Here's How Millionaires Are Investing Their Money
Key Points
Investors with a net worth of more than $1 million tend to have a diversified mix of assets.
The asset mix changes over time for most people with net worths of $1 million or more.
The number of people investing in stocks dips by decade.
- The $23,760 Social Security bonus most retirees completely overlook ›
Close to 25 million millionaires reside in the United States, and the number is growing.
Achieving millionaire status can provide more financial security than most people have, but it's not something everyone can do. Investing can help make it happen, though, as it puts the power of compounding to work for you. When you invest, your money earns returns that can be reinvested and help your wealth grow.
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If you want to grow a seven-figure nest egg of your own, it can be helpful to look at how people who are already millionaires are investing their money.
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What are millionaires investing their money in?
Empower recently published some helpful data showing how millionaires are allocating their investment dollars.
Here's how users of the Empower Personal Dashboard with average net worths topping $1 million have distributed their funds across different kinds of investments.
| Age | % of Assets in Cash |
% of Assets in U.S. Stocks |
% of Assets in U.S. Bonds |
% of Assets in International Stocks |
% of Assets in International Bonds |
% of Assets in 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% |
Data source: Empower
Unsurprisingly, the investment preferences of young millionaires differ from those of older millionaires.
Young people tend to have more of their money in stocks because they can take on more exposure to risk and take a chance on earning the higher potential gains that stocks offer, compared to cash or bonds.
Older people in their 70s and 80s, on the other hand, need to have more of a cash cushion and less exposure to the market, because they don't have as much time to wait out downturns. Since they may need to rely on their investments for income, they don't want to have to sell stocks at a loss if the market happens to be down when they need a distribution. Having more money in cash allows them to leave their investments alone until the time is right to sell.
Millionaires choose an age-appropriate investment mix
Amassing $1 million in investments isn't an easy feat, so it's not surprising that most investors with a seven-figure nest egg have made some smart choices when it comes to allocating investments. Anyone who is investing should make sure they take the time to consider their own asset allocation carefully.
You don't want to be too conservative, as this could limit your potential returns and make growing a seven-figure nest egg much more difficult and expensive. At the same time, taking on too much risk could lead to losses that are difficult to recover from.
Explore best practices for asset allocation by age and, like many millionaires, make sure that rebalancing your portfolio over time is part of your investment strategy. Building a portfolio with the right mix of investments -- especially high-quality investments you'll be happy to hold for the long-term -- can be the surest path to achieving the financial security that you deserve.
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