Investing That Grows With You

Asset Allocation: A Beginner's Guide to Investing by Life Stage

Types of Investments for Your Early Career 

Your early career is the best time to start investing. However, before you start, it's crucial to build a solid financial foundation. As a rule of thumb, you should save 4 to 6 months of income as an emergency fund, then start setting aside 15–20% of pre-tax pay for retirement. 

Once you have these savings, you can start researching how to make money through investments. At this early stage, you would naturally be looking for investments that are suitable for beginners. Regardless of which types of investment you decide upon, it's important that you start investing as early as you can to reap the benefits of dollar cost averaging. 

'Starting a portfolio from a young age enables you to minimise uncertainty and help offset financial risk or losses when the economy is in decline,' says Taylor Tresatti, head of financial industry research and planning at BIZDEV: The International Association for Business Development. 'Additionally, you enjoy more opportunities to grow your wealth and finances when markets, which tend to bounce back, might go up again at a later date.'    

In other words, time in the market has historically led to more success than trying to 'time the market'. That's because consistent contributions to your savings allow you to capitalise on the magic of compound interest to generate income. Financial radio host Dave Ramsey claims that an initial USD10,000 investment made during this life stage could potentially grow to as much as USD452,000 over 40 years¹. 

During this beginner phase, your asset-allocation strategy may be more aggressive and include a mix of investments that come with greater risk but more growth potential, since you have plenty of time to recover from any losses. Most people in their 20s have fewer financial obligations that prevent them from seeking large rewards. Given this level of flexibility, if you're in your 20s, you might allocate as much as 80–90% of your holdings to stocks instead of more stable assets, such as bonds.  

There are numerous methods for investing into high-growth equities. Instead of just purchasing individual stocks, it might be wise to consider buying into funds that contain a balance of different companies. 
 

Investment-Linked Policies (ILPs) as a Type of Investment for Beginners

ILPs are a unique investment instrument that can be good for beginners. How do investment-linked policies work? Essentially, ILPs combine life-insurance coverage and investing. With an ILP, you can select from a diverse array of funds (which might include dividend-paying funds ). At the same time, a portion of your premium will be paid to insure you against sudden death or terminal illness.

ILPs offers the flexibility to manage your investment approach and balance your level of risk. If circumstances change, you can quickly switch funds either on your own or with the guidance of a financial consultant. For those who are concerned with Environmental, Social and Governance (ESG) and a more sustainable investment options, there are funds that offer opportunities to invest in a host of greener and more eco-conscious businesses.

As with any type of investments, purchasing an ILP comes with investment risks. The returns are not guaranteed and the surrender value (if any) of an ILP depends on how the sub-funds perform in the market. This is why it is important to understand your risk appetite and to select a good mix of funds that suit your risk profile.

Property and Stocks as Types of Investments for Beginner

It's especially important to use the early phase of your life to diversify your portfolio by using a mixture of different asset classes.

During your early career, you may wish to start saving for a 20%+ down payment on a home (saving up more than 20% helps you minimise monthly mortgage costs, interest charges and fees). Property can be a stable asset to add to your holdings, balancing out more volatile investments.

Equities such as stocks can offer both short- and long-term growth opportunities. Fixed-income investments, including bonds, can provide a measure of stability with their recurring payments. Other instruments like real assets (such as real estate and commodities) can offer investors ongoing revenue and serve as a hedge against inflation. Then there are less common investments, such as private equity and hedge funds, which can provide outsized returns or losses.

As CNBC observes, diversification is 'critical to building long-term wealth².' So, explore the many options, beyond just stocks. It's also important to understand that there are numerous types of assets within each category. For example, corporate bonds differ from mortgage bonds; there are small-, mid- and large-cap stocks; and REITs (Real Estate Investment Trusts) provide a unique way to invest in property. All have their benefits and risks. By investing a small amount in each, you can experiment to see how each will perform. According to Ric Edelman, author of 'The Long-Term Financial Impact of COVID-19', had you invested in each of 16 major asset classes over the last 15 years, you'd have enjoyed an 8% rate of return on your investments.

Types of Investments from Mid to Late Career

In general, during the mid- to late-career phase, 'The top goals on average for the Asian investor are growing wealth, protecting wealth, securing a comfortable retirement, and transferring wealth³,' observes David Wilson, Associate Director and Wealth Management Lead for Growth Markets at Accenture. So, during these years, you ought to pay even more attention to the money coming in and going out.

As you reach the pinnacle of your career, your salary and investments should have grown, as well as your expenses and commitments. In order to meet these responsibilities, and with fewer years ahead of you to recover from plunges in the market, it's time to reassess your asset allocations, dial down the risk and increase fixed-income investments, which should now take up as much as 40% of your portfolio. Bonds and other such instruments might offer a lower rate of return than stocks, but they also provide greater stability than equities.

'At this stage, you would have built a substantial financial portfolio for your retirement. It is therefore important to make sure the value of that portfolio is preserved. You might want to look at the risk profile of your current portfolio, and rebalance it. Portfolio rebalancing is something all investors should do regularly, but it takes on additional importance when your financial goals adjust based on your life stage,' says Khoo Poh Huat, Manulife Singapore's Chief Distribution Officer.

Tresatti adds: 'When working to diversify your investment portfolio, this means not only thinking about what asset classes you're holding and how much of them you're holding onto, it's also important to think about tax-saving strategies, and how different types of assets and investments fit into your big-picture approach to investing. Our needs, incomes, and living situations will have changed over the years – which means that whatever game plan you had come up with in the past must now evolve.'

