more than just a fancy buzzword
Life-cycle investing theory is our basis for creating your goal specific investment portfolios that your investment strategy is built on. It is a key element in our attempt to tailorize each and every investment decision provided to clients.
Life-cycle theory applied to goal-based investing
merging concepts that fit!
The success of your investment strategy
is perfectly defined by reaching your goal. However, it also makes a difference how you reach it! To state it simple: reaching your financial goals while sleeping well is as least as important as reaching your goal itself. Nothing is more costly than abandoning your goals just because your strategy was not suitable given your personal circumstances.
We therefore apply life-cycle theory to construct investment portfolios that are fully tailored to your personal circumstances, helping us to mitigate investment risk further.
What does life-cycle investing stand for
and why is it important anyway
Life-cycle investing is a concept that relates the different income stages in your working career to your optimal investment strategy. To understand the importance we first need to see that next to financial capital there is human capital as well.
Your labour income is an asset or to be more precise in integral part of your human capital. It will evolve with your age (over your life-cycle), experience different levels (salary grow) and sector employment uncertainty (it fluctuates). The same will happen with your spendings and savings.
But why is this so important?
smoothing your consumption is key!
Your labor income is used for consumption. Following consumption-based asset pricing theory investing is also very much about smoothing, i.e. stabilizing your future consumption. This is important since your income will usually be at risk over time either due to changing employment security our by uncertain wage growth and/or higher prices (inflation).
By taking your personal life-cycle circumstances (salary-sector-saving-time) into account, we can generate strategic investment portfolios that are best suited to mitigate some of these risks and hence smooth your future consumption.
Wage growth risk
undefined - CHF
How will this work in practice?
the 4 life-cycle investing dimensions
By knowing your profession or sector of occupation, your salary and your savings rate we assess the riskiness of your human capital and adjust your investments accordingly. This is done by comparing how your labor income changes over time in conjunction with changing asset prices. Asset prices that move in lockstep with your income are placed at a disadvantage, while assets that move in opposite to your income (go up if you income falls) are preferred. Although every user profile will be unique some general rules apply with regard to how life-cycle considerations will affect your investment portfolios.
More accurate information
leads to more suitable investments
We are fully aware of people's sensibility
when sharing information about their personal financial background. At the same time we see it as incredibly important to highlight why this information is needed and how it is used in our investment engine. It must be understood that the accuracy of your input is essential when aiming to shield you from some of the risks that can occur during investing (see our data protection declaration).