Life cycle of personal investment

(1) Personal investment life cycle concept

In a person's life, income level and expenditure level are usually inconsistent, forming a periodic change law, which is the so-called personal investment life cycle. In the whole cycle, the income curve and consumption curve show different changing laws. This changing law of income and consumption makes individual investment present different characteristics, and each period has different requirements for investment activities. Therefore, the investment strategies and principles in different periods are very different.

(2) life cycle and investment strategy

1. accumulation stage

The accumulation stage means that people don't start working until middle age. The main feature of this stage is that people's income not only meets their daily consumption expenses, but also needs to accumulate funds for future consumption. This kind of future consumption not only includes bulk consumer goods that need to be gradually accumulated to a certain amount of funds before they can be purchased, such as down payment for buying a house and various household consumer goods. There are also foreseeable future consumption, such as childcare consumption, education consumption and pension consumption; There are also some unexpected but possible consumer expenditures, such as large medical expenses and various unexpected expenses. Therefore, people's financial arrangements and investment plans at this stage have an important impact on the whole life, and proper arrangements can ensure the happiness of personal and family life to a certain extent; Improper arrangement will be restricted by objective economic conditions and affect the happiness of personal and family life to a certain extent. Because people's expectation of return on investment is high at this stage, and at the same time, they have the ability to generate income in the future as a guarantee. Usually, the main feature of investment at this stage is that people prefer high-risk long-term investment to ensure a higher return on investment than the average return on investment and improve the living standards of individuals and families through investment.

2. Matching stage

The matching stage refers to the middle period from one's career to retirement, that is, from middle age to old age. At the beginning of this stage, people's income not only meets daily consumption expenses, but also mainly pays various accumulated debts, such as housing mortgage loan, car loan and children's education expenses. In the later stage of this stage, many families have paid off all kinds of debts and started to make investment plans for their future retirement and real estate investment to ensure a higher quality of life in the future. People's financial arrangements and investment plans at this stage mainly affect the living standards of the second half of life and future generations. The expected rate of return on investment income is lower than that in the accumulation stage, and there is no future earning capacity as a guarantee. Therefore, the main feature of investment at this stage is that people prefer to invest in medium and long-term varieties to ensure a more stable return on investment, rather than taking greater investment risks, so as not to affect the living standards of individuals and families.

3. Expenditure stage

The expenditure stage is the third stage of personal investment life cycle. Since people retired, the main cost of living at this stage consists of three parts: the first part comes from social welfare, that is, public welfare provided to retirees according to the social security system; The second part is the pension accumulated by retirees enterprises and retirees themselves during their work; The third part is the income generated by the early investment of retirees. The remarkable feature of financial arrangement and investment plan at this stage is that the main purpose of people's investment is to preserve value rather than gain, so as to ensure that the original investment will not be lost, and low-risk investment varieties will become the first choice for investment. They strive to ensure that their original living standards and quality of life will not be affected by property losses and inflation. Usually, the main feature of investment at this stage is that people prefer low-risk long-term investment, and at the same time, they must passively participate in some venture capital to ensure that the return on investment can make up for the asset losses caused by inflation.

4. Gift stage

The gift stage is the last stage of everyone's life. As the fourth stage of the investment life cycle, people's living expenses at this stage have decreased relative to the remaining property. Due to the decline of uncertainty in the future, people begin to give their remaining assets to relatives, descendants or friends at this stage. Due to the inheritance tax, the remarkable feature of the financial arrangement and investment plan at this stage is that the main purpose of people's investment is to avoid high taxes, and the establishment of trust plans and trust funds is the main form of investment at this stage.

(3) Life cycle and investment form

Because different investment life cycles have different investment requirements, we should choose different investment forms to meet the investment requirements accordingly. There are different classifications according to different angles.

1. According to the nature of investment, it can be divided into equity investment, debt investment and mixed investment.

Equity investment refers to the investment made to obtain the rights and interests or net assets of another enterprise. The purpose of this investment is to gain control of another enterprise, or to exert a significant influence on another enterprise, or for other purposes; Creditor's rights investment refers to the investment made to obtain creditor's rights. The purpose of this investment is not to obtain the remaining assets of another enterprise, but to obtain the interest higher than the bank deposit rate, and to ensure the timely recovery of principal and interest; Mixed investment is often manifested as mixed securities investment, which is an investment with both equity and creditor's rights.

2. According to the investment object, it can be divided into equity investment, bond investment, real estate investment and other investments.

Equity investment refers to foreign investment that obtains the ownership of joint-stock enterprises by purchasing stocks and making capital contributions to obtain share certificates or capital contributions certificates; Equity investment mainly includes direct investment and indirect investment. Bond investment refers to foreign investment through the purchase of bonds. Bonds can be divided into national bonds, corporate bonds and financial bonds according to the issuers. Real estate investment refers to the real estate investment that is carried out after buying a house and then selling it in order to obtain the interest of the price difference. Other investment refers to foreign investment other than equity investment, bond investment and real estate investment, and generally refers to joint venture investment.

3. According to the liquidity of the investment object, it can be divided into investment that is easy to realize and investment that is not easy to realize.

Easy-to-realize investment refers to the investment that can be realized at any time in the securities market; An investment that is not easily realized refers to an investment that is not easily realized in the securities market. This kind of investment usually cannot be listed and traded, and it is not easy to realize it.

4. According to the binding relationship between investment and investee, it can be divided into controlled investment and uncontrolled investment.

Investment is an equity investment that enterprises seek to exert great influence on the business and financial decisions of the invested enterprises for the needs of operation and competition. Non-controlling investment refers to equity investment that does not reach the share that can exert significant influence or gain control over the business and financial decisions of the invested enterprise, and debt investment that has no control at all.

5. According to the purpose, realizability and payback period of investment, it can be divided into short-term investment and long-term investment.

Short-term investment refers to an investment that can be realized at any time and is not prepared to be held for more than one year; Long-term investment refers to investments other than short-term investments, including all kinds of equity investments that have been held for more than 1 year (excluding 1 year), bonds that cannot or will not be realized at any time, long-term creditor's rights investments and other long-term investments.

To sum up, different investment forms have different investment characteristics, that is, different risks and returns. Therefore, it is necessary to combine the investment requirements of different investment life cycles and the risk-return characteristics of different investment forms, and choose investment varieties that meet the investment requirements of specific investment stages.