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Writer's pictureMichael Nowacki

Don't Let Demographics Determine Your Investment Approach

Every individual has different goals and risk tolerances, that cannot be deduced from data. People can have similar ages, education levels, and upbringings, but completely different experiences and temperaments.


Consider two people that are 30 years old, both graduated from Ivy League Schools, and each make $250,000 a year. Person A might want to be very aggressive in their investment approach and is willing to tolerate big swings in the stock market. They have a high income and will add when the market is down. Person A might have grown up without money and wants to find a path to achieve wealth more quickly. Or they might have grown up around wealthy people and want to become on an equal level financially. Or they might just enjoy the game and feel excitement about trying to grow savings at a high rate.


Meanwhile Person B is more conservative and wants to have smoother results, even if that means potentially earning less over time. Peace of mind is more important than potential returns this person. High-risk strategies tend to live up to their name if given enough time, so this person wants to avoid losses and feeling foolish after a mistake. Person B might have grown up without money and values their hard earned savings, so they don't want to lose what they worked so hard for. Or they might have grown up surrounded by wealthy and savvy people and don't want to become embarrassed by investment losses. Or they might have tried to be aggressive in the past and lost money and it was painful.


Only you know what type of investor you want to be. It is your job to communicate that to any investment professional that helps you. It is the job of the investment professional to execute the strategy and optimize your portfolio of investments.

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