What is the Perfect Age to Become a Trader?

This week on the Talking Wealth Podcast, Filip and Pedro break down decades of research papers to finally answer: What is the perfect age to become a trader? The answer surprised us, but along the way the boys stumbled across something even more revealing. By comparing everything from day trading to long-term investing, the research unexpectedly uncovered not only the best age to start, but which style of trading may actually give you the greatest chance of success.

• 0:01Speaker 00

  This podcast is brought to you by Wealth Within, a global leader in stock market education. For more information on our courses, head over to wealthwithin.com.au. Please note that the information in this podcast should not be considered personal financial advice. Enjoy.

• 0:20Speaker 01

  Welcome to the Talking Wealth podcast. I'm with Phil and Pedro. Now, today we have a very interesting podcast for you. If I want to start it off by saying, if you could choose the perfect age to start trading, what would it be? Would you start at 18, when you're young, sharp and have decades ahead of you? Would you wait until 30, when you've actually got some money and life experience? Or could you do it in your 40s or even 50s? Could they be the sweet spot? Now, there is some fascinating research around age investing and financial decision making, which we're going to dive into. And we're going to find the, give you the exact age that all this research comes and not only

• 1:04Speaker 01

  dive into the age of the best time to start trading, we're also going to dive into, by accident, we uncovered in this process, what type of style at what age really helps give you the best chance of success. So today we're looking at the numbers. Pedro, welcome. How are you, mate?

• 1:28Speaker 02

  G'day, Phil. Look, can I, can I choose age of 18, but knowing what I know now? Is that an option?

• 1:37Speaker 01

  Well, if you've got a time machine, then yeah, mate, by all means, go for it.

• 1:41Speaker 02

  But that would be ideal.

• 1:44Speaker 01

  I think, I think what you're, the word for what you're saying there is hindsight. And don't we all wish we have hindsight in our...

• 1:56Speaker 02

  Oh, yeah. If I could grab 18-year-old Pedro, grab him by the neck and say, mate, I've got something to show you. Get your head out of the gutter.

• 2:07Speaker 01

  Yeah. And the thing is, I mean, I started, you know, this, looking at, or I came to Wealth Within, you know, 20 years ago now, pretty much. So for me, it's like, I started on this experiment and we dive into the numbers. I'm that 18-year-old that is a thing. And I can talk from experience about what I was as an 18-year-old, or how I thought about money, how I thought about trading, to how I think about it now, is, there's two different human beings. So yeah, I think it's a good podcast because I can at least talk to, living through this experience somewhat, or not somewhat, living through it. And so it'd be interesting. Yeah.

• 2:53Speaker 02

  Absolutely. I mean, I had a bit of a financial awakening myself at 18, you know, I was in debt quite, you know, quite heavily. And then that's where I got, you know, tried to get out of that debt. And I took different avenues. Eventually I chose property. So I did take a different route for many years. And my trading journey started a little bit later. Yeah, I think it was in my late twenties where I still really started to get into, into the, the trading. But yeah, I took that route, property, but still wanting to learn about financial literacy, which was good. And I think that, I think that's probably a different subject though, right? If you're talking about learning financial literacy,

• 3:34Speaker 02

  that should definitely start, I would say, high school even. But trading in particular is what we're going to talk about, right?

• 3:42Speaker 01

  Yeah. And we're also going to cover that. I mean, it's an important point. We are going to cover the financial literacy side of things. But I mean, you know, even, you know, you starting in your late twenties, you're 50 now. So you've, like, you've got a good 30 years experience.

• 3:56Speaker 02

  Thanks, mate. Aged me about, about 15 years, but you know.

• 4:03Speaker 01

  No, just kidding. You're a young man. All right. Let's, let's get into it now. I want to start with an experiment. And just to, you know, really get people thinking about this. Now, take $10,000 and assume purely for, for, you know, hypothetical reasons, that it compounds at 8% annually with no additional contributions, because that's really what's sold to you by a lot of passive type investors, especially super funds, saying, well, you know, your money compounds at an X amount per year annually. So just leave your money in the market. Don't try to get in it. Don't try to get out. Let it sit there

• 4:47Speaker 01

  and you will have X amount of money by the end. And that is all good and well, in theory, until you're the poor bugger that has to retire in 07. Or, or, you know, that doesn't really tell you about what's possible if you could actually not ride the downturns and only participate in the upside. And for some who are looking at that saying, well, yeah, that's a perfect scenario. And the answer is, even if you weren't perfect in that pursuit, even if you didn't, you know, stay out of every downturn, if you stayed out of most, and if you think that's impossible to do, all you need is a chart and some of our skillsets that we teach. And you'll see with your own eyes that it's very, very possible.

