Most investors stop buying stocks as they get older, and, instead, start investing in more conservative options. While it’s a good idea to not invest all your money in high-risk investment options like stocks, you need not completely stop investing in them. In fact, having some stocks in your investment portfolio can help you earn great returns. Here are some reasons why you should not entirely stop investing in stocks as you get older:
Not All Stocks Are Volatile
Many people avoid investing in stocks assuming all stocks are volatile. This, however, is far from the truth. Dividend stocks, for instance, are common in retiree accounts since they generate good income and aren’t volatile. As you get older, you should steer away from investing in very risky stocks and start investing in ones that are stable and offer a steady income.
Markets Pick up Quite Quickly
Stock market crashes are not uncommon. But, the good news is that bear markets always pick up. The average bear market only lasts 3 years. So, even if you do lose some of your money in a market downturn, you’ll most likely be able to get that money and some more back in a few years.
Offers Good Returns
In the past, it was common for Americans to earn good returns on their savings accounts and government bonds. However, in recent years, interest from these options has significantly reduced. To this end, the best way to continue earning good returns is by investing in the stock market.
Provides a Hedge Against Inflation
Once you retire, you may not earn as much as you used to while you were employed. Given this, if you stick to solely investing in no-risk or low-risk financial options, inflation is likely to outpace your returns. To avoid this and ensure you have a comfortable retirement, you should consider investing in stocks.
You Can Invest in Other Safe Financial Avenues as Well
Buying stocks when you are nearing retirement is only a bad idea if you haven’t invested in stable options like bonds and savings accounts. To reduce risk, ensure that you have a well-diversified investment portfolio.
Stocks can really help you grow your wealth over your retirement years. Remember to do your research and pick stocks that have performed well in the past and match your risk appetite.