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  1. #91
    Senior Member
    Join Date
    Aug 2013
    Posts
    525
    I started using this calculation for friends and family considering investments in low med and high risk ventures.

    Low Risk = GIC / Bonds/ TBills etc. = Factor of 1-5 (based on term and Backing) (50 - 100% % of portfolio - age based)
    Med. Risk = Stocks (Blue Chip) Copper / Silver / Gold mining stocks etc. Some tech. etc. etc. - Factor 6-20 (based on co. research) (10-40 % of portfolio - age based)
    High Risk = Startups / Penny Stocks / Emerging Markets (Iraq etc.) - Factor 21-30 (based on research / stability) (no more than 10% of portfolio / age based)

    Then we take the age into consideration and life expectancy.

    For example, avg. life expectancy in the US is approx. 78 years. (you can go into more detail, male vs. female, but we start here)
    https://www.google.ca/#q=average+life+expectancy+usa

    If your age is say 55 and the risk factor is sitting at 30 (Iraq / emerging markets / IPO / New Venture SX) my friend / family member is discouraged from participating in that particular market at any level. 55 + 30 = 85 - exceeds benchmark of 78

    Yes.. I realize the rule of thumb is older = less risk ... but this puts it into better perspective for people. (i.e. you will likely be long gone before experiencing a return)

    I encourage all of them to do their own research.

    You can manipulate and alter the factors to suit your own needs but we have found this a good starting point that has worked well - so far so good.

    All the best.

    CG
    Last edited by ChinaGirl; 04-20-2014 at 03:36 PM.

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