• 5:31Speaker 01

  The, you look at compounding differently. But anyway, let's go to this experiment. You're 18 and you've got until 65. So if you invested that 10 grand at 18 and you leave it until 65 years old, you, you have about $373,000 at 8% a year. If you start at 25, you've got about 217 grand. If you started 35, that, you have about 100,000. If you start at 45, well, a third of it. If you start at 45, you have about 47,000. You start at 55, obviously 21,000. Same starting capital, same hypothetical return, only variable this

• 6:11Speaker 01

  time. So if we're asking, what's the best age to start investing? If you're talking about theory compounding, it's hard to argue that as early as possible is better, right?

• 6:26Speaker 02

  Yeah. In a perfect world, in a linear world, right?

• 6:32Speaker 01

  But that's investing. Trading is very different. And if you're an 18-year-old, for example, that has massive advantage when it comes to compounding, but that massive advantage in compounding could also be the exact massive disadvantage when it comes to experience, behaviour and decision making. Because as a trader, they're the three things you need, you need to be successful. And this is where this research that I did, becomes very interesting. So basically, there was a major paper called The Age of Reason: Financial Decisions Over The Life Cycle Examined, which examined the financial behaviour across

• 7:14Speaker 01

  10 different credit markets. Now, what researchers found was this U-shaped relationship between age and financial mistakes. So, young adults made more mistakes, older adults made more mistakes. And in the middle, there was a sweet spot. Now, the age at which fees and interest payments were minimised was approximately 53 years old. So, this paper basically proposed an explanation saying, you effectively have two forces moving in opposite directions. The first force is experience, which generally increases as your age goes up. You've made

• 7:58Speaker 01

  decisions, you've made mistakes, you've seen different economic conditions, which is a big one. You've hopefully accumulated financial knowledge. But going against that force is the cognitive performance force. So certain cognitive abilities eventually deteriorate with age. So imagine those two lines crossing. When you're 20, you have right, high raw cognitive ability, low experience. At 40, you've got high cognitive ability, which I'm not so sure about that, because I'm having to start to wear glasses at 40. So I don't have my cognitive ability with my eyes, but...

• 8:34Speaker 02

  Yeah, of course. And also, there's chosen cognitive ability. There's some things that you're more cognitive to than, than others, I would say, as you get older.

• 8:46Speaker 01

  I thought you were going somewhere else with this in terms of physical performance.

• 8:50Speaker 02

  Not talking about the blue pills either, no.

• 8:52Speaker 01

  That's exactly where you were going with this, but I'm glad you weren't. Yes. So, at 40, obviously, you know, your cognitive ability for most people is still there. I mean, the brain's as sharp as ever. But you've got much, much greater experience. Now, this is where the study became interesting. Around your 50s, you have very high accumulated experience, while the cognitive ability can still be strong. Now, eventually, experience remains high, but you get decline from, from, you know, age-related cognitive decline. And so, the researchers argued that the interaction between experience and cognitive performance could help explain why financial outcomes followed this path. Now, it's important

• 9:37Speaker 01

  to note that this study wasn't studying traders specifically. It examined financial decisions, including borrowing. So, you know, we're not saying traders peak at 53, or they, or the best time to be a trader is 53. We're saying, one major life cycle study found financial mistakes were minimised around the age of 53. So, it's very fascinating because, you know, could a trader actually become better through their 30s, 40s and be the best, the best version physically to become a trader at 50s? Is that the right age? Because really, when you talk about trading, it's, a major part of it is mistakes, minimising mistakes.

• 10:24Speaker 01

  And

• 10:25Speaker 02

  The scars that you've got, that you've carried through and that you remember.

• 10:29Speaker 01

  Yeah, yeah. And, and, um, you know, have, are you, are you sound? Are you, are you more, um, I mean, I, I know personally and, and even physically, a twenty year old, the amount of testosterone pumping through their body, you look at the world very differently than you do at forty.

• 10:48Speaker 02

  Oh, yeah.

