Client Login

How To Invest Based On Your Age

Sep 18, 2018 | Everyday Finances, Life Events, Retirement

Grandmother and adult grandaughter considering how to invest based on age

With markets at record highs, now’s a great time to re-evaluate your investment portfolio and consider what opportunities may be appropriate, relative to your current and future lifestyle, and longer term investment goals. How your investments should be positioned doesn’t just depend on current market conditions, though. There’s a range of elements to consider, including your timeline, comfort level, growth objectives, current income needs, and much more. Depending upon your investment horizon, here are some key considerations on how to invest based on your age.


How To Invest If You’re Young

It’s common to think that investment positioning decisions are easy for young investors who have a long investment horizon. With a long time to go before retirement, the tendency is to opt for an ultra-aggressive approach. While that might be the case for committed retirement savings, it’s not always appropriate for all savings. Notable exceptions include:

College Savings

Perhaps the most common investment mistake relates to college savings. Although your child is young, his or her investment horizon for college is still likely shorter than yours is for retirement. For this reason, if you have kids in or approaching college, SageVest Wealth Management strongly advises that college savings are appropriately conservative.

A House Down Payment

Saving for a house is another unique circumstance. Investing can increase your down payment potential, but it also puts your savings at risk. We typically advise holding down payment funding in more conservative investments, or solely in cash.

A Job Change

If you’re contemplating or facing a job change, it’s wise to have a minimum of six months to a year’s worth of cash flow needs in stable savings.

How To Invest If You’re Approaching Retirement

If retirement is still some time away, hopefully you have the luxury of being able to ride out a market downturn without worrying about how to pay your bills if stocks tumble. However, if retirement is closer, your stock exposure becomes much more important. Consider the following:

How Will You React?

Perhaps the most important question to ask yourself is how you’ll react if retirement’s nearing and we experience a market downturn. If your honest answer is that you’ll panic, then it’s far better to reduce stock risk now at market highs than it is to do so at market lows.

How Conservative Should You Become?

Conversely, you need to remember that your retirement will ideally span a number of decades. For most people, this requires investment growth, meaning you can’t risk becoming too conservative if you call the markets wrong.

Will You Be Able To Retire If The Markets Fall?

If you’re planning to retire in the next five years, it’s important to ensure that your investments are positioned to help replace a portion or all of your paycheck at that time. We typically recommend holding at least five years worth of projected retirement income needs in cash and bonds. This secures income resources, regardless of stock performance.

How To Invest If You’re Retired

If you’re already enjoying retirement, your investment considerations broadly align with those outlined above for someone who is approaching retirement. This is particularly true if you’re in the earlier phase of retirement. Stay focused on:

Keeping An Eye On Growth Opportunities

It’s important to remember that people are living longer than ever today, and that age 100 is no longer as old as it once sounded! As individuals age, their mix of stocks and bonds will change, typically becoming more conservative over time. That said, you need to remain alert for growth potential, to help sustain the years ahead.

Maintain Adequate Safeguards

While long-term growth is important, so too are sufficient safety to protect your financial well being during a market downturn. It’s essential to have adequate cash and bonds to sustain your lifestyle during a market downturn.

It’s important to remember that all investments carry some inherent risk, alongside the potential for asset growth. How much risk you’re comfortable with, how much growth you need, and your time horizon for investments are all key elements of your investment strategy. Please contact us to find out more about how we can help you achieve your personal investment and financial goals.

Prepared by SageVest Wealth Management. Copyright .
Standard Disclosure

The information contained herein is obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed. This article is for informational purposes only. The views expressed are those of SageVest Wealth Management and should not be construed as investment advice. All expressions of opinions are subject to change and past performance is no guarantee of future results. SageVest Wealth Management does not render legal, tax, or accounting services. Accordingly, you, your attorneys and your accountants are ultimately responsible for determining the legal, tax and accounting consequences of any suggestions offered herein.

In accordance with IRS CIRCULAR 230, we inform you that any U.S. Federal tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used by a taxpayer, for the purpose of (a) avoiding penalties under the Internal Revenue Code or that may otherwise be imposed on the taxpayer by any government taxing authority or agency, or (b) promoting, marketing or recommending to another party any transaction or matter addressed herein.

The provision of a link to any third party website does not mean that SageVest endorses that website. If you visit any website via a link provided here, you do so at your own risk and indemnify SageVest from any loss or damage incurred.

Make a wise investment in your future today.