Finance & Accounting
Pages 4 (1004 words)
Kristin Decides to Try Her Hand at Investing Your Name Instructor Course Title 01/24/2012 The options open to an investor, especially a young investor, that the choice can seem overwhelming to those with no experience in the financial benefits of personal earnings.
Younger persons also tend not to be responsible for dependents, large assets, and, in many cases of young professionals, their own health coverage. An older person, however, is by his or her nature more risk-adverse, since there is a more limited time span in which to make up potential losses due to investments. Consequently, investing is more confusing for the younger investor like, in this case, Kirstin who is a 26-year-old female potential manager. Although Kirstin has to build for the future by selecting more secure investment options, she should also try to maximize her gains by taking on more risk than the average investor did. This is not to say that Kirstin should become a gambler with her money on the stock market; rather, she should look to expand her capital in a safe, prudent manner. Regardless of an investor’s age or level of risk-aversion, one should always seek diversification as a first principle (Melicher & Norton, 2008, p. 8). Even though Kirstin does not have a large asset pool to pull from in terms of seeking out investments, she ought to seek out holdings in as many asset classes as she can. This means that spreading her assets between equities (blue chip and growth), bonds (corporate and municipal), cash equivalents, and commodities. ...