Bloomberg View - Investors are constantly reminded that it's impossible to avoid risk in their portfolio. People are worried about geopolitical risk, interest rate risk, liquidity risk, losing money, volatility, uncertainty and the permanent impairment of capital. The list could go on forever.
Getting older is a double-edged sword when it comes to your investment abilities. On the positive side of the ledger, as you age you gain valuable experience in the markets, your assets should be growing and you should have learned to avoid costly mistakes. On the other hand, these longer life expectancies lead to a higher chance for cognitive decline in your later years that could prove to be a huge risk to your assets and ability to manage money effectively.
A recent research paper, Risks in Advanced Age, by Michael Guillemette, a professor of financial planning at Texas Tech University, outlines why it makes sense for older investors to pay attention to the risk of cognitive deterioration.