Question

Contrast the interests of young people and seniors. How do they differ in risk aversion, planning needs, and approach to financial planning?

Answer 1

Difference in interest of young people and seniors are as follows-

A. Young people are generally more risk loving and they have a lower level of risk aversion whereas senior people have a higher level of risk aversion and they do not want to take risk because they do not have much age on their side.

B. planning needs for younger people is related to a longer time period and they will be generally looking for such investments which will be returning them higher rate of money and it may involve higher risk but older people generally plan for smaller periods because they will be trying to have uniformity in their life and they do not want uncertainty in their life so they will be avoiding the risk and they will be trying to invest into such security which will we offering them with low rate of return but uniform rate of return like bonds.

C. Approach to the financial planning for the younger people are generally aggressive in nature and they will be trying to maximize their rate of return and they will be mostly contrarian and risk loving in nature whereas older people will be trying to stay defensive and moderate in their approach and they do not like risk and volatility so they will be avoiding any investment which will be leading them to risk exposure.