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That's why you take on riskier investments early on and transition to "safer" ones as you reach retirement age (or whenever you're planning to access the money)
by oakesm9 7y ago
That's why you take on riskier investments early on and transition to "safer" ones as you reach retirement age (or whenever you're planning to access the money).
- derivagral 7y agoI always found this slightly wrong (for a non-outlier case). If you're young and you have some earning/saving power, why would you want that to be risky? Keeping it "safe" in an index fund means that it is compounding longer than the assets you'll get later in life!
- wskinner 7y agoThe confusion is probably coming from your idea of “risk”. When people say stocks are risky they mean their prices have higher variance. But they also have higher long term growth rates. If you’re young, you have more years left until you will need to sell your investments in retirement. That means you should care less about the short term variance and more about the long term growth rate.