Lifecycle Investing – What is a lifecycle investment strategy?
Lifecycle Investing – Whats The Best?
A lifecycle investment strategy is when super contributions are invested according to your age. As you get older, the investment strategy changes, lowering risk over time. A lifestyle investment strategy, therefore, allows you to manage your investment risks over your lifetime.
For more information on lifecycle investment strategy, please go to https://www.amp.com.au/personal/hub/grow-my-wealth/take-control-your-super
We all want to live our ideal retirement. But that takes careful planning…and superannuation. Unlike the one size fits all balanced investment option offered under some super products, a lifecycle investment strategy changes depending on where a person is in their life. Which means how their super money is invested changes over time.
When we’re younger, there are a lot more growth investments in our super, such as shares and property, which tend to be riskier. That’s because there’s plenty more time, and career, to go, so we can be bolder and aim for a bigger return.
But, as we age and move towards retirement, this super is moved to more conservative investments, or safer, lower risk ones. Because less time till retirement means less time to ride the ups and downs of the financial markets.
Where a balanced investment option would maintain the same ratios of how money is invested, a lifecycle investment approach is tailored to change and adjusts over time to help achieve a comfortable retirement.
Now, I could go on to compare the lifecycle to the balanced approach, but that would be like comparing apples to oranges. As always, if you want to make sure you’re on track for the retirement you want, the best thing you can do is to engage with your super. Which is what I’m going to do… right now.