The Three Stages of the Investor Life Cycle

The Three Stages of the Investor Life Cycle

Our investment goals never stay the same over our investing years. As people grow older they tend to develop concerns regarding their investments that were not a priority consideration in their early years. Trends have shown that over time, people transition from aggressive investment options to conservative alternatives. 

To identify what stage of the investor life cycle you currently fall under, you have to consider your age, current earning ability as well as your plans for the future. Understanding the stages of the investor life cycle helps you devise an effective investment strategy at every stage, which in turn ensures you get the best outcomes today and gets you to your goals in the desired time.

The Three Stages

Stage 1:

The Accumulation Stage

Age: 20-35

Individuals who fall within this stage are usually between the ages of 20 and 35. They have just begun their careers and so they have a relatively low net worth. They also have relatively longer working years before they retire.

Because of the time they have to engage in active work, individuals at this stage can build aggressive portfolios. The goal is to build emergency savings (short term) and accumulate wealth (long term) through high yield instruments. In an event that they lose their investment capital, they have ample time to rebuild their finances or hold their investments until the returns yield in their favor.

Stage 2:

The Preparation Stage

Age: 35-60

At this stage, investors have likely reached their peak earning years and so they can save and invest a lot more. Individuals at this stage are usually aged between 35 and 60. While the short term goals may include vacations and funding children’s education, the long term goal will be to build a nest egg large enough to see investors through their life in retirement. Your portfolio becomes more balanced as retirement approaches.

Having a shorter time for active work, they are usually working towards building their wealth in preparation for retirement. A loss of investment capital might be detrimental at this stage so a well-balanced portfolio is often considered. 

Stage 3:

The Retirement Stage

Age: 60+

At this stage, individuals may stop earning active income and will totally depend on their savings as well as the returns on their investment to survive. 

People who were able to successfully build wealth for retirement can achieve their desired lifestyle while in retirement, but the most important objective is to outlive one’s savings. To achieve this, individuals should be able to earn through investments but prioritize capital preservation. Investors usually become more conservative as they retire.



Investors transition through all the stages of the investor life cycle during their lifetime. As the years go by, investors tend to have a lower risk appetite. This leads to an adjustment in their investment portfolios to align with goals and future plans. At the retirement stage, the priority shifts from wealth accumulation to capital preservation. You can begin your saving journey at BRAVEWOOD.

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