- While investing, young investors tend to be in an accumulation phase that encourages them to take more risks and save up for retirement.
- A young investor investing in bonds is likely to generate a fraction of the average stock market returns over the upcoming 40 years.
- As he/she is in a better position to absorb market fluctuations, investing in these bonds is suitable but not the best bet.
- On the other hand, most investors nearing or in retirement prefer protecting their savings. So, they typically allocate a considerable chunk of their portfolio towards income-producing and conservative investment.
- With the years of retirement inching closer, a 60-year-old investor does not have enough time in hand to recover from losses arising due to a bad market combined with an aggressive portfolio.
- For older investors, an investment in treasury bonds makes more sense as they offer higher security and stable returns.