Age is inevitable — but it is just a number. This goes true with a lot of things — and that includes investing. Though it is really recommended for us to learn how to invest and to start investing as early as possible, people can still invest their funds no matter what their age. Some people may be asking themselves this same question, “Am I too old to invest?” Though there is no age limit when it comes to investing, there are certain things that we need to consider when it comes to investing, especially if we are nearing our retirement, or after we have retired.
Perhaps the number thing that we have to consider and think about carefully is where to invest our funds. Choosing the type of asset class where we could invest our hard-earned retirement funds is very critical, especially because we cannot afford to lose. After all, investors who are near their retirement age, or who have already retired, do not have much time to get back what they lose if they happen to invest their funds in losing ground. Thus, careful selection of asset classes for investments is a must.
Should You Invest In Stocks and Bonds?
A lot of people are wondering if it would still be wiser to invest their funds in stocks and bonds after they have retired. The stock market have been constantly fickle, so why invest in stocks, you ask? Though there is a constant rise and fall of the market, most financial advisers would still say that it would still be wiser for retirees to have some of their money in stocks and some in bonds after their retirement. This way, retirees can still have a portfolio which has the potential for growth. After all, diversifying the funds in stocks and bonds will give the best potential for the investors to meet their long term financial needs and goals, even though there is no guarantee for this.
The next question that investors need to ask themselves is how much of their retirement savings should go into the markets. Once a person retires, it is clear that he needs to put a portion of his money in safe money-market accounts, such as the less risky short term certificates of deposits. This can provide a sense of security that the investors won’t lose their hard-earned money through the ups and downs of the market. This can also provide the cash that retirees will need for their everyday expenses. It is a famous investment advice to invest a portion of the funds in secured assets. If you are wondering how much is this portion must be, perhaps a reserve of one to two years of projected living expenses would be enough.
A Balanced Portfolio
The best way to invest after retirement is to find the right balance for your portfolio. If one puts too much amount into equities and stocks, there is a bigger risk of losing the funds in case the market fails. Setting investment goals is a must, and this is why we should learn to allocate our assets. Learning how to tradeoff between risk and return, and how these may change as we age, is essential as we go from more aggressive to more conservative asset mixes.