Investing When You’re Older – Investing Strategies Change While You Age
Many elderly people do face challenges when it comes to investing their retirement money.They wonder whether to invest in a risky venture and earn more returns or to invest in a less risky venture which may have low profit.
For the people looking for safe stocks, I recently came across this amazing article that goes in depth on the best Canadian stocks you can buy today. I’ve purchased a few, such as Shopify and Fortis(from their dividend one, which is not the one it’s linked to)
From my experience, I am of the idea of retired people investing in a less risky venture.Below are some of the tips and facts to second my argument.
Tips For Investing When You’re Older
1. Have a plan and know the kind of venture you are investing in.
If you don’t have a plan, how will you know if you are on the right track? The process of creating a plan includes determining your current financial situation, how much money you want to save, and by when.
2. Diversify your investments.
Create a balanced portfolio to help you stay on the right track and reach your goals.
3. Beware of getting rich quick schemes.
If an investment seems too be good you should think twice as it might be not the case. Usually the higher the estimated return, the higher the risk to you. Stick with time-proven ways to grow your investments.
4. Feel comfortable with your investment decisions.
If the risk in your investments keeps you from sleeping at night, then it is not worthy for you to invest in. Keep records and check your statements each time you receive them.
5.Always question anything that doesn’t look right or that you don’t understand.
Read the Prospectus thoroughly before investing, do your research and understand how the fund works and all applicable expenses.
As we all know the more the risky the investment is the more the rate of returns.When we are young we intend to invest in a more risky venture for us to save enough money for retirement, to buy a house, to cater for the family as well as other many responsibilities.On another hand, as we got older, we have no much responsibilities to do.Therefore, when making investments at the old age we are more concern about stability and predictability of investment rather than the rate returns.Also when we reach retirement we no much time to analyse trends in the stock market.Most elder people get sick regularly so that it difficult for them to pay much attention to risky investments such as stock and treasury bills.
How Risky Is the Investment?
Every investment has a risk. There are no risk-free investments. Some investments are riskier than others, but every investment has a risk. There really is no such thing as a sure bet and anyone who tells you there is lying.
Investments should match your risk tolerance. You need to be clear about how much risk you are willing to take in your trading and investing. This is not an easy question to answer.
In general, people overestimate the amount of risk they are willing to face and underestimate the risks they are taking. Here are a few good rules of thumb:
As you grow older, take less risk.As your net worth increases, take less risk most people think to buy and hold strategies are the least risky strategy available. They are wrong. Buy and hold exposes investors to massive swings in the valuation of the stock market.