With money from a summer job, financial advisor Rick Ferri's daughter made her first stock market investments in 2008. Soon the markets—and her investment—tanked. Though just 20, she panicked and told Ferri, president of investment management firm Portfolio Solutions, that she couldn't stomach the volatility and was ready to call it quits.
Though Ferri talked his daughter out of selling, the story emphasizes why investing based solely on age—an increasingly popular way for investors to access diversified portfolios—can lead them astray. Most young investors, after all, don't have a father who is a financial advisor, who can talk them out of selling at the wrong time.