The Magazine for Asian Investors
Which investment is suitable for each age?
Here are some tips useful for your investment.
First of all, let’s get familiar with the tools and terms used in organizing an investment portfolio. We strongly recommend that beginners in investing familiarize themselves with the basics of investing. For this purpose, a competent financial advisor can be consulted.
- Cash or bank deposits. Before anyone thinks of investing their hard-earned money some cash reserves should be built up. There should be at least 6 months of cash to equal bills or obligations. However, this is different for everyone as everyone is in a different situation and has a different standard of living. Therefore, everyone should decide for themselves how much security in cash is important for themselves. Cash has the advantage of being highly liquid and is used in our society as a means of payment. The disadvantage, however, is that it is low-yielding and is frequently inflated.
- Bonds/ debt securities. Investing in bonds is a low-risk investment. You receive a return in the form of an average fixed interest rate depending on the grade of the bond, where investors have the status of creditors and issuers have the status of debtors. When companies need liquidity, companies can issue bonds that investors can buy. In addition to corporate bonds, there are also government bonds, for example. Investing in debt securities is an attractive alternative in volatile market conditions. Therefore, investing in debt securities can help reduce portfolio volatility.
- Stocks, ETFs and mutual funds. Investing in company shares makes the shareholder an owner regardless of how many shares are owned. The return comes in the form of profits from rising share prices and, depending on the company, dividends. There is also the alternative of investing in ETFs or mutual funds. These are generally considered to be lower risk as the risk is spread over several holdings. For example, there are equity funds that track entire indices such as the S&P 500.
- Other investment types. These are investments in assets such as commodities, real estate and cryptocurrencies. These are usually safer investments that can increase in value over time but do not yield dividends or interest income during the holding period.
Definition of an investment portfolio.
An investment portfolio is the collection of assets of value to produce results that meet the goals and needs of investors. The investment portfolio typically reflects an investor’s investment strategy and investment style.
An investor’s “age” also plays a critical role. Especially in relation to the risk tolerance of an investor.
But why does age matter?
The age is usually related to the job and the related financial possibilities which are important for the ability to do investments. For example, a person who is retired and has built up a large cash position would probably choose a low-risk investment like government bonds and live off the interest income. On the other hand, a person in their early 30s whose cash position is manageable and has their whole life ahead of them will probably look for a higher-risk investment as they probably still have enough time to make up for losses. Of course, this varies from person to person.
Important! We at Naturaldeposit see a great risk in holding fiat currencies, as governments are up to their ears in debt and currencies lose value every year due to real inflation. Forget the government numbers. Use your own wits and notice how the prices of goods have increased over your lifetime. However, we know that fiat currencies are important measures of our society’s ability to maintain our standard of living. Therefore, we would encourage every investor to add a portion of gold and/or silver to their portfolio. We see gold as a security.
Disclaimer: Everyone is responsible for themselves. This is not financial advice.
So let’s look at what an investment portfolio might look like depending on age group.
23-29 Years old or Young Investor
These portfolios are classified as high-risk, high-growth portfolios. At this age, you start working, you still have a lot of time to earn a lot of money and there are not many obligations.
This age group is more likely to invest in stocks or cryptocurrency.
But it is also recommended to position remaining income in lower-risk investments, such as bonds or mutual funds. These can run for 20-30 years in order to secure themselves for retirement.
30-39 Years old or Middle Age Investor
The portfolios of this group are considered to be more risk-averse than those of the young investors. This age is the age of starting a family, when various parts of income increase, the job is stable, income is higher, but liabilities also increase.
Investment portfolios can, for example, consist of a mix of higher-risk parts like stocks or cryptocurrencies and lower-risk parts like real estate or commodities.
However, it is also advisable to put the remaining income into lower-risk investments such as bonds or mutual funds. These can run for 20-30 years to hedge for retirement.
40-54 Years old or Investors in early Retirement
This group of investment portfolios is considered very stable, has a good financial status that increases with age, and has a balanced financial profile with low financial stress.
At the same time, they do not have much time to earn money in retirement. Therefore, it is recommended to balance the portfolio in a safer direction. Safe deposits such as common stocks, ETFs, or bonds that yield above-average returns when held. Nevertheless, it is also recommended to look at precious metals as a hedge.
55 Years or older or at Retirement Age
This portfolio is considered low risk. Due to retirement age, lack of earned income, and little time to work. This group typically has accumulated cash balances and returns from investments. Although this group has low or no debt load, they may still incur costs for such things as medical care.
This group of investment portfolios should focus on investing in low-risk assets because the low-risk exposure assets require some investment budget to live on.
Investing is “risk”, but not investing at all is “risk” as well.
The data mentioned here in this article are freely chosen by Naturaldeposit, without the influence of any third party. The article is for informational purposes only and should not be considered investment advice or a recommendation to invest in any security or to use any investment strategy. Although we assume that the information contained herein is reliable, we do not guarantee its accuracy, completeness, or typographical errors. Our content may not be appropriate for all investors. The data in our content is reflected as of the date of publication and is subject to change without notice. The data is by no means intended to be a full analysis of all relevant facts relating to any country, region, market, industry, investment, or strategy.