How To Talk To Seniors About Reducing Investment Risk

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Senior couple with financial adviser. Isolated on white background.

No matter what your age might be, whether you’re young or in your senior years, investment comes with risk. Although this is the case, many still choose to take the risk and see where their investments take them. Some end up doing great while others, not so well. If you are close to a senior who partakes in the investment world or is thinking about joining, there are a few things you’ll probably want to discuss with them in order to ensure that they take the least amount of risk possible while still giving them the option to reap the rewards.

Investing at a young age compared to investing in your retirement

As stated above, all investment comes with risk, but those who invest at a younger age tend to take a lot more risks with their money, whether it be through stocks or real estate or another investment outlet. Generally speaking, taking higher risks when you’re younger is a common way to invest as you’ll have a lot more time to recoup your losses should your investments turn not go well. The same cannot be said for those who invest in their later years. In fact, investments should be low risk and short term. The reason being is that you don’t want to risk a large sum of money in a high-risk investment just to lose it all. If you’re retired and your working days are over, you’ll have no means of re-building your income or savings. Also, deciding to take part in a long-term investment would mean the possibility of never seeing the benefits of your investment.

How to start the investment conversation

Because no one likes to be told what they should or shouldn’t do with their money, it’s best to start the conversation by expressing how you want to make sure that you’re able to help in the best way possible. Once they realize that you’re on their side and not there to direct them, yet rather to assist in the decision-making process, the rest of the conversation should flow rather nicely. Talking points include but are not limited to: types of investment opportunities out there, which of those opportunities make the most sense, how to reap the investment rewards and what to avoid and consider.

Types of low-risk investments

There are a few different types of low-risk investments that seem to be favorable with an older crowd, as well as with all the other age groups. Those investments include bonds, annuities, exchange-traded funds, mutual funds and real estate investment funds. Each of these are different in nature and offer different time-frames and interest rates. Because of this, one may be more suited to your senior compared to the next, making it very much worthwhile to thoroughly research each one before bringing them up in conversation.

Things to consider

Although there are many good investment opportunities out there, not everything is as it seems. Unfortunately, seniors are one of the main targets for scams, meaning that you’ll have to be extra careful if your family or friends decide to go through an investment banker or ad. A key is to never invest in high return, guaranteed schemes. These are most likely fake investments.

Another thing to consider is how much wealth is already in place. If your senior friend or family member has already accumulated a nice retirement and savings from working or previous investments, it might be wise to avoid new investments altogether. Sometimes, it’s just not worth it to risk your current financial state, especially if you’re living well and should continue to throughout the rest of your life.

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