Tom Terzis Explains the Different Investment Focuses for Millennials, Pre-Retirees and Retirees

While people from all generations should focus on investing their money and taking care of their portfolios, each generation should have a different focus when it comes to protecting their financial future. People of each generation, from Millennials to retirees, have special concerns when it comes to managing their money. No one should keep the same financial strategy throughout their lives, but rather they should adjust their savings and investment plan for each stage of life.

Tom Terzis, an Independent Wealth Specialist situated in Toronto, explains the ways in which people in every generation can make the most of their money and ensure their future security.

Millennials
While the popular perception may be that Millennials are just starting out on their own after college, the oldest Millennials are already nearing 40. This is a time when investors need to pay particular attention to their financial futures.

Younger Millennials need to make sure that they start investing as soon as possible; even as soon as they have their first jobs. The most important aspect of compounding interest is to start investing as early as possible so that your money has time to grow. Putting even a small amount of money into an RRSP at a young age means that they will be able to retire comfortably thanks to the principle of compound returns.

For example, if a young worker puts $50 per month into their RRSP starting at the age of 22, assuming a 50 percent match from their employer and raising the amount contributed each time there is a pay raise, the worker would have $1 million by the age of 65. Since many investors contribute the maximum amount to their RRSP to take advantage of full employer matching, the potential for growth is outstanding.

Millennials, according to Tom Terzis, often make the mistake of neglecting their financial future. When they are strapped for cash in their daily lives and struggling to pay back high-interest credit cards and student loans, investing may be a low priority. However, they must take advantage of the long years ahead for them before retirement.

When it comes to investment, young people who are just starting out with investment can carry higher risks. Taking the time to sit down with a financial advisor like Tom Terzis can help Millennials navigate the difficult parts of making an investment strategy.

One aspect of financial wellness that many Millennials may overlook is life insurance. This is especially critical when they start families of their own. All Millennials should look into life insurance and how it can benefit them.

People in the Millennial generation need to be reminded that their financial decisions will carry great weight throughout their lives. Fortunately, most Millennials do not deserve the irresponsible reputation that they have been given by older generations.

Pre-Retirees
Workers who are entering their late 40s to mid-50s need to take extra care with their money. It is time to pull out of high-risk investments and balance their portfolio to provide a steady stream of income in the pre-retirement years. People in this age bracket also frequently have high expenses from children living in the home, including college tuition.

Pre-retirees need to make sure that they have a solid base for their financial future. If they have continued to contribute the maximum amount toward their RRSP and investment accounts, they should be in good shape. If they have a spouse at home who has not been in the paid workforce, they will need to make sure that they have saved enough to cover their needs into retirement.

This may be a good time to minimize high-risk investments and to switch to a less aggressive financial strategy. Retirement could be only five to ten years away.

Retirees
Just because a person has retired does not mean that they should stop investing. Taking advantage of lower-risk investments means that retirees can continue to grow their portfolios. Investments like CDs, money market accounts, and bonds are excellent options.

Retirees must be sure that they have provisions for long-term care. They should also not expect to rely on Social Security for retirement income, as Social Security provides a poverty-level income when used on its own. Most retirees would prefer to continue to travel, support less fortunate members of their families, and gift some of their assets to younger relatives.

Retirees also need to be careful that their funds do not run out during the course of their lives. Retirees are living longer each year thanks to medical advances, and women often outlive men. Taking these points into consideration means that retirees will be able to create a secure foundation for themselves.

Creating Security
Investors in all age groups should be careful with their money, explains Wealth Specialist Tom Terzis. At younger ages, they can take more financial risks for greater rewards. As they age, they will need to pull back their levels of risk so that they have a better foundation for retirement.

Tom Terzis asks all investors to carefully consider the consequences of making financial moves at any stage of life. At any age, investors need to be sure that they are making the most of their money.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.