Investing Basics

Creating a Financial Plan

When creating your own financial plan, it’s important to consider your age, risk tolerance and financial goals. It’s essential that investors build a portfolio that suits them and helps them to meet their goals.

When it comes to age, younger people have age on their side and can afford to take bigger risks, whereas older people may prefer more certainty, investing for income rather than for capital gains.

A formula that can be used to calculate the % of money that someone should invest in stocks is: 100 – the person’s age. Therefore, a 60-year-old should only invest 40% of their money in stocks.

Risk-taking investors are likely to buy more stocks than risk-averse individuals. A more risk-averse investor may prefer to own more bonds than stocks (i.e. 20% stocks, 80% bonds).

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