Much has been written about your risk bearing capacity being more when you are young, and that it decreases as you grow older. It is often said “invest in equity or equity funds because you are young and invest in debt when you are old because you cannot take high risks then. But is age the only criteria which decides your risk appetite? What would be the other factors.

Your current expense and loan ratio
If your current expenses and loan repayment eat away a major chunk of your income, even if you are young, you would want to look at savings and investing cautiously, and not be too aggressive as to lose your money if the risk is too high. a 27 year old, paying 60% of his/her income as loan repayment and other 20-25% as household/personal expenses would want to investment in conservative investments even if returns are low.
Your liability cover
Do you have an asset, life and a health insurance cover? Or may be a home insurance as well if you own one? In case all your assets and liabilities are covered, you could invest aggressively, even if you are a 50 year old. This is where a financial planner would help you understand the kind of investments you should make, depending on your risk profile and not of all those who belong to the same age category.

Your financial and personal status
If you have a good 6 month emergency cover, you are single, have an earning spouse if married, have a stable job and lesser number of dependents, you can choose to invest aggressively in higher stages of life as well. Imagine a 50 year old woman, who has an earning husband and a son, a small home loan portion left in her name and that too insured!! Does she need to be a conservative investor only because she is 50? Not really.

Your goals and objectives
Let’s take another example here. A young 27 year old working girl, whose mother is dependent on her, has sufficient income and a two year work experience. Can she choose to be aggressive because she is young? The answer is a big NO. Because she has to have contingency funds to take care of all emergencies, household expenses, own expenses and invest for her marriage. She cannot afford to lose her savings because of her savings being so crucial for her present as well as for her future.

Your knowledge about investment choices
It is your financial planner who makes you understand the best suited investment choices and not the sales agents. Once you have understanding of your own, each of your investments will very crisply be aligned to your objective of investment. Also, in case of cushion investments, your knowledge would guide you for timing withdrawal or additional investment-irrespective of how old you are.  

So do consider all aspects when you looking at Risks in your investments.

Team Getting You Rich