• 10:48Speaker 01

  Or fifty. Um, there is just two different speeds operating at life. And then when you attack that to the market, I know personally today, the version of me today is a much better market participant. If you took away all the, the knowledge, um, and you took away all the experience and all that stuff, and you just, from purely the way physically, uh, you know, the calmness, the patience, all of that stuff compared to twenty, I would much rather take this version physically to the market than, than the, the twenty year old version. And it's not to say

• 11:24Speaker 02

  Yeah.

• 11:25Speaker 01

  that, that, you know, trading at twenty, you, you, there's no chance for you because I, I did. So it's not to say that, but with everything known, maybe this is, this is a good lesson for those young guys to go, hang on a second, this is some good information. I'm looking at a, almost a time machine forward about the skills that these, these studies show are the best skills to have, um, for the greatest chance of success. And if I don't have those, those, um, traits right now in my twenties, if I'm completely opposite and it's not working for me, well, maybe I need to rethink me,

• 12:03Speaker 01

  um, and how I'm attacking things. Maybe I need to slow down. Maybe I need to, you know, not pump the pre-workout before I jump on the computer or, or, um.

• 12:14Speaker 02

  Yeah, that's not a good idea. We shaking, shaking the mouse around quite a bit.

• 12:20Speaker 01

  Um.

• 12:20Speaker 02

  You know? But you know, I would actually also carry that a little bit backwards. And, and what I mean by that is that, you know, we say that experience increases with time and, and so on. And of course you get more, more careful, you get more disciplined and, and you actually become more constrained in the market. But I would also add that you can actually, um, learn from your younger self as well. Because what I've noticed, you know, speaking to many students, you know, in different age groups and, and even observing myself, my risk tolerance has become a little bit lower. Uh, whereas, you know, back in the days, your risk tolerance, you're like, mate, I'm gonna go all in, but you don't have the experience.

• 13:02Speaker 02

  But now that you do have the experience and, and you can go all in, you don't because your risk tolerance has, has declined. So I would say uh, to everybody, uh, understand your level of experience and use that, but also remember your young self. Remember that person that was like, you know what? Let's risk it. Let's risk a little bit because it does take risks to be in the market.

• 13:25Speaker 01

  I think that's one of the best things you've ever said because it honestly, it's so true because you get scarred with age, with age just by life. I mean, naturally you become less, you know, I mean, and you've got to think about all aspects of like, like in your twenties, if someone offers you something that looks like a Panadol in a nightclub, you, you'd very, uh, without hesitation, um, you know, uh, have, have the medicine and have a great time for the next twenty hours. But, uh, these days, you're forty and you've got a headache and you don't want to mix a Neuraphin and a Panadol because you might, um, you know, the packet says it's no good. So I get, I get your point. It's, it's a huge point, um, to make because

• 14:10Speaker 01

  now you've got all the skill, you've got all the, all the, you've prepared the, the F1 car, ready to operate at its full potential, full speed, and you, you then decide because of life, you drive it only at sixty Ks an hour and, and, and it's true. And, and I mean, that leads in very well to the next point, which is, um, you know, uh, this other, uh, idea that, um, and it comes from a, a long, long, I've got to say this right, longitudinal research, uh, from recent longitudinal research, um, using German adult skills data,

• 14:48Speaker 01

  which found average cognitive skills can continue improving while into adulthood. So this is another, a piece of, uh, research that I, uh, went over. It said, average literacy improved, uh, into roughly the forties, uh, so forty year olds, while numerously showed stronger declines later. And people who regularly use their cognitive skills performed substantially better as they aged. Now that is interesting with that. This is very interesting as we're heading into the age of AI where we're, uh, I mean, we are using our brain to some degree. I think we're using our brain a lot more by thinking, you know, the thought part of our brain is, is I think on another level with AI, it forces you to

• 15:33Speaker 01

  think and ask good questions and, and try to get answers. Curiosity is increasing, which is awesome. Curiosity, I think, is one of the most important things for humans, um, for the evolution of humans. And, um, but on the other hand, the, all the other elements are being done by the AI. So, uh, you know, calculating and reading and all that stuff. It's like we can just get summaries now. So it's important for traders because, you know, trading is not a hundred meter sprint. You're, you're using things like pattern recognition, probability, memory, risk assessment, emotional control and all the accumulated experience that you have. So some of those abilities will decline with age. Others will benefit you enormously from experience. So

• 16:18Speaker 01

  the question is, would you rather give a hundred thousand dollars to, a hundred thousand dollars to an incredibly intelligent twenty year old who's traded for six months? Or a switched on forty five year old who's experienced the GFC COVID inflation rate cycles, bull markets and bear markets? So.

