It seems to be common advice that a retirement portfolio should be invested aggressively when one is young, and conservatively when one is older and closer to retirement.
Is this good advice? Shouldn't I just pick some risk level and stick with that throughout?
Consider this:
You're 20, the year is 2008, and your $15K savings are slashed in half because S&P500 crashed. In 50 years, when you need to go to groceries with that money, the S&P500 has gained 2000% since.
Now consider you're 70, the year is 2008, and your $15K savings are slashed in half because S&P500 crashed. But now, you're going to the groceries the next day. You don't have any more 50 years to wait for S&P500 to go back up. Now your budget for retirement is halved within a couple of months.
Since the tolerance to risk when you're retired (or close to be) is significantly lower than when you're young - the investment choices should be changed accordingly.
So yes, it is a good advice.
