Photo of Eric R. Ebbert, CFP®, MBA, CEO Eric R. Ebbert, CFP®, MBA, CEO Nov 12, 2021

We never know what curves life will throw at us and what our financial needs will be. At certain points in our lives, we’ll be in a time of crisis and will need additional funds to cover unexpected expenses. Other times will be filled with joy, and we may want to celebrate that. Regardless of the stage of life you’re in, it is beneficial to prepare financially for all life stages. 

Typically, you can expect for there to be three stages in regard to your financial well-being: wealth accumulation, preservation and distribution. According to Cathay Bank, “By understanding your savings, investment, and banking options, you will be better equipped to meet your money goals and needs during each stage.”

Stage 1: Accumulate liquid savings

The first stage is all about building your nest egg. While in this stage of financial planning, you will work to accumulate savings and liquidity. For example, you will want to focus your efforts on building your emergency fund, putting money in money markets or CDs, and developing credit. Other areas to accumulate wealth include taking advantage of your retirement plan options such as a 401(k) or IRA. 

Stage 2: Preserve your wealth

At this stage, your goal is to diversify your holdings. Evaluate your investment strategy and goals. Next, select an asset allocation that includes a mix of stocks and bonds to help you reach that milestone. You should consider having a mix of high-risk investments and low-risk investments. The percentage of high/low risk allocations should change as you age. The closer you are to your retirement age, the more likely it is that you will want to invest in lower-risk options.

Stage 3: Reduce risk when distributing your wealth

This phase should be known as the “reduce your risk” phase. One way you could reduce your risk is to draw down equity exposure by lessening your riskier options, padding your investment accounts against risk.

Talk to a ProVise CFP® professional about the life stages for financial planning

At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about preparing your money for different stages of life? Contact ProVise today to schedule a complimentary consultation.