• 16:37Speaker 02

  Well, we've got a, a good example of that recently with this, uh,

• 16:41Speaker 01

  Leo.

• 16:42Speaker 02

  situational awareness guy, twenty two, twenty four year old.

• 16:45Speaker 01

  You've got to say it right. It's, it's not situational awareness. It's non-situational awareness. That's.

• 16:52Speaker 02

  Right, yes.

• 16:53Speaker 01

  That's what, that's what's going on there.

• 16:54Speaker 02

  Oh, he forgot that part. That's why he, he messed up.

• 16:58Speaker 01

  He did. He forgot, he forgot to understand the situation he was walking into. Mate, this ain't your AI research paper with your, uh, with your robots and you're, you're, you're coming into the big boys world of, of volatility, of putting your, your money on the line and, um,

• 17:18Speaker 01

  and different, different bulls live around here. They ain't, they ain't just your, uh, oh, my, my research paper says this, so it's gotta be that. Yeah?

• 17:28Speaker 02

  Exactly. Well, the market says otherwise.

• 17:30Speaker 01

  Let's say when the big funds sniff out how leveraged you are and go, thank you, buddy.

• 17:35Speaker 02

  Yeah. And, and that, that bull, uh, came with the name of, uh, Mr. Ken, Kenny boy, Ken Griffin. I think he sniffed blood and, um, took him out.

• 17:45Speaker 01

  Yep, exactly. So, um, I think the bigger question I've given, we've asked that is raw intelligence isn't necessarily market intelligence. And, um, you know, from what we saw from Leopold, I think the big question is, does experience actually make you better?

• 18:05Speaker 01

  Now, we have to be careful here because there is research showing that investors can learn from experience, no doubt. Uh, an article, Nicolosi, Peng and Zhu, um, which was an article, uh, they examined individual investors and found evidence consistent with learning investors who whose previous decision demonstrated greater ability subsequently tended to achieve greater trade profitability. So, um, another research, a major paper called Learning by Trading found something much more nuanced. Now, in this paper, researchers followed individual investors' records over nine years. They found two forms of learning.

• 18:49Speaker 01

  Some investors genuinely improved, but others learned by discovering that they weren't particularly good at trading and stopped trading. So it's really, really important because when researchers only examine traders who survive, it can look like everyone gradually improves, but they don't. Some improve, some disappear. And the authors concluded that ignoring investors who can quit significantly exaggerates how quickly traders appear to learn. It's just like the employment numbers. The employment numbers look much better sometimes, not because everyone's employed, it's because people stop looking for work.

• 19:25Speaker 02

  Yeah. Um. This, in this case, it's, it's traders falling off.

• 19:30Speaker 01

  Yeah. And so this is the big, I mean, this is a good discussion point, I guess. Um, you know, ten years of trading experience

• 19:39Speaker 01

  and one year of experience repeated ten times.

• 19:42Speaker 02

  Hmm. Yeah, it's like, uh, like what Bruce Lee says, you know, uh, practice one kick a thousand time or, or practice a thousand kicks one time.

• 19:51Speaker 01

  Especially if you're practicing it wrong. So

• 19:53Speaker 02

  Yeah.

• 19:54Speaker 01

  simply, simply participating in markets. I think the point is it doesn't guarantee you improvement. So for the experience to be valuable, something's got to change.

• 20:05Speaker 02

  Hmm.

• 20:05Speaker 01

  And so strategy, risk management, positionizing, trade selection, psychology, or an understanding of the market. So what it's basically saying is, just because you spent ten years in the market, does not make you, that experience that you have had doesn't necessarily mean that it's the right experience that's going to make you a better trader.

• 20:28Speaker 02

  Yeah.

• 20:28Speaker 01

  Because you could be doing all the wrong things for ten years, or you could be in a bull market, um, for, for ten years, or you could be doing something that.

• 20:40Speaker 01

  Really, you're getting by, by the conditions that you're in more so than the, the, the strategy or the skill set that you have. And you misdiagnose that for you doing the right thing. And then all of a sudden you get walloped.

• 20:53Speaker 02

  Yeah, I mean, I liken it to those guys that you see at the gym where, where you see them once and then five years later, you see them again and, and they're looking exactly the same. I mean, they've been consistent going to the gym. They've just been doing the wrong exercises. Maybe they haven't been eating well. They haven't been sleeping well. There's so many different factors that you have to join together to actually get the results that just time in the gym. Yeah, they're spending two hours in there. They're, they're puffed out by the end of it. Uh, but at the end of the day, they're not progressing to where they want to go. So I think it's the same with the trader.

