How Does Age Enter into Financial Planning?

Here are some guidelines to use, depending on your present age:

Ages 20 to 40.When you are young, growth of financial resources should be a primary goal; a relatively high degree of risk is tolerable.

Suggestion: Invest in a diversified portfolio of common stocks or in a mutual fund managed for growth of assets, not income. Speculation (real estate, coins, metals, etc.) is acceptable.

Ages 40 to 50. This is the period of time when the 20/20 rule goes into effect, working now for about 20 years and having 20 years more to go before retirement. Stocks are still an attractive choice, but now you need a more balanced approach. Begin to invest in fixed-rate instruments

(bonds), and look into ones that are tax free (municipals) only if your present or near-future income is high enough to warrant it.

Ages 50 to 60. At this point, growth is less important and risk less acceptable. Move a portion of your investments out of stocks and into bonds in order to minimize risk and increase your current flow of income.

Age 60 and Over. By now, the majority of your funds should be in incomeproducing investments to provide safety and maximum current interest.