ಹೂ�ಡಿಕೆದಾ�ರರ ಜೀವನ ಚಕ್ರ�PRESENTATION ON :

INVESTOR LIFE CYCLE

Presented by:Vinay Kenkere

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.

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)

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

PHASES IN INVESTOR LIFE CYCLE

ILC

Early Carrier Mid Carrier Late Carrier Retirement

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.

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

LATE-CARRIER

Individual has virtually no debt or mortgage on his income.

His/her savings level is high.

Risk exposure is reduced.

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.

RISK-RETURN PREFERENCES OVER INVESTOR LIFE CYCLE

Late Career

Risk

Retirement

Return

Mid Career

Early

Career

PHASES IN INVESTOR LIFE CYCLE

ILC

Accumulation Phase

Consolidation Phase

Spending Phase Gifting Phase

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

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

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

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

INVESTOR LIFE CYCLE

PHASES IN INVESTOR LIFE CYCLE

ILC

Youth StageMiddle-Aged Consolidatio

n Stage

Retirement Stage

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

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

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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