The term investment has a relatively broad definition and covers a number of different asset classes, which means that it can mean different things to different people.
This means that there are many factors that will impact on the size and nature of your investment portfolio, beyond those such as budget or existing knowledge base.
In this post, we’ll ask how you should invest according to your age, taking into account your underlying goals and wider cost considerations.
Here’s How to Invest According to Your Age
If You’re Between the Age of 20 and 30
Most youngsters graduate by the age of 21, and at this time your finances shouldn’t be encumbered by loans, debt or mortgage repayment.
So, this is an ideal time to start investing and craft your retirement plan, as you look to deploy around 10% of your disposable income or earnings.
Another reason for this revolves around the concept of compound interest, which means affords investment made during this decade in your life have the highest possible growth potential.
Even basic investments made during this time can have a big impact on your financial prospects. If you have a job, for example, you should definitely invest in a pension plan, which will currently require you to make a 5% contribution and be augmented by a 3% contribution from your employer. At this time, you can also focus on aggressive growth stocks rather than bonds, particularly if you have a healthy appetite for risk.
This may be the ideal time to open a Forex bonus account too, and trade derivative assets such as currency pairs.
If You’re In Your 30s and 40s
In your 30s and 40s, you’re likely to be more settled and career focused, while your disposable income levels will have probably been impacted by mortgage payments and similar costs.
You’ll still be young enough to reap the yields of compound interest at this time, while you may also be able to commit between 10% and 20% of your income to investments.
While contributing to your future retirement will remain a leading priority here, the nature of your portfolio should change.
More specifically, we’d recommend investing a little more in bonds, perhaps as much as 305 of your capital. The remaining money should be retained in stocks across a broad range of markets.
If You’re In Your 50s and 60s
While your retirement may be inching closer, now is not the time to lose focus. Similarly, it’s unwise to adopt an aggressive approach at this stage, and if you’ve managed to accumulate a large sum of cash, you should prioritise consolidating this where possible.
This type of conservative approach will see you move as much as 50% of your capital into bonds or money markets, which are stable and low-earning funds that deliver a sense of calm and reliability.
Your remaining capital should remain in stocks, although you may want to prioritise blue-chip dividend shares that provide an incremental yield over time.
Watch this space for updates in the Hacks category on Running Wolf’s Rant.
