“EARLY INVESTMENT-BETTER INVESTMENT”

INTORDUCTION:



Responsibility increases with the age and the capability of bearing the risk decreases. The capability of bearing highly strong risk is more incase of young persons and it will be very less in case of people who are about to retire or retired persons. Based on this, an investor has to make a plan for the investment.



Let us have a look at the investment portfolio based on ages.



According to the changing scenario, a lot of investment avenues have emerged to invest money .Out of that some may be of risky securities and some are risk less securities which provides returns to the investors at a given level of risk. At the time of preparing investment plan, age of the investor plays an important role. He is required to consider age, family and other factors at the time making investment .For example, an investor who has retired can make an investment in risk less securities which gives him a fixed income .In case if the time of retirement is more (young), they can make investment in risky securities where the return is also very high along with the risk.



The below table tells how to make an investment by taking in to consideration the factors like age, family , other constraints and so on. Basing on the needs and requirements, an investor can make modifications in the investment .the capability of taking risk differ from one investor to another investor. For Example, if an investor has more no of dependants, his capability of taking risk will be low and vice versa.



Investment avenues can be classified as Gold, Bullion, Fixed Income Securities, Equities and Mutual Funds .Among those Gold and Bullion are considered to be as highly liquid securities ,which also includes savings accounts of the bank. After shares, Fixed Income Securities and Mutual Funds play an important role in investment. Along with these, those investment securities which are prone to less risk also need to be given much importance.



I Age : 22-30 years

It is an age where the investor is single or married having no children. The number of dependents on the investor is also less where there will be a chance to mobilize more savings for the future. Annual income and the risk bearing capability of the investor will also be high. At this time, it is better to make investment in equity shares for a long time i.e. for 5 years. For an investor with in an age group of 22-30 years, the investment portfolio as follows:





22-30 years of age
%

Cash ,Bullion
10

Fixed Income Securities
30

Equity Markets
40

Mutual Fund-Equity Growth
20






II Age: 31-45 years

A stage where the number of dependants will be more children an other responsibilities will arise. More focus will be on protection of investment rather than on returns .The risk bearing capability of the investor will also decreases to certain extent . For the investor more priority will be towards children studies and mobilization of future savings and so on.



31-45 years of age
%

Cash ,Bullion
10

Fixed Income Securities
40

Equity Markets
30

Mutual Fund-Equity Growth
20






III Age: 45-60years

At this stage, more focus of the investor will be towards mobilizing of savings for higher education and marriage of children.He also focuses on future savings to lead his retirement life.Risk bearing capability of the investor will be zero and depending upon his needs ,he is required to change the investment portfolio accordingly.



45-60 years of age
%

Cash ,Bullion
10

Fixed Income Securities
50

Equity Markets
20

Mutual Fund-Equity Growth
20














III Age: Above 60 years

At this stage investor is more focused on enjoying his life with family or doing a part time leisurely work. The risk bearing capability is zero .For an investor at this time, it is better to hold less equity investments and hold more of fixed income securities to earn a fixed income which also ensures liquidity.





Above 60 years of age
%

Cash ,Bullion
10

Fixed Income Securities
70

Equity Markets
10

Mutual Fund-Equity Growth
10






Conclusion: Like this the investment portfolio changes depending upon the age of the investor The proportionate of investment may not be exactly but it may vary depending on the other constraints that are taken in to consideration by the investor.



“EARLY INVESTMENT-BETTER INVESTMENT”



For Example: An investor goal is to mobilize 10 lakhs after 20 years. For one year from now he has to make an investment of Rs14000/- Per annum. If he is willing to make investment after 10 years, he has to make an investment of nearly Rs 60000/- per annum. So get ready for savings at an early stage.