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.
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
17.
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