• 21:27Speaker 01

  Yeah. And now, now we're going to get into something controversial. This is going to ruffle a few feathers, I think. Um, this is the part where, and this is a part of the research that, that came to us, um, and, and it came to me, um, as we were doing this, but it was a little bit left field, but I thought I have to include it in this podcast and it's, it's day trading. It's a day trading myth, which is the most popular form of trading that is known out there. Everybody wants to be a day trader. They want to be in and out in that, you know, session or day or 10 minutes or hour. And I want to share some statistics on this because at Wealth Within,

• 22:05Speaker 01

  we've, we always promote that, um, you should let the market work for you and for the market to work for you, to ride trends, to, um, really be able to understand and measure price, read price like a language. You need to zoom out and have a look at the bigger picture and allow time to be your friend. I'm not saying that you buy and hold at all, but definitely this whole day trading push that, that has, has been given to our market or to people over the last 20 years. Um, that this study that we're going to, I'm about to uncover will show you some real statistics, statistics on what it has been for people and who's actually really winning. And we know that

• 22:49Speaker 01

  brokers are the biggest winners because obviously you keep pushing that button every day, more commission. That is in their interest. But in terms of the success of it, well, listen to this. So the question, I guess, uh, you know, relating to what we're talking about is what's the best age to become a day trader? And there was a massive study that looked at day traders on the Taiwan, as given where, where you are there, buddy. Um, on the Taiwan Stock Exchange between 1992 and

• 23:28Speaker 01

  2006. Now, the researchers found enormous differences in skill. The very best traders showed persistence in their performance. But here's the killer statistic now. I don't know if you want to drumroll this for me or I need to do it myself. Yep. Yep.

• 23:47Speaker 02

  Yep, that was it.

• 23:48Speaker 01

  That was a terrible effort at a drumroll, but anyway.

• 23:51Speaker 02

  That's all I got, mate.

• 23:51Speaker 01

  Um, less, uh, so basically less than 1% of day traders were able to predictably and reliably earn positive abnormal returns after fees.

• 24:03Speaker 02

  Hmm.

• 24:03Speaker 01

  Okay. And after fees is the important part because the more you churn, the smaller, the, the, the lower the, um, amount of profit you're going for in the day, which it has to be small because in a day, you're probably chasing such a small percentage of volatility relative to a week, relative to a month. Um, and the fees don't change. Um, and so they're much higher when you're chasing such a smaller amount. And I've also experienced this type of stuff where, uh, trying to trade really, really short term in that, in that oftentimes I would trade and, you know, in the day, do a number of trades and, and go, okay, you know, four, five winning trades in

• 24:48Speaker 01

  the day, beautiful money made. And then you go and look at the, and you throw in, obviously there were a few losing trades in there too, but net was four or five, you know, um, positive. And you go and look at the end of the, the, the thing at the end of the day. And for all the trades that were done, let it be if it was 10 or 15, um, whatever the number was, you, the profit was chewed up in commission.

• 25:13Speaker 02

  Hmm, hmm, hmm.

• 25:14Speaker 01

  And it's like, damn, I, I was profitable on what I did, but I gave it all back to commission. Um, and, and so I've experienced that personally.

• 25:23Speaker 02

  Consistency is very hard. You know, my experience with that is that, you know, one day I'll be profitable, uh, next day may not be. And if you're less profitable the next day and you lose what you had the, the day before plus some, then you're, you're at a loss and, and then you've got to try and do it again. So you're going to try to be a day trader. And this is what people think. They could, they sit down in front of their computer and they get to work eight hours a day from a certain time and they can generate money. I mean, but you have to do that consistently. When you have a job, you'll get paid. If you do your job properly, you'll get paid a hundred percent. You've got a hundred percent chance of getting paid, uh, if you do your job, that is. Uh, with trading, this, that's not the case. There's no hundred percent chance you're going to get paid and you're

• 26:06Speaker 02

  doing that consistently every single day, five days a week. Uh, I mean, and 97% chance, I'm, I'm looking at it here, 97% lost money. You really want to play in that field. That's, that's something where the odds are stacked against you. You're, you're saying that you're going to be that, that 3%. I mean, of, of course, everybody tries it when, you know, I've tried it, you've tried it. Uh, but for me, short-term trading isn't day trading now. It, it, it's a different thing. It's, it's days, it's, it's weeks, uh, you know, could go into the month category, but that's what short term trading is. And that's what I've found is, is the most profitable.

