Ben Carlson, a veteran money manager and author, breaks down how to handle investment risk across four critical decades of your financial life.
In your 30s, you have time to absorb market losses. Carlson emphasizes loading your portfolio with stocks. The longer runway means you can ride out downturns and benefit from compound growth. Most investors at this stage should target 80 to 90 percent stocks, 10 to 20 percent bonds.
Your 40s shift the equation slightly. You've built meaningful assets, but retirement still feels distant. This decade calls for a 70/30 or 75/25 stock-to-bond split. You're balancing growth with the first real signs of stability you need to protect. Market crashes hurt more now because you have more to lose, but you still have 20-plus years before retirement.
The 50s demand a harder look at your actual retirement date. If you plan to retire at 65, your time horizon shrinks noticeably. Carlson suggests moving toward 60/40 stocks and bonds. This allocation reduces your portfolio's swing during downturns while still capturing meaningful gains. Many people entering their 50s regret being too aggressive in the prior decade.
By your 60s, you're either retired or near it. A 50/50 split or even 40/60 stock-to-bond portfolio makes sense. Your focus shifts entirely from growth to income and capital preservation. You need your portfolio to generate cash for living expenses, not multiply in size.
Carlson stresses one consistent theme across all stages: know your actual risk tolerance, not just the theoretical one. A 40-year-old might check a box saying they can handle volatility, then panic-sell when the market drops 20 percent. That panic becomes the real risk.
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