How Age Influences Stock Investment Decisions

Author: George Davis

Investing in your 40s and 50s

Age has a significant role to play in your investment career. As you grow older, your investment decisions mature with you. When you reach a certain age where you pursue a relaxed approach to life, your investment decisions become less risky since your life goals change with age. As you discover your true self, you tend to be more comfortable with things you have rather than chase after material possessions.

Trading, in a way, is a thrill that professional investors hang on to even after crossing their adolescent days. The ideal approach to investing in the stock exchange is to take risks according to your health, age, and financial position. While you might be sitting comfortably on a good salary, your age doesn’t permit you to make a profit-based investment. Therefore, it is crucial to understand how age influences stock investment decisions.

Investing At Various Ages

To better explain the point stated above, we have shared investment tips for different ages. These tips are based on your health, financial position, and liabilities.

Investing Between the 20s – 30s

Investing in your 20s and 30s is the perfect time to have an aggressive investment strategy. At this life stage, you may have accumulated enough funds in your savings account with fewer liabilities. Moreover, you have 30+ years ahead of you before retirement, so you can aggressively focus on your growth. It is common to have 70% - 80% of your portfolio in stocks during this age. However, if you plan to retire before the age of 50, you should reduce your percentage contribution to stocks and add it to your savings. This is because you will need a more steady income flow to help you save a reasonable amount by your retirement age.

Investing in Your 40s – 50s

As you come closer to your peak earning age, you have a substantial income that you can distribute between your savings and investment. However, the ratio should prioritize your end goal. Meaning if you are planning to retire in the next 5 years, you should contribute a significant amount of your earnings to your savings account or a 401k plan. However, if you still have ten years ahead of you, taking a few risks doesn’t hurt anybody.

By the time you reach your 50s, you should dial down your investment strategy and plan on stepping out of the market. Most people plan on leaving the stock market with a bang, but they end up hurting their earnings. However, people at the age of 50 are expected to live another 30+ years. It depends on your personal preferences whether you enjoy the thrill of investing or want to sit back and spend what you have accumulated. However, the ideal approach is to enjoy the fruits of your labor and relax in your late 50s.

The Bottom Line

Investment is an adventure most people enjoy. However, the stock market can be too complicated for some people. These individuals miss out on a tremendous opportunity to grow their portfolio and contribute to their retirement fund.

Stock Picks

1. Glencore Plc (GLNCY)

2. Cerner Corporation (CERN)

3. Quest Diagnostics Incorporated (DGX)

Find the top stock picks with guidance on when to sell, buy and further information by subscribing to the PT Premium Service in the Proficient Trader App