Why Risk And Age Aren't As Tied As You Think

In the investing world, the standard thinking seems to be that the older you get, the less risk you should take on. But Charles Schwab’s Liz Ann Sonders says that’s not always the case.

In an interview with Bloomberg Business, Sonders says that in determining risk levels, investors need to ask themselves, What will cause me to make a mistake? If you are the type of investor who will sell when major declines hit because of the emotional stress, for example, you should not be taking on large amounts of risk — even if you are only 25 years old, Sonders says.

Sonders also talks about the importance of investor sentiment, saying that if she could only focus on one indicator, it would be sentiment. And she talks about how shifts in sentiment in recent years have been occurring much more quickly than they used to.