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 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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Retirement time frame |
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20 years or more to retirement
Model A
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5–20 years to retirement
Model B
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5 years or less to retirement
Model C
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First 10 years of retirement
Model D
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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 Develop an investment strategy 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.
Return to topInvestments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money. Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus and/or summary prospectus, which can be obtained from your plan’s financial professional or downloaded and should be read carefully before investing.
Most investments carry some degree of risk. For example, equity investments are subject to market fluctuations. Investing outside the U.S. (especially in developing countries) involves additional risks, such as currency fluctuations, as does investing in smaller companies, as more fully described in the prospectuses. Small-company stocks can fluctuate in price more than larger company stocks. 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 in bond funds and for the bond holdings in New World Fund, Capital Income Builder, The Income Fund of America and American Balanced Fund is not guaranteed. These fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Fund shares of the U.S. Government Securities Fund are not guaranteed by the U.S. government. Diversification does not eliminate the risk of investing; losses are possible in diversified portfolios.