast, older investors prioritize stability and income generation, necessitating a more defensive stance.
Given the challenge inherent in accumulating a million dollars through investments, it is not surprising that those who have reached this milestone often demonstrate disciplined asset allocation principles. The balance they strike between growth and safety is key to both achieving and preserving wealth.
For individual investors, considering personal circumstances and carefully crafting an asset allocation tailored to age, goals, and risk tolerance is essential. Excessive conservatism may limit growth potential and delay reaching financial objectives. Conversely, excessive risk-taking can expose one to losses that could undermine long-term wealth accumulation.
Adopting best practices, such as regularly rebalancing the portfolio to maintain desired asset allocations, and focusing on high-quality investments held for the long term, can establish a solid foundation for financial security. By mirroring investment discipline similar to that demonstrated by millionaires, investors can work towards their own financial milestones with greater confidence.