The stage of life investors are at determines how they should organise their portfolios.
T he stage of life investors are at determines how they should organise their portfolios. Younger investors, planning to lock money away for 20 years or more, can take more risk than those nearing their retirement date, who will rely on their investment pot to fund their lifestyle.
Here we look at the ideal investments for different ages. Every case is unique, so we have made some generalisations, and have focused on the savings being put away for the long term, rather than short-term savings, such as buying a house or a rainy-day fund.
Often those starting out investing for the first time fall into this age category, meaning that they are not experienced investors. However, they have a long time before they are likely to need the money, if they are saving for retirement, and this impacts their investment decisions.
“This age group has time on its side, they could be working another 30 years or longer and spending a similar amount of time retired. The fact they are still have a long time working means they are generally able to tolerate more volatile markets in the short term,” said Adrian Lowcock, of Architas, which is part of Axa. For this reason investing in stock markets makes sense.
Mr Lowcock recommends investing in companies in emerging markets, as it has the potential to grow over the long term, but will have a lot of movements up and down in prices, meaning it is not suitable for short-term investors. He recommends Jupiter Global Emerging Markets as fund manager Ross Teverson has a focus on growth that tends to work over the longer term.
A long similar lines, John Husselbee, of asset manager Liontrust, said investors need to decide whether they want to go for a higher risk approach and focus on one country within the emerging markets; focus on a region, such as Latin America or emerging Europe; or go for a global approach across all emerging markets.
He recommended Stewart Investors Global Emerging Markets for the latter, saying it is run by a team that has scale and experience.
For those who want to invest closer to home, FP Crux European Special Situations is selected by Laith Khalaf, of Hargeaves Lansdown, the fund shop. The fund invests in European stocks that are undervalued by the rest of the market, but can take longer before their prices rise.
