As an investor in your 70s, it's important to carefully consider your time horizon and risk tolerance when making investment decisions. Your time horizon is the length of time you have remaining to invest and grow your savings, and your risk tolerance is your willingness and ability to take on
risk in pursuit of potential rewards.
Time horizon is an important factor in your investment decisions because it can affect the types of investments that are suitable for you. For example, if you have a short time horizon, you may want to focus on more conservative investments that offer
a steady stream of income, such as fixed income products (bonds, GICs) or dividend-paying stocks/equities. This can provide a measure of financial security and help to supplement your retirement income from other sources.
On the other hand, if you have a longer time horizon, you may be able to take on more risk in pursuit of higher returns. This could involve investing in more volatile assets, such as stocks or real estate, which have the potential to provide higher returns
but also come with a higher level of risk.
In addition to your time horizon, risk tolerance is also an important factor in your investment decisions. Your risk tolerance is your willingness and ability to take on risk in pursuit of potential rewards. This can be influenced by factors such as your
age, your investment goals, and your overall financial situation.
For example, if you are in your 70s and retired (or approaching retirement), you may have a lower risk tolerance than a younger investor.
As you age, the income withdrawn from your accounts through retirement will decrease the total amount you have invested, which is the opposite of what you’ve been doing all these years saving and adding to your RRSP. This decreasing balance will
have a large effect on your overall time horizon and how long you can invest. Since your time horizon may be shorter, you may not have as much time as younger investors to recover from any market downturns or losses.
This could mean that you are more comfortable with more conservative investments that offer a steady stream of income, rather than taking on more risk in pursuit of higher returns.
Overall, it's important to carefully consider your time horizon and risk tolerance when making investment decisions in your 70s. By taking these factors into account, you can develop a personalized investment strategy that aligns with your individual
goals and circumstances, and helps you reach your financial goals.