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Advance Age Wise Assets Allocation Method

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ARTICLE ADVANCE AGE WISE ASSETS ALLOCATION METHOD
- Nikhil Srivastava Age plays a crucial role in our life. As our age increases, our life decreases. It implies that age and life of a person have negative correlation. We know that life of a human being is divided into four stages namely childhood, adolescence, youth and old age. In childhood and adolescence we have more desires which we are governed by, whereas in matured and older age we have more needs and we work for fulfillment of the same. When a person is ruled by desires, he has more enthusiasm but when he works for his needs, he is not much energetic. For example, at a younger age we like to play and we play without being afraid of injuries because at that age human body has good resistance power and injuries get cured easily. But as we grow in age we avoid playing, though games lure us but we don't like to take any risk of getting injured. This is human nature. It is now obvious that when we are grown up, there is loss of energy and self confidence. This human behavior is evident in a person's investment strategies as well. In early part of our earning life we usually invest more in shares in comparison to debt market. But as our age increases we invest more in debt and less in equity, because now we invest for fulfillment of our needs, rather our desire and when a person invests for his needs he doesn't want to take any risk. This is logically true, because as person grows his risk tolerance level decreases. Let's see it in financial term by an example. Suppose Mr. X at the age of 30 invests all his money in equity (Rs. 500000), and if he loses this money, he has remaining 30 years to recover this amount as it has been assumed that the working life is 60 years,
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whereas Mr. Y who is at the age of 50 years invests all his money in equity (Rs. 500000) and if he loses his money then he has only 10

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