|
Age
As far as age is
concerned, in general older investors seek security
while younger investors can afford to take a few more
risks. This is because older investors are unlikely to
be able to top up their portfolio if any of their
investments perform poorly. Younger investors can take
more risks, partly because they may be able to afford to
sit on their shares through a downturn and wait for
their value to increase again, and because they have a
continuing capacity to earn if their investments turn
sour.
Some experts recommend a
formula that tells you what percentage of your long-term
investment money should be invested in aggressive growth
vehicles such as shares.
That means no lying
about your age to look younger! For this formula to
work, you can't be one of those people who are
perpetually twenty-nine years old.
And the formula is,
simply one hundred minus your age equals the percent of
your investment money that should be in aggressive
growth investments.
This formula is really
straightforward and makes logical sense.
When you're young, you
have time on your side. If one of your investments is
unsuccessful, it may be upsetting at first. However, you
have many years before your retirement to rebuild your
wealth before you actually need to touch the money.
And the formula works so
that when you grow older, more of your assets should be
invested into conservative, income-producing investments
such as bonds. That's because when you're 50 years old
you have a lot less time in the job market to rebuild
your retirement fortune than when you're say a spry
twenty-five year old.
Now, this formula
generally applies to money earmarked for retirement. Or
at least money that you won't touch for ten years or
more.
Next:
Increased Share Value vs. Regular Dividends
|
