Investing in Life Cycle Funds

There are many people who would like to invest their money into something, but are not sure what would be the best investment in regards to simplicity and low risk. Investing in life cycle funds is easy and simple. Also known as “age based funds” life cycle funds are like investing in a retirement, only without the maintenance fee.

Life cycle funds are a special type of balanced fund, which is built on equity and a fixed income. Investing in life cycle funds is set apart by its allocation and combination of assets. What this means is that your investment will automatically adjust according to your age. As retirement nears, your investment will become more conservative to lower any risk.

Asset Allocation

If you are low on money to invest and just starting out, HULT PRIVATE CAPITAL investing in life cycle funds is ideally for you. This comes with the thoughts that as you grow older the more conservative and less willing to take the higher risks. The younger you are the more time you have to bounce back and rebound from a failed investment. Stocks are ideally where you would want to invest in your younger years, your 20’s through your 40’s. Stocks are high risk investments, meaning you can gain more, but have an increased risk of losing it. Bonds are recommended as you near and throughout your retirement. They are a medium risk investment, with still good percentages, not as high of a risk of losing it. Cash instruments are usually held during the retirement years as they are low risk investments and principal preservation investments.

Investing in life cycle investments has been criticized for being more conservative closer to the retirement years, and sacrificing the potential for larger returns. But the asset allocation is just a recommendation for the age groups and can be altered to fit your flexibility for higher or lower risks at different ages. If you are comfortable with the higher risk investments while approaching or during your retirement, there is nothing saying that you can’t do that. Likewise, if you are not comfortable with the higher risk investments in your younger years, you can invest in the medium or lower risk investments. The great part of investing in life cycle investments is that it offers flexibility in your allocation choices; you can choose the level of risk that suits you and your financial situation.

Automatic Investing

When you decide to invest, it is a good idea to enroll in an automatic investment plan, and have an amount automatically transferred from your bank account into the investment fund. This will help you to establish a more disciplined investing habit throughout your life. Monthly investments can also help to lower cost per share.

Investing may seem quite overwhelming and sometimes confusing, but once you get started it will become easier and less intimidating over time. That is why investing in life cycle funds is a good option to start out with. If you want to get more into investing you can do that with more confidence, and if you decide you don’t want to go any further into it, there is no need to because investing in life cycle funds can last you through retirement.

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