How much stock should I own at 40?
One of the most widely followed rules says to subtract your age from 100 to find the percentage you should hold in stocks. According to the rule of 100, 40-year-olds should allocate 60% of their savings to equity investments.
The common rule of asset allocation by age is that you should hold a percentage of stocks that is equal to 100 minus your age. So if you're 40, you should hold 60% of your portfolio in stocks. Since life expectancy is growing, changing that rule to 110 minus your age or 120 minus your age may be more appropriate.
As a general rule of thumb, you'll want to have saved three to eight times your annual salary, depending on your age: 40: At least three times your salary. 45: Around four times your salary. 50: Six times your salary.
What's the right number of companies to invest in, even if portfolio size doesn't matter? “Studies show there's statistical significance to the rule of thumb for 20 to 30 stocks to achieve meaningful diversification,” says Aleksandr Spencer, CFA® and chief investment officer at Bogart Wealth.
Exactly how much should you be exposed to stocks in your 40s? Using Vanguard target-date retirement funds as a guide, the portfolio of people in their early 40s who plan to retire in roughly 25 years would have 87% of their money in stock funds and roughly 13% in bonds.
| Age by decade | Average net worth | Median net worth |
|---|---|---|
| 30s | $277,788 | $34,691 |
| 40s | $713,796 | $126,881 |
| 50s | $1,310,775 | $292,085 |
| 60s | $1,634,724 | $454,489 |
While many experts say that you should have three times your salary saved by 40, the average U.S. household headed by those 44-49 has only $81,347 saved for retirement according to the Economic Policy Institute.
| Age Range | Account Balance |
|---|---|
| Ages 35-44 | $27,910 |
| Ages 45-54 | $48,200 |
| Ages 55-64 | $57,670 |
| Ages 65-74 | $60,410 |
Fidelity says by age 40, aim to have a multiple of three times your salary saved up. That means if you're earning $75,000, your retirement account balance should be around $225,000 when you turn 40.
How much money do I need to invest to make $1000 a month?
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
Most experts tell beginners that if you're going to invest in individual stocks, you should ultimately try to have at least 10 to 15 different stocks in your portfolio to properly diversify your holdings.
More Americans than ever are invested in the stock market. Data from the Federal Reserve's Survey of Consumer Finances shows that 53% of all US families owned publicly traded stock in some form in 2019. That is up from 32% in 1989. The median stock value held among households in the market was $40,000.
Another rule of thumb -- and perhaps a more important rule of thumb -- is that you should have between two and three times your current salary saved up when you're 40 years old if you want to maintain your current standard of living.
| Age | Men | Women |
|---|---|---|
| 30–34 | $56,344 | $46,289 |
| 35–39 | $95,937 | $75,785 |
| 40–44 | $139,431 | $107,538 |
| 45–49 | $190,716 | $142,037 |
There are no set ages to get into or to get out of the stock market. While older clients may want to reduce their investing risk as they age, this doesn't necessarily mean they should be totally out of the stock market.
The median salary of 35- to 44-year-olds is $1,197 per week or $62,244 per year.
For example, you may be considered rich if you're in the nation's top 1% of earners. In 2022, that group saw an average annual income from wages of $785,968—nearly 19 times higher than the bottom 90%, according to the Economic Policy Institute Open in new tab.
Even if you're 40 years old with nothing saved for retirement, not only is it possible to build a $1 million nest egg by the time you reach your golden years—it might not be as hard as you think to get there.
Americans at this life stage are reflected in Federal Reserve statistics covering people ages 35 to 44. The Fed's most recent numbers show the average savings for the age group that includes 40-year-olds is $41,540. The median savings is $7,500.
What age do people peak financially?
According to the U.S. Bureau of Labor Statistics, the median income of American workers is highest between the ages of 45 and 54. These peak earning years are a critical time to take control of your finances and hone your money management strategies.
The average American's net worth at 40
Having said that, according to the most recent Survey of Consumer Finances, which is conducted every three years by the Federal Reserve, the median net worth of a household in the 35-44 age group is $91,300. However, the average net worth in this age group is $436,200.
How many Americans have $100,000 in savings? About 26% of U.S. households had more than $100,000 in savings in retirement accounts as of 2022, according to USAFacts, a nonprofit organization that analyzes data from the Federal Reserve and other government agencies.
As of May 2023, more than 1 in 5 Americans have no emergency savings.
However, the general rule of thumb, according to Fidelity Investments, is that you should aim to save at least the equivalent of your salary by age 30, three times your salary by age 40, six times by age 50, eight times by 60 and 10 times by 67.
