Are You Investing for the Right Stage of Life?

When investing and planning for the future, much of the focus is on the right holdings (Stocks, Bonds, etc.) to take advantage of the way the market moves.

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But there’s another very important factor to consider as you make your investment choices. That is, your stage of life.

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Different stages of life require different financial strategies. That means understanding and applying the three phases of the financial cycle.??

The Three Phases of the Financial Cycle

At Anchor Wealth, our investment strategies are designed to make sure that someone who's worked hard throughout their life and has done a good job of putting money aside will not run out of their savings when they are five or ten years into their retirement. And there are three important phases in this financial cycle.

Accumulation Phase (Age 18-54)

The first one is the Accumulation Phase, where you are working and earning an income and hopefully putting some of it aside. It’s during these years that many are willing to take some risks with their investments. Obviously, this phase goes on as long as you are making money but generally peaks around age 50 or 55, when you are reaching your highest income potential. This is usually the age when people first seek me out for advice.

Preservation Phase (Age 55-65)

The second phase is the Preservation Phase. This is when people realize they don’t want to work forever, when they are beginning to travel and maybe visit their children who’ve moved away or married, or they’ve bought a lake place. Perhaps they have even had some health scares. This is the phase where financial risk comes off the table. Most of the people I meet with have entered this phase and are 10 or more years away from retiring.

Distribution Phase (Age 65+)

And finally, there is the Distribution Phase. This starts when you are no longer working and earning money and need to access those funds you have invested during your accumulation phase. For almost everyone, this is a major transition in their lives and will include a more realistic look at their resources and lifestyle.

As we all know, the market has moved up and down several times just in the past two decades. And during those years, some of my clients have experienced all three of these phases.

I have found with this financial uncertainty, that most people are increasingly interested in preserving what they have saved, especially when they transition to the distribution phase.

And this is where Anchor Wealth and the Virtual Family office comes in. Our main objective is to provide a person who comes to me with a net worth of perhaps a million dollars or more, a steady and understandable approach to maintaining their wealth. This way they can continue live a safe and secure lifestyle, yet still be able to gift that same level of wealth to their beneficiaries when they pass away.

Make sure you are investing wisely for your stage of life. DM me to set up a call.