Ask Stacy: Am I Too Old to Buy Stocks?

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Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.

If you’re not typically a video watcher, give it a try. These videos are short and painless, and you’ll learn something valuable. But if you can’t deal with video, no problem: Just scroll down this page for the full transcript of the video, as well as some reader resources.

Today’s question is about age and investing; specifically, whether someone approaching 80 should have money in stocks.

Years ago, when I worked as a Wall Street investment adviser, I had plenty of seniors as clients. But that doesn’t mean stocks are for everyone. Are they for you? Here’s how to know.

For more information on this topic, check out “11 Pointers to Investing in Your 60s and Beyond” and “13 Dumb Investing Moves and How to Avoid Them.” You can also go to the search at the top of this page, put in the word “investing” and find plenty of information on just about everything relating to this topic.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Stacy Johnson: Hello, everyone, and welcome to your Money Q&A question of the day. I’m your host, Stacy Johnson. This question is brought to you by Money Talks News. We’ve been offering the best in personal finance news and advice since 1991.

Today’s question comes from Mary. Mary says, “I’m 79 and wondering if I’m too old to invest in a stock mutual fund. Do not want to assume high risk, so would you recommend, or not?”

Well, Mary, I spent about 10, 11 years as an investment adviser in a retirement area. I lived in Arizona. There were lots of retirees, so I had plenty of clients investing in stocks and stock mutual funds who were well over 79 years old. So, the answer to your first question — Are you too old to invest in mutual funds? — is, “No, you’re not.”

What matters more than age is when you’re going to need that money. If what you’re doing is trying to create an estate — in other words, you have more money than you probably are going to spend — then there’s nothing wrong with putting some of it into risk assets like stocks.

My rule of thumb — as you may have heard many times if you’ve been watching these — is taking your age from 100, then putting that percentage of your long-term savings into stocks. So, if you’re 80, take your age from 100, and that leaves 20. That’s about the maximum percent you’d typically want to put in stocks.

Now, if you’re going to need that money sometime soon, or could, then you don’t ever put it in risk assets, period — stocks or anything else. That’s the first thing you need to know.

Number two, how to invest. What I’d advise is to use what’s called “dollar cost averaging.” That means investing a little bit on a monthly basis, rather than investing a lump sum in at once. Why? Because when you invest a fixed amount into a fluctuating asset, you’ll automatically buy fewer shares when prices are high and more when prices are low. Over time, that’s going to give you better performance. It’s also going to relieve you of a lot of the stress that occurs when you invest everything at once only to watch the market go down the next day.

Final point: If you’re worried about investing in stocks, don’t do it. When they see the market going up every day and they’re not in it, it’s easy to feel bad: It’s called FOMO, or the “fear of missing out.” But if it’s going to bother you to invest in risk assets — and maybe it would, since you’ve never done it before and you’re 79 years old — don’t do it.

There is no investment return that’s worth staring at the ceiling at night. So, if you’re all right the way you are, don’t feel forced to change.

I hope that answers your question, Mary.

Let’s close with our financial thought of the day. This one comes from Oscar Wilde — it’s one of my favorites: “Anyone who lives within their means suffers from a lack of imagination.” Like it? Steal it! Have a profitable day, and meet me right here, next time.

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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