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80 year Old And Equity Investments

Should an 80 year old  or near about person who has come about in possession of large chunk of money through some source, let’s say property sale consider deploying a large chunk of money in listed equity investments?

General opinion: No, absolutely no. Too risky at this advanced age!!! Even if one is really inclined to invest in equities, should be in lowly amounts. Somewhere I read – equity allocation should follow 100 minus current age rule. If you are 80, equity allocation basis overall assets should be 20%. Never mind doing up asset inventory and asset allocation check on overall capital basis is rarely focused on.

Well, I don’t subscribe to this “general opinion”. In personal finance, “personal” comes before “finance” and any generic statement does not take into account investor specific financial situation.

What if an 80 year old:

-          Has assured income which is at least 1.25 times his / her regular expenses? To top it up, he / she also has at least 3 times of annual expenses deposited in safe fixed rate investments to take care of any contingency needs

 

-          If no assured income, has at least 10 year of expenses squirrelled away in safe fixed rate investments

 

If the answer to either of these questions is a resounding yes, then I would say – yeah, you can go ahead and consider risky equity investments for the new capital coming your way. You have the capacity to take calculated risk.

Off course, whether you do it or not depends upon your willingness to take on risk. 

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