Navigating investment through stages of life

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No two investors will think exactly the same, and that’s even more true when those investors are at different life stages. As our personal circumstances change throughout our lives so should our approach to investing. Throughout your life your risk profile and asset allocation will change, so let’s look at how someone might approach investing, depending on their life stage.

Early working life

If you’re in the early stages of your career or working life, it’s likely your financial priorities are reflective of building a nest egg of funds over time for the future. Your investment horizon is long and you may have limited savings to start building the foundations.

A younger investor will generally have a higher tolerance to risk when compared to older investors as they have time to ride out market volatility. The asset allocation in their portfolio could lean towards a larger allocation to property and equities (growth assets), which historically offer higher returns but see higher levels of volatility.

At this stage of investing, diversifying across asset classes and industries helps spread risk. While growth assets may dominate, a smaller portion of an investor’s portfolio may be allocated to bonds (income assets) and alternative investments.

In this stage of life, investors can use the time that’s on their side to take advantage of compounding, or dollar cost averaging where they invest a fixed amount regularly. They can do this by contributing to retirement funds or other savings vehicles. During this phase it’s beneficial to contribute to these funds aggressively.

Mid-working life

As you move into your mid-working life your financial goals shift and financial responsibilities increase. Priorities such as mortgages and family costs come into the picture and many investors have a general desire for greater financial stability.

Now is the time many investors choose to review and adjust the asset allocation in their portfolios to achieve a better balance between growth and protection of capital.

As financial complexity grows at this stage of life, seeking professional financial advice while engaging and executing a financial plan becomes more beneficial.

There may be some benefit from tax-efficient strategies to maximise returns while minimising tax liability. Tax efficient investment strategies may include the use of PIE funds which may be included if the individual has a higher marginal tax rate.

Ownership structures such as trusts could also be considered as larger assets are accumulated within a household.

Now is the time to set specific retirement goals with a plan to track progress towards these goals in the years ahead.

Pre-retirement into retirement

As retirement approaches, people’s focus often shifts from accumulating wealth to keeping what’s saved at this point and making it last throughout retirement.

To assist with this stage in life, asset allocation should be reviewed and adjusted to fit in with your specific retirement goals. This may lead to a more conservative asset allocation which will be set based on return expectations to achieve retirement goals.

At this stage, a common investment strategy is to generate income in retirement and many choose to work with an adviser to help guide their investments into the next stage of life.

Whether an investor or not, estate planning also becomes a vital consideration.

Your approach to investing is never going to stay the same throughout your life, so reviewing it regularly will set your up for success in whichever stage of life you are at.

Recognising changes in age and stage of life while adjusting asset allocation is crucial for long-term financial success, as is having the discipline to revisit and adjust your investment strategy to adapt to ever-changing circumstances and market conditions.

Whilst your stage of life may determine your general approach to investing, each individual has a different risk tolerance and their own circumstances. To successfully navigate this journey, it’s helpful to seek guidance from a financial adviser who can personalise advice and help tailor an investment portfolio to align with specific life milestones and objectives as they change.


This research has been prepared by Jarden Securities Limited (Jarden) which holds a licence issued by the Financial Markets Authority to provide a financial advice service. The information in this research solely relates to the companies and investment opportunities specified within. The nature and scope of any financial advice included within that research are limited to generic and non-personalised commentary about that investment only, such as the performance and the investment outlook of the company concerned. Any such commentary does not take into account any individual’s particular financial situation, objectives, goals or risk appetite. We recommend that you seek financial advice that is specific to your circumstances before making any investment decision or taking any action. No fees, expenses, or other amounts will be payable for the provision of any financial advice in this research report. However, if you act on any information or advice contained in this research report, a brokerage fee (and other fees such as an administration and custody fee) may be payable to Jarden. For fees payable for brokerage and other services provided by Jarden, information on our complaints and dispute resolution process, and the duties applicable to us for providing financial advice, please see our publicly available disclosure statement at www.jarden.co.nz/our-services/wealth-management/financial-advice-provider-disclosure-statement

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