Investment strategies for different age groups

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August 16, 2021 1:19 PM

Every individual must strategize their investments, keeping in mind some factors. There are some obvious factors like risk-taking ability, market conditions, and the amount of capital to be invested.

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India boasts of an array of investment options to choose from. In today’s world of skyrocketing prices to satisfy daily needs, savings and investments go hand-in-hand to tackle this issue.

Vivek Bajaj, Co-Founder, Elearnmarkets.com and StockEdge says, “Every individual must strategize their investments, keeping in mind some factors. There are some obvious factors like risk-taking ability, market conditions, and the amount of capital to be invested.” Having said so, risk-taking abilities slowly decrease over the years.

Here are some investment strategies for different age groups;

Young adults: Students who are fresh graduates and have just got a job, begin their journey towards financial independence and experts say this beginning can be overwhelming. One has just started earning and there’s always a desire to spend but that is not the path one should take. Young adults have a gamut of options to invest in.

Bajaj points out, “SIPs have emerged as a popular form of investment, providing a basket of options to choose from. For some high-risk takers, this is the point where their stock market journey starts. Cryptocurrencies have also emerged as a high-risk high-reward option for Millennials and young adults.”

He further adds, “the main challenge at this point is thorough market research to understand the risks associated with the markets.”

Mid-life adults: As people slowly grow up, their risk-taking ability decreases over time. Experts say a good point of starting is the ‘100-Age’ rule. Simply subtract your age from 100 and that is the percentage of your portfolio that should be invested in risky investments like mutual funds and SIPs while the rest in risk-free investments like fixed deposits, bonds etc.

Bajaj says “The risky options provide higher returns compared to fixed deposits and the asset classes can be diversified to spread the risks associated with each class. Post Office schemes or Fixed Deposits are low-risk options that provide stable returns. The most important factor to consider at this point is proper asset allocation.”

Elderly people: Post-retirement, people look for a stable source of income to meet their daily needs. Experts say that impulsive buying habits also come to a halt at this point, and the best investments are those that pay stable returns.

Bajaj adds, “Senior Citizen Fixed Deposits are a great option to get assured returns, which are higher than normal Fixed Deposit Schemes. Senior Citizen Savings Scheme, Tax-Free Bonds, Post Office Monthly Savings Schemes are some more options to explore!”

Industry experts say the main challenge here is to invest in schemes that provide a stable return and are risk-free.

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