Age Group Risk Analysis Paper

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Introduction The Objective of making any investment is maximizing income and minimizing expenses. Each individual in the stock market is therefore assumed to behave rationally when pursuing personal benefits. According to Obienugh, when faced with an investment opportunity, each investor in the stock exchange makes a calculated decision on whether to invest in a particular stock or how much to invest . All these decisions are influenced by different factors. The risk assessment is a very important decision to make, however risk can vary from one individual to another. This study is aimed at investigating some of the factors that influence individual investor behavior. The main focus of the study is on the demographic factors that affect …show more content…
This is why studying the demographic factors affecting investment in the stock market is important. Age is one of the key demographic factors to look at when considering factors that might affect investment . This is because age has a close linkage to risk averseness. A study by Porteba indicates that demographic changes have major implications for investment risk and returns . The ever declining birth rates and ever- increasing number of seniors could mean disaster for the stock market. Center for Disease Control (CDC) has from time to time warned of the frightening implications of the aging population in America . By the year 2030, the number of old people in the U.S. is set to increase to about 20 percent from 12.4 percent in 2003 . Due to these age changes, experts believe that the rise in the aging population will result in asset meltdown. Asset meltdown arises as the gaining population sells their stocks so as to get money for their …show more content…
The age group that generally invests a lot in U.S. stock market in increasingly moving into retirement. With retirement, most people tend to be risk averse because they have limited source of income . On the other hand, young people tend to be ambitious, so they are willing to play around with their portfolio and see how it all turns out. The main different between the younger generation and the older generation is the aggressiveness with which they make investment decisions . Older people are more likely to choose conservative portfolio when it comes to balancing between stocks and bonds. In fact, there may not be much of a difference between the stock portfolio of a young individual and that of a retiree apart from the amount of stocks that each owns . Therefore, investment behavior boils down to the risks that each of the age group is willing to

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