Life Stages & Investing

At different stages in life, the objectives and needs are different.

During one’s earning life, money is saved from the current income to take care of the future. This is the Accumulation Phase.

The investment objectives in the 4 stages in Accumulation Phase are:

  1. Single, starting employment
    • Starting a saving habit
    • Emergency fund equal to at least 6 month’s expenses through bank deposits
    • Small beginning of equity investments through SIP
    • Start PPF, NPS accounts
    • Setting aside “margin money” for housing loan
    • Getting adequate term insurance & accident insurance
  2. Marriage
    • Monthly and annual budget of income, savings and expenses
    • Buying a house and getting a housing loan
    • Monthly instalments of housing loan build your house ownership
    • Family floater health insurance
    • Increasing equity fund SIPs
  3. Starting a Family
    • Changes in monthly budget
    • Buying a car and getting auto loan
    • Education funding for children – short term through debt funds, long term through equity SIPs
  4. Approaching Retirement
    • Children education goals nearing completion, responsibilities reduce
    • Income increases as career advances
    • Housing loan EMIs as percentage of income come down
    • Increase equity investments through SIPs and stock portfolio
    • Term insurance needs come down
    • Joint names and nomination in investments

After achieving financial stability, one has earned the “freedom to retire”. The income and cash flows from the accumulated wealth enable living with self-respect and comfort. The 5th & 6th stages in the life cycle fall in this Distribution Phase. The investments considerations are:


  • Cash flows from existing investments used for expenses – systematic withdrawal plan
  • Golden period in life – when time, money & energy are all present
  • Discretionary expenses – such as travel – need to be budgeted
  • Portfolio partly shifts to fixed income investments, but equity still continues
    • Provision for health care expenses – top up on health insurance 

6.Succession & Estate Planning

  • Creating a will
  • Financial security for single spouse
  • Careful distribution after your life to next generation

Taking Care Of Your Money – The 3 Excuses

Never Taught In School

Understand some simple principles and practicing them will help us take charge of our financial fitness. It is helpful to spend an hour or two with a financial planner to understand these.
However, most people are hesitant to do this, and there are typically three excuses:

The 3 Excuses

1. My parents did fine without planning

All this idea of financial planning is okay. But, my parents did so well financially. They never needed any plan like this!

Things have changed. Life different for the earlier generations. The conveniences and luxuries did not exist – which today make demands on our money. We have shifted from joint family to nuclear family. While we will do everything to give the best future to our children, do we wish to depend on them for looking after us in our old age?
We want to become financially independent to live with a sense of self worth and self respect. That’s why, we need planning!

2. Where is the money to save and invest?

“I earn well, and so does my spouse. But we need to keep up our lifestyle. Everything’s getting so expensive”

It is not easy to save money. Just consider – We must give something to ourselves first! We are the two most important people in my life! Look at the equation below.

Income – Expenses = Savings

For financial success, change it to:

Income – Savings = Expenses

3. I am comfortable now, and this is how it is going to remain

But I am leading a comfortable life now. Retirement is far away. I will certainly save for retirement, not now, but later – when my income is higher

Sounds logical, right? But have we taken inflation into account? Do we want to go through life’s journey without a map? Can I have the freedom to retire early?

To take of these, meet a financial planner. Create your roadmap and,

  • Start Early
  • Save consistently
  • Invest wisely