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Asset allocation models

How do you know which investments to include in your retirement plan? Your selections will help determine the health of your finances in retirement.

Ideally, your mix of investments would grow enough to support you in retirement while buffering you from the ups and downs of market fluctuations. But how do you find the right combination of investments?

Your financial professional can work with you to create a customized savings plan. Together, you should assess your overall situation, including your other assets, specific financial needs and risk tolerance.

You can also use the American Funds asset allocation models as a guide when choosing your investments. This collection of sample portfolios was designed for investors based on their retirement time frames. The fund categories shown — growth, growth-and-income, equity-income/balanced and bond — are commonly found in retirement plans. Find the model designed for your time frame below.

Asset allocation models

Click on any model for more details and to see how the portfolios compare.

RETIREMENT TIME FRAMES

20 years or
more 
to retirement

allocation model
growth color

Growth

40%

growth-and-income color

Growth-and-
income

35%

balanced color

Equity-income/
Balanced

20%

bond color

Bond

5%

5–20 years 
to
retirement

allocation model
growth color

Growth

20%

growth-and-income color

Growth-and-
income

35%

balanced color

Equity-income/
Balanced

20%

bond color

Bond

25%

5 years or
less 
to retirement

allocation model
growth color

Growth

15%

growth-and-income color

Growth-and-
income

30%

balanced color

Equity-income/
Balanced

20%

bond color

Bond

35%

First 10 years 
of
retirement

allocation model
growth color

Growth

0%

growth-and-income color

Growth-and-
income

20%

balanced color

Equity-income/
Balanced

30%

bond color

Bond

50%

The models were developed by American Funds investment professionals.

Fund categories

Growth funds provide the highest potential risk and reward, followed in order by growth-and-income, equity-income, balanced and bond funds. Your company’s retirement plan may not offer funds in every investment category. See Choose the right mutual funds for more details about fund categories.

Models balance risk and return based on time until retirement

It makes sense for younger investors to invest with the goal of achieving higher returns so that their retirement savings grow and stay ahead of the rate of inflation. As retirement approaches, older investors tend to move into investments with less risk to protect the money they’ve saved.

That’s how our asset allocation models were designed. Model A puts heavy emphasis on growth for younger investors. Models B, C and D each focus more on income and stability than the preceding model.

If you find yourself more than 10 years into retirement and more dependent on your savings, you may want to consider investing mainly in funds that aim to preserve what you’ve saved.

Reassess your investment mix regularly

Because your needs, goals, portfolio and situation may change over time, be sure to re-evaluate your investment strategy at least once a year. You can always choose a different model or create your own mix.

Models are not investment advice

Remember that the models are intended only as a general guide. Your financial professional can help you decide if the models make sense for you. Whether you use the models or not, you’ll need to decide which specific funds to invest in. Use the list (above right) to see how American Funds categorizes its funds.

Further reading

If you want to learn more about selecting an investment mix, explore our What is asset allocation section. You’ll find a series of articles that explain asset classes and mutual fund types, different kinds of risk, how time should influence your investment choices, and much more.

Find your target date fund

With a target date retirement fund, you get diversification and professional oversight in one easy-to-use investment that fits your timeline. See why target date funds can be a good choice.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Model portfolios are subject to the risks associated with the underlying funds in the model portfolio. Investors should carefully consider investment objectives, risks, fees and expenses of the funds in the model portfolio, which are contained in the fund prospectuses.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries.
Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds.
The return of principal for bond portfolios and for portfolios with significant underlying bond holdings is not guaranteed. Investments are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.
Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Use of this website is intended for U.S. residents only.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.