In order for any one of your investment programs to have a chance of success, there are a number of features that you must consider. It is only natural that we take several factors into consideration on a case-by-case basis, because the investment programs must be tailored to the needs of the individual.
The first factor is the age of the individual investor. A man between 25 and 35 years of age would have an entirely different set of investment objectives from a man in his fifties. The younger man will look forward to the building of an estate throughout the years, as his earning power increases. He probably will be more interested in "growth" securities, while the older man may place great emphasis on safety and current income. Next would probably come the state of his health, since a lack of sound health would perhaps threaten to curtail his earnings, and this in turn might dictate a type of investment program, which would emphasize safety of principal above all else.
The number of dependents and their requirements will certainly have a bearing upon the objectives to be attained by any program, since such matters as food, clothing, shelter, and general living standards will be reflected in the total family budget, and this in turn will relate to the total available funds. For example, Will Windowglass has a wife and three children, while Lawrence Lawnmower is married and has no children; it is quite apparent that the former will carry quite a sizable amount of life insurance in his over-all program, while the latter may find other forms of investment more attractive and more suited to his needs. Other things being equal, Will can scarcely match the total amount that Lawrence will have available for investment, since the latter has fewer family responsibilities.
The individual temperament of the investor is quite important. Some people worry about any risks, regardless of size; some worry about things that might happen and could cause disaster. Such persons should place their funds in investments that promise the highest degree of safety, such as good-quality bonds; they would never be happy otherwise. In the field of investment, as in all other cases where risks must be assumed, there is no place for the man who tortures himself when he takes them. Peace of mind is far more important!
Economic status determines in advance the funds that the investor may have available. Some occupations may allow only a modest degree of financial improvement throughout life, which will, in turn, limit the range of one's investments. Other occupations may place no obstacles in the way of continual financial gain, coupled with still greater future possibilities in the field of investment. A wealthy individual will be concerned over the taxation factors, as much even as he may be with the income itself, while those of more modest means will be satisfied with an entirely different set of objectives in setting up their financial program.
Age and economic status are very important investment factors and should be considered before you put together your portfolio. It is vital to understand how your portfolio will mature over time, how long you might have to watch this process and whether you have plans in place to distribute the funds amongst your dependents in the case of your demise. Although time-consuming, this can be a one-off process -- and a good broker can make it practically painless. One afternoon in his office and you can be secure in knowing your investment is safe.