The portfolio evolution in your mid-career phase should be aligned with your retirement plan. To do this, you'll need to consider certain factors when calculating your retirement fund (such as rising inflation and life expectancy) and plot a withdrawal strategy. This means thinking about what investments that you want to hold, sell or convert into more predictable asset classes to ensure that you have enough wealth during retirement. For instance, you may wish to reallocate your wealth to steadier, more stable, passive income-generating investments.

Types of Investment at Retirement and Beyond

Costs of living are surging in Asia and around the world – including in Singapore, where pensions and benefits are dwindling⁴. Yahoo! Finance estimated that the cost of retirement for a single Singaporean will leap from S$1,379/month in 2019 to S$2,500/month by 2030⁵. It also notes that by 2030, you'll need around S$600,000 to retire, which doesn't include expenses for medical conditions or other unexpected emergencies. 

According to the Manulife Asia Care Survey 2025, Singaporeans are increasingly prioritizing quality of life over lifespan, with 43% wanting to avoid chronic illness and 21% aiming for total financial independence in retirement. Despite these aspirations, the survey reveals a gap between retirement goals and financial readiness among Singapore respondents. The World Health Organization projects that the number of people aged 80 and above will triple globally to 426 million by 2050, with Asia leading the demographic shift⁶. Singaporeans are also living longer and healthier lives, with a life expectancy of 83.2 years now; the retirement age is set to rise to 65 by 2030, reflecting the need for extended financial planning.

'[This] translates into needing to have more savings on-hand for retirement,' says Tresatti. 'And that's before you take into account how inflation, the rising costs of goods and other common expenses – as well as economic hiccups and unexpected dips in the marketplace – can also put a pinch on your pocketbook. It can be challenging to accurately calculate just how much you'll need for retirement under the best of circumstances, and things only get more unpredictable from here.'

Longer life brings extra risks, and traditional retirement planning and asset-allocation strategies may no longer hold. At retirement, as for earlier phases of your life stages, your investment portfolio will need to evolve. 

Annuities as a Type of Investment at the Retirement Stage

The traditional rule is to subtract your age from 100 to arrive at the right proportion of stocks for your portfolio. For example, a 35-year-old would want to consider allocating 65% of their money to equities and 35% to bonds and other stable investments. However, these days, doing so might risk having a portfolio that won't grow enough to last your whole life. So, some financial planners suggest changing the math and subtracting your age from 110 or even 120⁷ to determine how much stock could be appropriate. As during other phases of life, diversification is still the key to success, as it's an effective hedge against uncertainty. Sprinkling in alternative investments such as commodities and real estate⁸ may help your portfolio outpace inflation, which eats away at your spending power.

Once you enter your retirement years, more of your focus should be on protecting your wealth and ensuring your wellbeing. A spectrum of annuities (that regularly pay you a fixed amount) and other income-generating investments can help you remain financially secure for as long as you live. 

Conclusion

All investing involves risk, and it is possible to lose money on any type of holdings. Since some investments are chancier than others, you need to constantly consider an array of factors – your goals, time horizon and risk tolerance – to choose those that are best for your current life stage.

Uncertainty is, in fact, the only certainty that you can expect to face over the course of your lifetime. Between market volatility, fast-shifting economic trends and a steady progression of planned and unexpected life events, you'll never be able to plan for everything. That's why the most-savvy investors maintain well-diversified portfolios that hedge against the unpredictability.

The best approach you can take at any age is to invest in a range of asset classes, regularly reassess and rebalance your portfolio, and pair your investments with insurance products that protect against uncertainty. Make the most out of every phase of your life's journey by taking advantage of opportunities for growth, while always working to protect your – and your family's – legacy. 

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Sources

1 Ramsey Solutions, 'How does Compounding Interest Work?', 2024, Ramsey, https://www.ramseysolutions.com/retirement/how-does-compound-interest-work

2 Kathleen Elkins, 'This chart perfectly sums up why it's important to have a diverse investment portfolio', 2020, Make It, CNBC https://www.cnbc.com/2020/06/18/chart-shows-why-its-important-to-diversify-investments.html

3 David Wilson, 'The Future of Asia Wealth Management', 2020, Accenture, -https://www.accenture.com/content/dam/accenture/final/accenture-com/document-2/Accenture-The-future-of-Asia-wealth-management-2024.pdf

4 Natalie Choy, 'Singaporeans Face Working Longer to Afford Retirement', 2022, Wealth Savings & Retirement, Bloomberg, https://www.bloomberg.com/news/articles/2022-12-12/singapore-retirement-crisis-pension-savings-dwindle-as-costs-surge?leadSource=uverify%20wall#xj4y7vzkg

5 Royston Yang, 'How Much Do You Need to Retire in Singapore? Here’s How Investing Can Help', 2022, Yahoo! Finance, https://sg.finance.yahoo.com/news/much-retire-singapore-investing-help-100000450.html

6 'Ageing and Health', 2022, World Health Organisation, https://www.who.int/news-room/fact-sheets/detail/ageing-and-health

7 Ashley Kilroy, '100-Age Investment Rule vs. 120-Age Investment Rule', 2022, Yahoo! Finance, https://finance.yahoo.com/news/100-age-investment-rule-vs-130051684.html

8 Real estate equity, Manulife Investment Management (Singapore) https://www.manulifeim.com.sg/site/private-markets-capabilities/real-estate.html