
Amount of Savings: Affecting Your Investment Strategy More Than Your Life Stage
For someone who is a total “NOOB” to budgeting, the 50/30/20 rule is a quick go-to formula to help you kick start the journey on salary allocation.
For those who are not sure of what the 50/30/20 salary allocation rule is about, here’s a quick recap:
Granted, this budget allocation rule is a good general guideline that may work for a lot of people.
But, it has its limitations it does not take into account all the various circumstances which an individual is in.
Or as how one of our Seedly community members, Zhirong, puts it:
“A lot of advice is piecemeal rather than a journey”.
He can’t be more right!
TL;DR – Your Amount Of Savings Affects Your Investment Strategy More Than Your Life Stage
Disclaimer: the numbers and figures here are all based on assumptions and estimations, so feel free to adjust them accordingly to better reflect your situation.
Investing Through Life Stages For Singaporeans
As a general guideline, a person’s life stage is a good factor to determine your investment risk appetite.
In turn, your risk appetite affects your asset allocation strategy when constructing your investment portfolio.
In fact, we have written a piece breaking down a Singaporean’s life stages by age to provide a general guideline on how much risk to take when investing.
Age Range | Goals | Return Expectations | Risk Appetite | Liquidity |
---|---|---|---|---|
20-30 Years Old | Education, Marriage, Holiday | High | High | Low |
30-40 Years Old | Children, Education, Insurance | Moderately High | Moderately High | Moderately Low |
40-50 Years Old | Children's Marriage, Retirement | Balanced | Balanced | Balanced |
50-60 Years Old | Retirement | Moderately Low | Moderately Low | Moderately High |
More than 60 Years Old | Holidays, Estate Planning | Low | Low | High |
From there, a recommended rule of thumb to stick to will be:
(110 – Your Age) = % of your investment portfolio that should be in Equity/Stocks
The remaining part of your investment portfolio should be allocated to fixed income instruments like bonds.
Investment Strategy And Portfolio Asset Allocation At Various Life Stages
Also, the Sunday Times recently published a breakdown of life stages and investment strategy.
Age Range Situation/ Life Stage Investor Profile Investment Strategy Asset Allocation Percentage Example
20 - 30 Fresh graduate or those who have worked for a few years Willing to assume a relatively higher level of risk to achieve long-term capital growth High growth
(Aggressive)25% fixed income
75%
equity/stocks
31 - 40 Planning to get married or buy a new home Willing to assume an above average level of risk to achieve higher returns Growth 35% fixed income
65% equity/stocks
41 - 50 Planning to have children Willing to assume a medium level of risk to achieve stable returns Balanced 45% fixed income
55% equity/stocks
51 - 60 Children grown up and working Willing to assume a relatively low level of risk to achieve stable capital appreciation Conservative 70% fixed income
30% equity/stocks
61 and above Approaching retirement Willing to assume the lowest level of risk with primary focus on capital preservation. Defensive 80% fixed income
20% equity/stocks
Source: Allianz Global Investors
Although these guidelines mentioned are good for most people, they do not take into account one important factor that can immediately change one’s risk appetite:
The amount of savings you have.

Your Amount Of Savings Determines Your Life Stage When Investing
Think of it this way, achieving common life goals like buying a house, raising children or retiring comfortably relies on our savings.
- We try to clear our loans as fast as possible so that we can start saving.
- The occupation and salary an individual is getting affects how much he/she can save every month.
So what if someone were to be at a certain life stage, but the amount of his/her savings has yet to catch up?
Age And The Amount Of Savings Are Not Correlated
It is inaccurate to correlate age with the amount of savings we have.
A common assumption will be that younger Singaporeans will have lower savings compared to the older generation of Singaporeans.
We all know that there will always be outliers.
The Amount Of Savings Matters!
When it comes to risk appetite, the amount of savings affects the amount of risk you can take.
Having $100,000 worth of savings at the age of 20 compared to someone at age 50 will affect the person’s risk appetite more than their age.
It Is All About The Savings
Your life stage affects the liquidity required, but reaching your savings targets earlier can help you with your investment strategy.
The general 50/30/20 budgeting guideline is not as useful when you are more advanced in his personal finance journey.
Here are the assumptions we made with this illustration:
- We are assuming you are looking to retire at age 62 in Singapore, you will need $300,960 in savings. We set it as $400,000 in savings to keep things simple.
- We are assuming your goal is to reach your retirement amount as soon as possible barring any catastrophic events.
Editor’s Note: This is solely based on my point of view. Do reach out to us if you feel otherwise! We would love to hear from you and improve this article!
Age Range | $10,000 in savings | $50,000 in savings | $100,000 in savings | $200,000 in savings | $400,000 in savings |
---|---|---|---|---|---|
20 - 30 | High growth (Aggressive) | High growth (Aggressive) | High growth (Aggressive) | Defensive | Defensive |
31 - 40 | High growth (Aggressive) | Growth | Growth | Balanced | Defensive |
41 - 50 | Balanced | Balanced | Balanced | Balanced | Defensive |
51 - 60 | Jialat... | Conservative | Conservative | Conservative | Defensive |
61 and above | Jialat... | Defensive | Defensive | Defensive |
Here are some general recommendations:
- If you are very young (20 to 30) and have got high savings, you will be able to adopt a very aggressive investment portfolio to get to your savings target as fast as possible.
- If you are slightly older (31 to 40), you might want to dial the risk back a bit.
- At ages 41 to 50, your children’s education is important, hence, a balanced portfolio ensures that you will still have a minimum safety net.
- If you do not have enough savings when you turn 50, you might want to ramp up your earnings for a more comfortable retirement.
- After the age of 61, whatever savings you have becomes more important as your earning power will probably diminish. Any unnecessary risk should be avoided.
Asset Allocation
As such, here’s a reminder about how to determine your asset allocation strategy and construct your investment portfolio.
Investment Strategy | Portfolio Mix |
---|---|
High growth (Aggressive) | 25% fixed income 75% equity/stocks |
Growth | 35% fixed income 65% equity/stocks |
Balanced | 45% fixed income 55% equity/stocks |
Conservative | 70% fixed income 30% equity/stocks |
Defensive | 80% fixed income 20% equity/stocks |
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The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.
