Investment Strategies for Different Age Groups

“An investment is the current commitment of money or other resources in the expectation of reaping future benefits” (Bodie, Kane & Marcus 2008,p.1) However, there is no “one size fits all” rule when it comes to investment strategies. Still, the following fundamental investment strategies can be applied to different age groups in order to help you secure and create wealth.

  1. Young Investors

The primary goals for the majority of people in their early twenties are to firstly, put their credit cards under control and then budget a plan for buying a property for the preparation for a family. In relation to credit cards, it is important to remember that you cannot extend your lifestyle by using these plastic cards, which were initially designed to serve in the best interest of the financial institution. Therefore, always pay extra attention to interest rates and the outstanding balances of your cards, not just minimum payment each month. In regard to the properties, saving a deposit by way of opening the First Home Saver Account Scheme often offered by Credit Unions and Building Societies would be good options that help you gain subsidies from the Government, if available. In addition, investing in equity funds also offers a good return.

However, with reference to Equity Investment, it is better to give your investment some time in the market rather than attempting to pick a best timing in the market, as history demonstrates that average returns from share markets that may experience negative returns are typically higher than cash over long terms.

  1. Middle-Age Investors

People in the late 30s and 40s normally start to have heavy financial burdens due to the upbringing of children and the purchase of properties. The primary objective therefore is to make their financial status increase at a stable rate. It is advised not to overly leverage their money in order to seek a higher return, such as entering future contracts or trading warrants. Instead the focus should be on reducing their mortgage by way of, for example, gaining returns from diversifications in their investment portfolios. More importantly, people in this situation should consider buying income insurance or setting money aside for emergencies, as the current uncertain economic outlook generally threatens the job security.

  1. Retirement stage

There is a tendency for people in their retirement stages to become extremely conservative when it comes to investment. However, the reality is that a very defensive investment strategy you adopt may mean your money could be running out in a shorter period of time because of the increasing life expectancy.

A set of principles for investing money earmarked for retirement was advised by Mr Bodie of University of Pennsylvania in his article “an Analysis of Investment Advice to Retirement Plan Participants”:

  • Diversify the total portfolio across asset classes, and the equity portion should be well-diversified across industries and companies.
  • The longer your time horizon, the more you should invest in equities.

In summary, it is advised to set a reasonable investment goal with appropriate investment strategies sticking to it. Then invest early, invest regularly and invest for the long term.


1.Bodie,Z,Kane,A &Marcus, AJ, Investments, Mc Graw Hill/Irwin, New York

2. Bodie,Z, “an Analysis of Investment Advice to Retirement Plan Participants”,2002,pp.1