• 26:44Speaker 01

  Yeah. And so, um, you know, going off what you said, that 97%, I mean, there was another study, uh, on the Brazilian futures and researchers observed all individuals who began day trading Brazilian equity futures between 2013 and 2015. Now, among those who persisted for more than 300 trading days, so that's people who went for a year, 97% of them lost money. Only 1.1% earned more than the Brazilians, uh, than Brazil's minimum wage and only around 0.5 earn more than the starting salary of a bank teller, according to the final paper abstract. So you've got to think all that effort, all that work, all that stress to get minimum wage. And, you know, think

• 27:29Speaker 01

  about what that means. So these people weren't people who tried trading for two weeks. These people were people that went for a year. Now, we don't know their level of skill or their level of knowledge. That's another thing that, that, um, you know, uh, really needs to be addressed in these studies. But for people that go, oh, you just need more screen time and it'll work for you. That doesn't add up. And, and this creates an important distinction for anyone starting young. So the reality is, if you're young, you will have an advantage, but it has to be done right. So if you're 18 and you go, hmm, I'm just going to sit in front of the computer. I'm going to

• 28:10Speaker 01

  watch a few YouTube videos and I'm going to work it out. Um, unfortunately that ain't going to be the way because if you need to spend those years learning properly, there's a difference between learning and learning properly. And there's a different set of lens that somebody who starts from nothing or somebody who has education, how they can dissect information. So, I mean, I know, you know, I hear it all the time with people that after they've done our, uh, their diploma, that, that, um, they say, now I can look at a YouTube video or I can look at information, but I look at it from a completely different context or lens. And I say, yeah, because you have a base. You have a reference point. You have knowledge to then, uh, to then, um, understand

• 28:54Speaker 01

  what this piece of information is and whether it's right, whether it's useful, whatnot. But if you're someone who, and most people do this, wants to start trading, especially the young ones, because they still, you know, live at home, got access to a computer these days. It's the hot thing with all their friends. It's, you know, crypto, it's, it's all the YouTube videos for influencers and, and they just go home, watch a few, you know, YouTube lives or watch someone trade or whatever, you know, this guy, that guy. Um, and they get bad habits from the beginning. They learn wrong things or they get so much information, they're constantly shifting and not looking anything, at anything from a level of understanding. That alone, you could spend the

• 29:33Speaker 01

  next 10 years going down the wrong path and that is not education. Um, you won't be elite by 28 if you do that for 10 years. Uh, because what you learn, you need to learn properly.

• 29:47Speaker 02

  Yep.

• 29:49Speaker 02

  Yeah, exactly. Yeah, you need to go through through that apprenticeship and you need to know the jargon, you need to know who the participants are, you need to know how to read a chart. I mean, not everybody, they may think that they know how to read a chart. But you know, from the stuff that we teach, how we go into short term bar analysis, what the opens, what the closes means, how to use volume with with the charts. There's so many layers and it needs to follow that path. That's what I really like about what we teach is that it's layers upon layers. First, you know how to read a chart, then you add on more components to that, and then we teach you how to trade on the chart.

• 30:26Speaker 01

  Yeah, I'm not going to go in. Yeah, you're right. Hundred percent right. I think the biggest thing for all of that is is not only the information. And I won't start on this point because this is not a sales ad, but the the the content itself, it has been rigorously put to the test. That's why it is in a diploma form. That's why it is government accredited. Think about that. You can't just get something that's government accredited by putting up willy nilly information. It needs to be checked, it needs to be sound in logic. Compliant. I remember doing so many compliant things, saying, okay, does this, what does this data mean for competence? What does this information? How do you, how can you prove that this does this?

• 31:08Speaker 01

  And so it's like, what you're getting has been put through the wringer in terms of information. That's how you know it's worth something. But let's move on because I want to get back to to the point of the problem with starting very young. Now, there's another study, I'm full of studies today, right? But

• 31:25Speaker 01

  obviously, younger people, they've got big advantages in terms of time, adaptability, as you've said, energy, technology, and the ability to recover financially. So you can cop a few batterings when you're younger, much easier than older. And that's, I think, going back to your point as well, why taking risk is something that you tend to lose as you get older. But in that, they also have the biggest tendency and the greatest appetite for financial risk. So there was a 2026 meta-analysis of research into aging and financial risk-taking, which found that survey and lottery studies generally support the relationship between increasing age and greater risk aversion, going to your point.

