How to Invest Your Money Between the Ages of 45 and 54

RetirementBetween the ages of 45-54 are some of the most integral investment years of your life. They represent a shift from a growth-oriented portfolio to a security-oriented portfolio as you begin to close in on retirement. During this time, long-term returns will have an increasing impact on your overall financial security.

You should trim back on your equity holdings and replace them with bond holdings. You should also restructure your equity holdings to be more weighted toward established big businesses instead of gutsy startups. A 60-70 percent reduction in equities should be associated with a corresponding rise in bond holdings.

Details for Bond Investments

This investment strategy is not based on solely purchasing U.S. treasuries. There are other options for bond investment. For one, Treasuries are expensive now due to the global economic collapse. They are also somewhat precarious due to continued U.S. debt worries, so you don’t want to be overexposed.

You’ll want to invest only slightly more heavily in a U.S. bond fund – experts suggest you increase your current holdings by about 20 percent to consist of about 20 percent of your total financial portfolio.

You will also want to buy some foreign bonds. If you don’t want to do your own research, experts suggest using the T. Rowe Price International Bond, which holds high-quality, low-risk debt and only charges 0.82 percent per year. Put 4 percent of your total investment holdings into foreign bonds. Investing in foreign corporate bonds could be an option too, as it could significantly reduce U.S. corporate bond volatility. At your age, any reduction in volatility is a good thing!

You should also put about 3 percent of your total portfolio into high-yield bonds. These are high-risk bonds, but if you find a good H/Y bond fund, you may be able to achieve significant returns.

Read more at CNN Money.