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Investors life cycle


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  • 1. PRESENTATION ON : INVESTOR LIFE CYCLE Presented by: Vinay Kenkere
  • 2. MEANING Investor:An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call optionswith the objective of making a profit.Someone who provides a business with capital and someone who buys a stock are both investors. Since those in the secondary market are considered investor.Speculators are also investors.
  • 3. MEANING Investment: any vehicle into which funds can be placed with the expectation that it will generate positive income and/or that its value will be preserved or increased.Return:  Current income(Dividends /Interest)  Increase in value(Capital Appreciation)
  • 4. MEANING Investor Life Cycle:Investors life cycles contains different stages, which shows the different phases of individual investor in his/her investment life, It also include both short term and long term investments
  • 5. PHASES IN INVESTOR LIFE CYCLE ILC Early Carrier Mid Carrier Retirement Late Carrier
  • 6. EARLY-CARRIER At the begging of his/her carrier Individual’s net-worth is very small/negative Spending exceeds his/her income Individuals expect larger future income Individuals are willing to take higher risk in anticipations of high returns.
  • 7. MID-CARRIER Individuals are covered with insurance by this time. Having tangible assets(home) reasonable base of financial assets. Individuals are willing take high risk for future high returns. Preservation of capital acquires some importance
  • 8. LATE-CARRIER Individual has virtually no debt or mortgage on his income. His/her savings level is high. Risk exposure is reduced.
  • 9. RETIREMENT Investments become principal source of income in this step. Chances of unexpected expenditures (Medical expenses) Preservation of capital may become the over-riding concern.
  • 11. PHASES IN INVESTOR LIFE CYCLE ILC Accumulation Phase Consolidation Gifting Spending Phase Phase Phase
  • 12. ACCUMULATION PHASE Early to middle years of careers Attempting to satisfy intermediate and long-term goals Net worth is usually small, debt may be heavy Long-term investment horizon means usually willing to take moderately high risks in order to make above-average returns
  • 13. CONSOLIDATION PHASE Past career midpoint Have paid off much of their accumulated debt Earnings now exceed living expenses, so the balance can be invested Time horizon is still long-term, so moderately high risk investments are still attractive
  • 14. SPENDING PHASE Usually begins at retirement Saving before, prudent spending now Living expenses covered by Social Security and retirement plans Changing emphasis toward preservation of capital, but still want investment values to keep pace with inflation
  • 15. GIFTING PHASE Can be concurrent with spending phase If resources allow, individuals can now use excess assets to provide gifts to other individuals or organizations Estate planning becomes important, especially tax considerations
  • 16. PHASES IN INVESTOR LIFE CYCLE ILC Middle-Aged Youth Stage Consolidation Retiremen Stage t Stage
  • 17. YOUTH STAGE  Twenties and thirties  Growth-oriented investments  Higher potential growth; higher potential risk  Stress capital gains over current income Whatare some examples of age- appropriate investments?  Common stocks, options or futures
  • 18. MIDDLE-AGED CONSOLIDATION STAGE  Ages 45 to 60  Family demands & responsibilities become important (education expenses, retirement savings)  Move toward less risky investments to preserve capital  Transition to higher-quality securities with lower risk Whatare some examples of age- appropriate investments?  Low-risk growth and income stocks, preferred stocks, convertible stocks, high-grade bonds
  • 19. RETIREMENT STAGE  Ages 60 and older  Preservation of capital becomes primary goal  Highly conservative investment portfolio  Current income needed to supplement retirement income Whatare some examples of age- appropriate investments?  Low-risk income stocks, government bonds, quality corporate bonds, bank certificates of deposit