Experience tells us that many people find they go through these financial Life Cycles:
- Investments focused on high return, high risk, growth-oriented investments.
- Early career situation.
- Long time horizon; a long time to meet goals.
- Net worth small relative to liabilities.
- Priorities and considerations often include.
- Children’s education.
- Larger home
- Few investments.
- Investments focused on high-return, high-risk, growth oriented investments, however, a shift to lower risk assets should begin as horizon shortens (typically within the last five years of the phase).
- Mid-to-late career stage (age).
- Income may exceed expenses.
- Time horizon is still relatively long (state time horizon).
- Income generating, low risk assets are given emphasis under ordinary circumstances.
- If the client can cover their income needs adequately, a larger portion of their assets can remain in capital gain oriented investments. Regardless of the circumstances, a portion of assets should remain in capital gain oriented investments to protect against inflation.
- Expenses exceed income and excess is derived from investment income.
- Horizon may still be relatively long (state time horizon, age)
- Client possesses more assets than will be required for life.
- Begin to gift wealth to others in order to avoid high estate taxes.