1. The investor life cycle describes the different phases investors go through over their lifetime from early career to retirement. 2. In the early career phase, investors have a small net worth and are willing to take on higher risks in anticipation of higher returns. 3. As investors move through their mid-career, they accumulate assets and take on less risk by prioritizing capital preservation. 4. In retirement, investments become the primary source of income and capital preservation is the overriding concern with lower risk investments.

1. PRESENTATION ON :
INVESTOR LIFE CYCLE
Presented by:
Vinay Kenkere

3. 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 options
with 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.

4. 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)

5. 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

6. PHASES IN INVESTOR LIFE CYCLE
ILC
Early Carrier Mid Carrier Retirement
Late Carrier

7. 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.

8. 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

9. LATE-CARRIER
 Individual has virtually no debt or mortgage on his
income.
 His/her savings level is high.
 Risk exposure is reduced.

10. 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. RISK-RETURN PREFERENCES OVER INVESTOR
LIFE CYCLE
Return
Risk

12. PHASES IN INVESTOR LIFE CYCLE
ILC
Accumulation Phase Consolidation Gifting
Spending Phase
Phase Phase

13. 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

14. 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

15. 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

16. 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

18. PHASES IN INVESTOR LIFE CYCLE
ILC
Middle-Aged
Youth Stage Consolidation Retiremen
Stage t Stage

19. 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

20. 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

21. 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