While copycats often get a bad name, sometimes it’s helpful to copy someone else’s style. This is even true in investing. For our How America Invests report, we studied 5 million client households to see how different investors behave. We learned a lot about investing behavior—and found some surprises.

Of particular interest were the differences in investing across generations. After studying millennial, Generation X, baby-boom, and silent generation clients, we uncovered some noteworthy trends related to asset allocation—and observed some investing practices you may want to copy.

Age-based equity allocations among Vanguard retail investors

Vanguard retail households (taxable accounts and/or IRAs) as of December 31, 2019

How does age relate to asset allocation?

What does it mean to start with the right asset allocation?

In general, younger investors can take on more investment risk because they have more time to recover in the event of a market downturn. But our report shows that at least a quarter of millennial Vanguard investors have adopted a cautious approach to their portfolios. And while those closer to retirement should generally be playing it safer with their investment choices, our typical boomer investor maintains an equity allocation of 66%. Silent generation households aren’t far behind with 62% in equities. That’s not quite what we expected from those age groups, since many investing experts recommend reducing equity exposure with age.

So risk is bad for older generations?

Yes and no. In general, older investors may want to move retirement money out of riskier assets, like stocks, and into safer options, like bonds and money market funds. But you don’t need a completely risk-free portfolio (in fact, there’s no such thing!) to be successful. It’s important to keep in mind that lower-risk investments tend to have more exposure to inflation risk, which is the possibility that rising prices could diminish the value of your investment returns. So it’s more about making the right adjustments as you approach your goals than avoiding risk altogether.

Should younger or lower-income investors avoid stocks?

Young households choose low-risk investments for a variety of reasons. Some fear the uncertainty of the markets—an understandable concern. But while the stock market can be volatile, avoiding the stock market can be even riskier over the long term, because it doesn’t help offset inflation or provide the opportunity for growth. If you’re a younger investor who’s heavily invested in cash, and have a long-term goal you may want to consider some aggressive stock funds to help build your nest egg. A target-date fund can also be a good choice if you’ve got a longer investing time frame.

What about investors who get help from an expert?

If you want more personalized support, check out our advice options.

Advised investors over age 50 typically hold less in stocks than their self-directed peers, which suggests a slightly more proactive approach to risk management. The influence of advice on investment choices isn’t necessarily surprising, though, since most advised clients choose retirement as their main investment goal.* If you’re apprehensive about or too busy for investing decisions, there are advice options that can help you feel more confident about reaching your goals.

We created How America Invests to help investors benchmark their behavior and to support our mission: giving investors the best chance for investment success. And we found valuable lessons across the generations. So why not learn from each other? Millennials can follow the older generations’ lead and take a growth-minded approach by considering more aggressive stock funds. And boomers may want to borrow a page from the millennials’ book by moving assets to cash to protect against market drops. You just never know what another generation may inspire you to do.

*Source: Vanguard, Assessing the Value of Advice (Pagliaro, Cynthia A. and Stephen P. Utkus, 2019).


All investing is subject to risk, including the possible loss of the money you invest. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Bond funds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments.

Diversification and rebalancing do not ensure a profit or protect against a loss.

"Investing: What’s age got to do with it?", 4 out of 5 based on 219 ratings.