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Lifestage investing: How to plan your financial future

30 January 20244 mins read by Angel One
Embarking on a financial journey mirrors life's stages, each demanding unique strategies. It is a philosophy attuned to these phases, that crafts a financial plan adaptable to your evolving needs.
Lifestage investing: How to plan your financial future
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Investing is not a one-size-fits-all activity. Different people have different goals, needs, and preferences when it comes to saving and growing their money. That’s why it’s important to consider your life stage when making investment decisions.

Lifestage investing is a strategy that adapts your portfolio to your changing circumstances and objectives. It helps you balance risk and reward, diversify your assets, and align your investments with your time horizon.

In this blog post, we will discuss three stages of lifestage investing and how you can apply them to your own financial plan.

Stage 1: Accumulation

The accumulation stage is when you are building your wealth and saving for your future. This stage typically lasts from your 20s to your 40s, when you have a long-term perspective and a high tolerance for risk.

During this stage, you should focus on investing in growth-oriented assets, such as stocks, mutual funds, ETFs, and real estate. These assets have the potential to generate high returns over time, but they also come with higher volatility and uncertainty.

Additionally, you should establish an emergency fund that covers at least three to six months of living expenses, in case of unexpected events or emergencies.

Stage 2: Transition

The transition stage is when you are preparing for retirement and adjusting your portfolio accordingly. This stage typically lasts from your 50s to your early 60s, when you have a shorter time horizon and a lower risk appetite.

During this stage, you should gradually shift your asset allocation from growth-oriented assets to income-oriented assets, such as bonds, CDs, annuities, and dividend stocks. These assets provide more stability and predictability, but they also offer lower returns and growth potential.

You should also review your retirement goals and expenses, and calculate how much income you will need to sustain your desired lifestyle. You may want to consult a financial planner or use an online calculator to estimate your retirement income gap and how to fill it.

Stage 3: Distribution

The distribution stage is when you are living off your investments and enjoying your retirement. This stage typically lasts from your mid-60s onwards, when you have a short-term perspective and a very low risk tolerance.

During this stage, you should preserve your capital and generate a steady stream of income from your portfolio. You should also consider inflation, taxes, health care costs, and longevity risks that may affect your purchasing power and financial security.

You may want to use a withdrawal strategy that balances your spending needs with your portfolio’s sustainability. For example, you could use the 4% rule, which suggests withdrawing 4% of your portfolio value in the first year of retirement and adjusting it for inflation each year thereafter.

You may also want to diversify your income sources by using a combination of Social Security benefits, pensions, annuities, dividends, interest, and capital gains. Additionally, you may want to create a legacy plan that specifies how you want to distribute your wealth to your heirs or charities.


Lifestage investing is a smart way to align your investment strategy with your life goals and circumstances. By following the three stages of life stage investing – accumulation, transition, and distribution – you can optimise your portfolio’s performance and achieve your financial objectives.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. 

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