7.3 learning

Factoring time into diversification

1 CE

retirement, college, a down payment, or a vacation, are all things people save money for, but with assets there are 2 rules
1. The first is the number of years until you expect to need the money
2. The second is your attitude toward risk
For instance, think about a goal that’s 25 years away, like retirement. Because your time is fairly long, you take on additional risk in pursuit of long-term growth

Risk Investments

1 CE

High risk – high risk investors have very good knowledge of investments, wants the biggest returns possible, or has a high income. High risk investors may put a high proportion of capital in stocks and shares.
Medium risk – might be starting to near retirement, somebody who has less time to invest or wants to take a smaller amount of risk. A medium-risk investor would generally diversify their investments.
Low risk – Older person who is nearing retirement needs funds or someone avoiding risk.