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