Personal Finance Wednesday

Good evening??

How has your day been? 

Are you counting down to the weekend? Or having a great work week? 

Our Wednesday newsletters are for Personal finance.?? 

A few days ago, I had a money conversation with an elderly Uncle who’s almost 80. We took the time to go through his entire portfolio and something struck me. Life is in cycles. We start as babies, grow up to become youths, and end up as elders. The same applies to our investment life cycle. At each stage of our lives, how we should invest differs. 

Here is a brief look at how to invest at each stage of life.

Age 18 - 25

Those within this age bracket are either in school or learning a trade. While they may not be earning much, youthfulness gives them room to take as much risk as they can. Calculated risk, however. Being young does not mean one should go 100% all in risky assets. Even if you have the safety net of family and friends. 

70% of your investment portfolio can be invested in high-risk assets such as growth stocks (local and foreign), agritech, and cryptocurrencies. 20% of your investment bucket can go towards medium risk assets such as blue-chip stocks, and a dollar mutual fund. The rest can be invested in low-risk assets such as treasury bills and government bonds. 

Age 25 - 35

At this stage, many people are through with their education or apprenticeship. Income is picking up. Some people may be in mid-tier management. Those that are self-employed would have clocked close to a decade in business, and their enterprises are a bit stable. You can begin to dial back the risk gradually. 

50% of your investment portfolio can go to high-risk assets. 30% to medium risk assets and 20% to low-risk assets. 

Many people may also start a family at this point. It is important to create a portfolio for your kids. For this, you can take quite some risk, as they have a decade or more before the money will be put to use. 

Age 35 - 45 

While earnings continue to climb, risk-taking can be dialed back. 40% of your investment portfolio can go to high-risk assets, 30% to medium risk assets. 30% can be invested in low-risk assets. 

Age 45 - 55

This is the period for many people when their earnings peak. At this point, some of those with kids may have them heading to university. 

50% can be invested in low-risk assets such as treasury bills and government bonds, 30% in medium-risk assets, and the rest in high-risk assets. 

Some people may also embark on building/buying a personal home at this stage. 

Age 55 - 60/65

In the private sector/some parts of the civil service, 60 is the retirement age. For those in this age bracket, this is a period during which they should dial back risk. 70% of one’s investment portfolio should be in low-risk assets. 20% can be invested in medium risk assets and the rest in high-risk assets. 

If you do not have a will in place, this is also the time to do so. 

Two less talked about but very key assets that should be in everyone’s portfolio regardless of age group. These are health and life insurance. 

Real estate is an asset class that can be taken up at any point in time. If low-interest rates are available, one can take up a mortgage from the first or second age bracket. However, due to the costs involved, it should not be the very first asset one invests in. 

Did you find this newsletter interesting?

Please feel free to share with family and friends. If you have any question, you can send me an email at info@themoneyafrica.com

We never want you to miss our weekly newsletter 

Please, join our mailing list here ????

https://bit.ly/38tL3PL

You can also subscribe to our paid platform - www.themoneyafrica.com for more. It costs N10,000 and you get access for a whole 6 months. What will beat that?