Investing and Age - Bravery in Youth, Caution with Age?

With the state-sponsored social security program in constant upheaval due to financial downturns and resultant budgetary restraints, it is no wonder more and more people are focusing on building private investment portfolios to

 safeguard themselves for their eventual retirement. Investment in a weak economy may seem counterintuitive, but it can actually offer impressive benefits for those in a position to take advantage of the low prices and bargains available on the market today. The level of risk involved with such investments varies greatly and must be taken into consideration when building an investment portfolio to make sure the level of risk of your investments matches your financial point of view and personal circumstances. Should your tolerance for risk change as you age and your investment needs develop? What are some investment tips for the various stages in your professional life?

Take the chance.

When you are at the beginning of your career, you have little to lose and the world to gain. As such, this is probably the best time in your life to take those bigger risks on those innovative stocks you have been eyeing or that part-ownership in the company you really believe in. The money you make during this time will have twenty to thirty years to mature, almost guaranteeing you a significant payoff for whatever you are able to invest. By the same token, any unfortunate losses will have years to be made up with other investments.

During this time in your life, bonds and real estate are also great investments. Bonds are great for long-term money making, providing you with a secure and substantial base, and real-estate is almost always profitable in the long-term as well, although significantly more risky than investments like bonds. Don’t forget to experiment with foreign stocks during this time as well - if you gain an understanding of the market, foreign investment can be the difference that brings your financial portfolio to the next level.

Weigh your options.

When your retirement is in sight, you might want to shift around your financial assets. You do not want a large proportion of your portfolio concentrated in high-risk investments that would leave you in dire straights were your luck to run out. It is not time to pull out of all of your riskier investments, but definitely start thinking about where that money might be kept safer. Instead, begin focusing on how to protect the sum you have accumulated so far by looking into secure investment protection options like Treasury Inflation Protected Securities (TIPS). TIPS offer a fixed coupon payment with a small interest rate and inflation adjustment at cash in, usually five, ten, or twenty years after purchase. Tools like these will make sure you will be able to meet your minimum needs come retirement time while still earning a profit on your investments.

Protect yourself.

Once you have officially planned your nearby retirement, your financial portfolio should reflect your shift in circumstances and perspective. During this time, make sure that the majority of your investments are in low-risk areas that will guarantee you maintain a solid monetary base even after your salary has stopped. Now is the time you want to develop the investments you already have instead of exploring new territory. For example, try using covered calls to gain a monthly income from your existing stocks without selling and make sure to slowly cash in investments you have made instead of taking out large lump sums to allow for as much interest to accumulate as possible. Above all, enjoy the benefits of all of your hard work throughout your life and don’t be afraid to take advantage of some of your investments - you deserve it.

Investing for your retirement can commence at any age. Think about your personal and professional circumstances along with your retirement goals before deciding on a strategic plan of action for building your financial portfolio. For more advice, see Bankrate.

Author: This is a guest post by Nate Miller. His main interests are Finance and Investing, with a recent focus on Business. He is constantly extending his fields of interest to incorporate news suggested to him by his readers. Also, if you like his writing, make sure to follow him on Twitter