• 32:03Speaker 02

  Oh, there you go.

• 32:04Speaker 01

  Although the exact relationship varies depending on how risk preference is measured. So here's the paradox. The young person has the greatest capacity to take long-term investment risk, but can also be attracted to forms of short-term risk capable of destroying their capital. And these are completely different things. Putting your money into a diversified equity portfolio at 20 and accepting volatility, or putting your entire account into a leveraged trade because somebody on TikTok said it's going to the moon.

• 32:31Speaker 02

  That's the one, yes.

• 32:33Speaker 01

  You know, so yeah, young investors can afford. Yeah. Yeah, that's what it is. That's what it is, you know.

• 32:40Speaker 02

  That's what I see all the time.

• 32:43Speaker 01

  You know, so they can afford volatility the younger you are, but they can't afford repeated ruin because they fall into those habits. And by the time they get to the old old age or older age, to the, you know, 53, which is here, given as research, the right age, they've come in with so many bad habits that bad habits. They've come in being beaten up by the market. And they've not walked in as a as a better version of themselves. In fact, they've got all the wrong experiences. If they haven't learned from them, it's not going to serve them well later in life, just because they've been in the market. And so, you know, you've got to ask the other end of the coin, which is, are you ever too old to start?

• 33:26Speaker 01

  Like, can someone be too old to start trading? And the data says there isn't a clean cutoff, but you know, there is evidence that age eventually affects investment skills. So there was these guys called Korniotis and Kumar, which examined an older individual investors and found something fascinating. I think this was a podcast of theirs. They found older investors tend to possess greater risk investment knowledge and experience. That's the positive. But the way they were less effective at applying that knowledge. So the researchers concluded that the negative effects associated with cognitive aging eventually dominated the benefits of additional experience. This is a very different argument from saying old people can't trade. The evidence doesn't say that at all.

• 34:12Speaker 01

  A mentally active experienced seven-year-old could obviously outperform an inexperienced 25-year-old. What the what the research is suggesting is that, on average, experience doesn't indefinitely compensate for every effect associated with aging. And so,

• 34:28Speaker 01

  again, it's going back to how have you got to that point? How have you learned? Really, that's that's what it is. The the age is

• 34:43Speaker 01

  as not as relevant as to the time you spend doing it right from the beginning.

• 34:52Speaker 01

  You know, going back to that martial arts analogy, you can, you know, throw a jab for 10 years, but if you start it off by losing that jab wrong, you've thrown the wrong jab for 10 years. Doesn't mean your jab's going to get better. You're just going to be really good at throwing the wrong jab. And then you walk in, you walk in, you walk in against somebody that that has the correct technique, they're going to slaughter you.

• 35:12Speaker 02

  Yeah, exactly. Yep. And and if you're, if you're not used to taking hits, when you when you do take that hit, I mean, it's it's going to hurt. And also, next time that that somebody throws a punch, you're going to flinch. So it's the same with the market. You have to learn how to take those hits and and keep going. It's like that, have you seen that Sylvester Stallone short from Rocky IV?

• 35:37Speaker 01

  Of course.

• 35:38Speaker 02

  How many times you can, is how many times you can get hit and keep going? Something like that.

• 35:45Speaker 01

  That's that.

• 35:48Speaker 01

  That's how winning is done. That's right.

• 35:50Speaker 02

  That's how winning is done.

• 35:51Speaker 01

  But that's right. That's the market. That's how you learn. You learn by your if you're young and you have a base in the right knowledge, you can then assess a situation where you're losing. Go, well, hang on a second. Let me, through the right framework, look at that scenario and go, okay, what happened there? How can I, through the right framework, work out, was this something that I can fix? And then fix with the right framework and the right tools. That's that is such a powerful thing because you're going to have to go through that as a young guy. You're going to have to learn, you're going to have blips, you're going to have to fix them, but use those blips as an opportunity. What they're telling you is that, hey, there's a hole in what you're doing. Here's a chance of showing you where there's a hole. Plug it, fix it. Happens again, you've either repeated the same mistake

• 36:36Speaker 01

  or it's a new one. If it's a new one, there's another hole in your process or your system or your model, something you had to learn. Go and fix it. Oh, you've never been through, you've never been through a four-year cycle crash? Okay, here you go. Learn it. That's, that that happens. If you didn't expect it to ever happen, that happens. Now you know for next time, boom. And you accumulate all this. And as long as you keep it and keep refining it into what you're doing, that that is how you get hit and keep moving forward. That's really how it how it goes. But I guess just to finish off, you know, what's the best age for each style, really, to summarize everything? So if we talk about long-term investing, someone that wants to do sweeter FA, put money in, the best is to start as young as possible.

