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Younger people are most often described as being in an accumulation phase. Their earnings have not yet hit their peak, but at
same time they are striving to obtain both hard and soft assets.
Examples here include saving for a new home or a child's education. Risk assumed here will be tempered by time constraints of these goals as well as individual risk tolerance. In general, longer time frame, more investments in aggressive category may be considered.
The other phases extend to middle age and beyond to retirement. Our middle age years often find us at peak of our earning power, with many of our former goals satisfied. This will mean greater savings are possible, and as time progresses towards retirement, our tolerance for risk will necessarily diminish.
Financial planning takes all of this into account and more. Other factors, including planning for health care and other insurance needs, preparation for emergency expenditures, tax and estate planning and like will all be part of strategy.
Unexpected windfalls may also enter into picture. Saving for retirement becomes increasingly important as time earned income will end draws nearer.
All of these variables add to importance of financially planning across all stages of one's life. It is a concept that encompasses your total financial picture -- both in present and for future.
Copyright © 2005 I.E.C. Haramis haramis@greekshares.com http://www.greekshares.com
Ioannis - Evangelos C. Haramis was born in Greece in 1951. Studied Business Administration, Marketing and Economics in Greece, USA and in Belgium.
He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.
