Common mistakes of the senior citizen in investing?
The risk factors are the same for an individual of 65 years of age to 20 years of age. The main difference is that a 20-year-old is investing on a 50+ years’ time frame while the senior investor is looking for a shorter time frame. Senior citizen always prefers low-risk asset to preserve the capital. Here is the list of some of the common mistakes that senior investor does
Investing too conservatively
In the recent few decades, senior citizen is looking up to as a good source of returns. Though financial expert advice senior investors to avoid investing in riskier assets like the stock market and invest in a safer asset like bond and cash. Most seniors prefer to avoid risk after retirement and allocated their sum to safe investments like fixed income. The yield of low-risk assets is not sufficient to meet the requirement of retirement. Senior must be aware of the ramification of what inflation can do to their nest egg if they accept lowest returns. It is advice to senior investors that they should invest a small portion of their sum into the stock market. A prudent allocation of debt and equity during retirement will help you meet your income needs and also protect you from inflation in the long term.
Not being debt free
Senior investors must try to be debt free in the early part of life as a major source of income gets passed on overcoming the debt. This results in lowering the sum of your savings. The higher the interest rates of the debt the longer you have to pay it which put your long-term financial goals at risk.
Not having health insurance
Health should be the major concern of senior investors. Healthcare cost is increasing these days. So, it is necessary to get a health cover before its too late. Health insurance is essential because there is a substantial health risk with advancing age. If you don’t have a health cover than a serious illness in your family can cause a great threat to your financial goals. Senior citizens must buy additional health insurance to meet any health emergency.
These are the most common retirement investment mistakes senior citizens do which should be avoided. It is however advised to make retirement plan at the early stages of your life to make a happy and comfortable in the later part of life.