Why Investing Matters At Every Age
The legal minimum age requirement to buy or sell stocks in the United States is 18, but that shouldn’t discourage anyone and everyone from engaging with stock investing as early as possible. In fact, someone who is showing an interest in investing before the age of 18 is way ahead of the game compared to their peers, and they likely have a very bright future of trading ahead of them. If they want to dip their toes in the water now, it is possible to begin trading under the supervision of a guardian via a custodial account. This account is controlled by the adult, but the minor can see how their investments grow over time in this account.
Regardless of your age, there are plenty of reasons to begin investing as soon as possible. We want to cover some investment strategies for different age groups to help show how people of all age groups can best position themselves in the market.
Teenagers And Young Adults (Age Range: 15-30)
We will use the ages of 15-30 to define the group we will call teenagers and young adults. These are people who are just beginning their investing journey, and they still have a lot to learn. It is great when someone in this age range is showing an interest in investing because it means that they have time on their side. If they start investing now and stick with it, they can likely do quite well for themselves in the long run, and perhaps they can generate enough wealth to transform their lives and the lives of those around them.
A younger person can get away with more aggressive investment strategies than someone who is older. This is not to say that they should run out and throw all of their money into the latest cryptocurrency or NFT necessarily, but it does suggest that they might consider dabbling in riskier investments during this stage of life. The reason they can use this strategy is that they have more time to recover from the losses in the event that the investment blows up in their face. On the other side of the coin, if they choose some investment that knocks it out of the park, then they can enjoy those outsized returns earlier in life. It is a win-win for younger investors to set aside at least some percentage of their portfolio for riskier investments.
Mid-Stage Investors (Age Range: 30-55)
This large group of investors are typically people who have reached the primary part of their career. They are experienced enough to have some work history behind them, but they likely have many more years of work still stretching out ahead of them. They are not as lost about where they want to go in life as they might have been when they were younger, but they still need to invest to make their life goals a reality.
The investment strategies deployed by people in this age range should be somewhat more conservative than the strategies they used when they were younger. Someone in this age range may have already put some money into investments and savings, and they don’t want to give up what they have worked so hard to build. There is nothing wrong with taking a more defensive posture at this stage.
Humaninterest.com explains what a conservative portfolio might look like, and why it might appeal to someone in this age group:
A conservative investment portfolio is weighted towards bonds and money market funds, offering low returns but also very little risk. This is the kind of portfolio you’d want if you’re more scared of losing money than not making money – for example, if you’re retired and these funds are your sole source of income.
You definitely don’t see the excitement and thrills that you used to with your more aggressive portfolio, but you also don’t have as much risk at play either. You essentially have tried to find the ideal balance between the two extremes so that you can have the portfolio that you really want without taking on more risk than you can reasonably withstand.
Retirement Age (Age: 55+)
The end goal for most people who invest is to have enough money to retire. They know that there will come a time in their lives when they are unable to work any longer. They hope that this time is far off in the future, but most of us are logical enough to understand that we need to prepare for all scenarios. Thus, we should try to get our money situation straightened out by the time we head into our 55+ years.
Those who are of retirement age should continue to hold investments, but these investments should be incredibly conservative. Holding things like government bonds and CDs is a good idea as they pay a set amount of interest and are considered extremely safe investments. They provide a reliable stream of revenue without risking much at all. Those in retirement no longer need to grow their wealth so much, but they may need to maintain it.