I'm an 18 year old looking to start investing for the future. I'd like to have a good balance of single stocks, ETFs and long-term stuff like bonds. I've put together a percentages chart that I think seems good, but I'm obviously not the most knowledgable on the stock market.

Here's my plan:

  • 10% of money in safe assets, like U.S Gov. Bonds
  • 50% in S&P 500 (Long term investments)
  • 25% in dividends
  • 15% in single stocks

So, what's your opinion on how I should invest as an 18 year old? Do I need to focus on long-term, short-term, or a different ratio than I currently am exploring?

  • At your age, I would say no bonds, 100% stocks. Secondly, at your age, it is all about earning more to invest. Since the portfolios of 18 year olds tend to be small, it is about finding more money (normally through working) to put into your investment account.
    – Pete B.
    Commented Mar 16, 2020 at 11:05

4 Answers 4


This is a fundamentally opinion based issue but I feel at 18 your plan had two flaws. Firstly it is a bit too risk averse. You have many years to invest and bonds tend to give very poor yields in the long term.

Second you have no international exposure. In most cases if you have a longer time horizon it can be worth having some international funds.

I would instead suggest something more like:

  • 50% US Index Funds
  • 25% International Index Funds
  • 15% Individual Stocks
  • 10% Investment Grade Corporate Bonds

Also note the stock market just took a substantial fall so it is probably a good time to heavily jump into the stock market as opposed to when it is higher. Bond yields are also very low right now so shall yield even less than normal.

Your outlook is somewhat dependent on when you suspect you will need the money. The above plan would be appropriate if you are in it for the relatively long term. If you will need money in a few years you may want to be more conservative.

Also note there are robo advisors who are able to automatically rebalance your portfolio as values to change to maintain your risk profile, Schwab Inteligent Portfolio is a free one but there are many available and suggest you look into them.

  • 1
    Vality makes a ton of great points. Vality, while I agree that conditional on the market having been higher before and lower now, that now is a better time to buy than before is true, I'm not sure how that leads you to conclude that it is probably a good time to heavily jump into the stock market. I'm not saying you're incorrect on buying now, I'm just trying to understand your logic. I don't see how one follows from the other. Maybe you have a belief in reversion? Now very well could be a great time buy to stocks so I'm trying to understand your bull case. Commented Mar 15, 2020 at 15:34
  • @RWP while reversion is generally not true in the long term there is a short term pattern of stocks generally bouncing back some and outperforming in the short term after a large fall. For example see this article google.com/amp/s/www.cnbc.com/amp/2020/02/24/… while I cannot say for sure there is not more downside to come it is definately a better time to buy in than it was before this fall, and while timing the market perfectly is not feasible it imo is none the less worth investing when down.
    – Vality
    Commented Mar 15, 2020 at 19:40
  • 1
    Nit: it's "averse", not "adverse".
    – chepner
    Commented Mar 15, 2020 at 21:54
  • 1
    I've made the exact same mistake before.
    – chepner
    Commented Mar 15, 2020 at 22:23
  • 1
    @Vality that was a very helpful response, thank you! Its' a good article. I have one point regarding their methodology: they cherry-picked their sample as the longest bull run in history. I still think the short-term bounce thing might hold in bear markets too though and is something I might look at. I really appreciate you taking the time to respond! Commented Mar 16, 2020 at 19:25

Unless you're somehow already wealthy at 18, you probably shouldn't be investing in stocks and bonds at all. Instead, you should invest in yourself, by earning a college degree. That will ensure that you can earn enough to invest properly and retire later. If you have any money left over after paying for college and having an emergency fund equal to at least 6 months' worth of expenses, then start investing.

If you're already wealthy, then go with Vality's answer.


No. The younger you are the more risk you should take. No bonds or dividends.

  • 1
    With rebalancing, a mix of stocks and bonds can perform better than all stocks.
    – minou
    Commented Mar 14, 2020 at 21:54
  • gaefan, what mix? and by perform better are we talking likelihood of return above some theshold, expected return/risk ratio, expected return? Commented Mar 15, 2020 at 15:29
  • 1
    Age is not the only determining factor for how much you risk you can take; there's no "right" amount of risk one should accept.
    – chepner
    Commented Mar 15, 2020 at 21:52

Having a fix percentage is going to be a nightmare to maintain but it's perfectly fine to have some numbers to use for measurement. One important factor to consider is that when you don't have much money to investment you don't have much money to lose so at that time it doesn't matter too much how your investments are divided. It's also important to know why you're dividing your assets and then how.

That being said, in the beginning you can consider going for higher returns with less division between different asset classes until you reach a peak where a big loss within that asset class would be deemed devastation by you. That's if you're trying to reach a maximum gain. Some might be uncomfortable with high risk at all but one can argue that chasing pennies is a risk in itself but that's for one self to decide.

At your age (and for anyone with a low net worth really) the most important factors are reducing living expenses, without cutting out your entire quality of life, saving up enough money to actually investing in something meaningful and then learning how much of your investments you want to have passive (lower returns, lower risk) and how many you want to have active (higher returns, more work or more risk).

I'd take a look at the book "Set for life" by Scott Trench (Audible available). He talks about these important steps in the order they make sense for your journey. He does talk about diving your investments and how it should be considered. His insights should provide meaningful to you. He's financially free and to do that he's combined traditional methods from guys such as Dave Ramsey and then intervened it by channeling his money into investments such as real estate and index funds.

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