• 37:21Speaker 01

  Obviously, time is your friend. If you want to learn to trade, late teens and twenties can be an excellent time to start learning. And I can attest to that because that's when I started, not because young people are naturally better, because they have time to develop skill. So that's the the and the time to go through all different market conditions. By the time you get to 40, you've probably seen a lot, if not all. So you've seen up, down, sideways markets, crashes, you've seen a bit of everything, wars. Now, for for active swing trading, there isn't academically anything, but the research gives us grounds for the hypothesis that the 30s through the 50s

• 38:05Speaker 01

  could be a particularly favorable period because accumulated experience can coexist with strong cognitive performance. So it's not a proven statistical age range, it's an inference, to say the least.

• 38:20Speaker 01

  But it also, if you're swing trading, that it requires patience, and the older you are, the more patience comes into your life, I believe.

• 38:29Speaker 01

  So day trading, I mean, there's no credible evidence establishing a magic starting age. And the overwhelming evidence is not age at all. It's that it's it's a tough way to earn from this world. And that's day trading. Intra-day trading is what they're talking about. So

• 38:48Speaker 01

  after going through all of this, mate, I think although it says 53, I don't think there's one perfect age to enter the market. There's actually three clocks. There's the compounding clock. There's the experience clock. And then there's the cognition clock. So if you're, you know.

• 39:08Speaker 02

  Yeah, I mean, to me, one of the the major points highlighted in this as well is that 53 is not even too old. If you wanted to start trading, if you want to start learning, you're at that stage where you've got the experience, no matter where where you've got that experience from, right? You might come from an engineering background, you might come from a business background. I mean, the students that I talk to that are that are of a later age, they're usually from different backgrounds. But they can still apply that experience to the market somehow. You know, they can still somehow be able to to have that discipline and and have that kind of restrained approach, not that gun ho kind of attitude that you would when you're when you're younger.

• 39:52Speaker 02

  And by learning the the aspects that we're teaching, they can apply it in in that disciplined way. So that, for me, is a huge takeaway that, hey, it's it's never really too late. You know, my oldest student, I'll tell you this, my oldest student was a lady. She was in her mid 80s, mid 80s, learning how to trade. You know, this is no word of a lie, and she was excellent. Yeah, I mean, we're still keeping in touch, she's still doing the the Trading Essentials with us. She sends in her analysis and so on. You know what her secret was? She told me that she kept on doing courses. She had done a a course on on financial planning. I think it was like six years before she did our course, so in her 70s.

• 40:34Speaker 01

  Wow.

• 40:35Speaker 02

  So, you know, there you have it. It's it's never too late.

• 40:39Speaker 01

  No, and the study said that as long as the cognitive decline happens when you when you really stop. I mean, if you keep your mind active, look at some of the best hedge fund managers in the world. They're not 20. They're in their 60s and 70s, Ray Dalio, 70s, Warren Buffett, he was working into his 90s.

• 40:56Speaker 01

  Jim Simons, he was, he started at 40. He actually started getting into the markets at 40 years old. So I think by all the research we've done, I think 50, that 50s is the sweet spot. That's when you are physically and experience-wise at your best to give trading a go. So I'm always going to bat for the young guys because I I started that way. And I think there's, you know, go. If you're young, go. Time is your advantage. Really give it a crack. But boy, if you're in your 50s and you think this is not for me, or I can't, well, statistics say the exact opposite. So let's, let's leave it on that. We'll catch you all on the next one. Thank you very much for tuning in. Pedro, thanks for joining, mate.

• 41:41Speaker 02

  A pleasure. This is a good one.

• 41:43Speaker 01

  Yeah, and as always, if you could please give us a five-star review, it really helps get our message out there so we can give you more stuff like this, more content, more research, and talk all things trading. On that note, have a fantastic weekend and we will catch you on the next one. Bye for now.

• 42:02Speaker 00

  This podcast is brought to you by Wealth Within, a global leader in stock market education. For more information on our courses, head over to wealthwithin.com.au. Please note that the information in this podcast should not be considered personal financial advice.