Financial Life Cycle
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Putting your investments in synch with your life.
Childhood ... early adulthood ... middle age ... active retirement ... old age ... we all go through
specific stages in life.
Your investment life has stages too, and it’s important to make sure that your financial life cycle matches
your personal life cycle. This means using different investments at different times.
Growth vs. Stability: The Big Picture
When you’re young, a 20- or 30-year investment horizon means you can take risks with your investment money
in order to take advantage of higher return potential. You can aggressively invest for growth, because you
have a salary to cover your living expenses. You’re more able to use a wide range of investments, and not
worry about short-term declines. If some investments fail, you have lots of time to reverse the loss.
As you approach and enter retirement, you may still have a 20- to 30-year horizon, since many people are
retired for that long or longer. But at this life stage, protecting your money may be more important to you
than growing it. You no longer have a salary, so you have to rely on your investment returns to cover living
expenses. And money lost in an investment may never be regained.
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Using CDs for retirement income.
When safety and income stability matter, Certificates of Deposit (CDs) may offer the best option. They
provide high guaranteed returns with FDIC insurance.