Equities have provided higher returns historically and will continue to do so over the next decades. Investors with a longer time horizon shouldn't be concerned with day-to-day volatility and are the best prepared to benefit from positive long-term returns.
It's important that this cohort of twenty-somethings invest early and often because there may not be a government safety net (Medicare and Social Security, for example) by the time they need it. This generation must learn self-reliance.
In general, I am comfortable with portfolios invested 100 percent in stocks until the client reaches about 40 years old. Between 40 and 60, it is generally appropriate to introduce fixed-income investments. But choices about how much fixed income and equity volatility a client should have depends on an individual circumstances and resources, and should be decided through in-depth conversations with the investor's financial adviser.
People in their 20s will never have a better money-making opportunity than now, but they must learn to pay their bills, save and then spend what's left. Not, pay bills, spend and save what's left. They must develop discipline.
Source: Michael Farr, CNBC
The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.
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