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ಹೂ�ಡಿಕೆದಾ�ರರ ಜೀವನ ಚಕ್ರ�PRESENTATION ON :
INVESTOR LIFE CYCLE
Presented by:Vinay Kenkere
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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.
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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)
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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
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PHASES IN INVESTOR LIFE CYCLE
ILC
Early Carrier Mid Carrier Late Carrier Retirement
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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.
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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
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LATE-CARRIER
Individual has virtually no debt or mortgage on his income.
His/her savings level is high.
Risk exposure is reduced.
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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.
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RISK-RETURN PREFERENCES OVER INVESTOR LIFE CYCLE
Late Career
Risk
Retirement
Return
Mid Career
Early
Career
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PHASES IN INVESTOR LIFE CYCLE
ILC
Accumulation Phase
Consolidation Phase
Spending Phase Gifting Phase
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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
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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
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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
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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
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INVESTOR LIFE CYCLE
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PHASES IN INVESTOR LIFE CYCLE
ILC
Youth StageMiddle-Aged Consolidatio
n Stage
Retirement Stage
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YOUTH STAGETwenties and thirties
Growth-oriented investments
Higher potential growth; higher potential risk
Stress capital gains over current income
What are some examples of age-appropriate investments?
Common stocks, options or futures
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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
What are some examples of age-appropriate investments? Low-risk growth and income stocks, preferred
stocks, convertible stocks, high-grade bonds
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RETIREMENT STAGEAges 60 and older
Preservation of capital becomes primary goal
Highly conservative investment portfolio
Current income needed to supplement retirement income
What are some examples of age-appropriate investments?Low-risk income stocks, government
bonds, quality corporate bonds, bank certificates of deposit
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