Which investment approach would be typical for a 20-year-old client with $1 million to invest?

For a 20-year-old client with $1 million to invest, the choice of a 90% allocation to stocks and 10% to bonds is deemed highly appropriate, reflecting a growth-oriented investment strategy suited to a young investor's time horizon and risk tolerance.

At this age, the client is likely to have a long investment horizon, potentially spanning several decades before needing to access these funds. This extended timeframe allows the portfolio to ride out market volatility, making a heavier allocation to stocks advantageous for capital appreciation. Stocks typically offer higher returns over the long term compared to bonds, although they also come with increased risk and volatility.

Additionally, with a significant portion of the portfolio in stocks, the young investor can benefit from the power of compounding over time, which can significantly enhance wealth accumulation. The modest 10% allocation to bonds serves as a stabilizing element in the portfolio, providing some level of income and reducing overall volatility without sacrificing substantial growth potential.

This combination of high equity exposure aligns with the investment objectives of a young investor, who may prioritize growth over capital preservation, making it a fitting choice for the scenario presented.