How to Adapt Your Investment Plan to Life Stages

creating a long-term investment plan

A buy-and-hold investment plan is easier in theory than in practice because goals and needs shift as different life stages begin. A perfectly balanced budget could be smashed to pieces by the birth of a child or an unexpected illness, so a financial plan and corresponding investing plan need to be malleable.

No one will have completely smooth spending over their lifetime, but if you can balance borrowing and saving, along with your risk tolerance and time horizon, you’ll have an investment plan that runs like a well-oiled machine and that makes your money work for your future. Here are a few ways to break down your investment planning by life stage.


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Entering the Workforce

For most people, real career work doesn’t begin until after high school or college. Maybe you saved some money when you had your first weekend gig growing up, but the majority of us aren’t able to seriously save and invest until we get that first 40-hour job. Of course, you’re also at the stage of your life where the temptation to spend is the highest, so budgeting becomes important.

At this stage of the life cycle, your expenses will likely be low, but so will your pay. Learning to live within your means will benefit you moving forward in a number of ways, now and in the future. Plan to earmark around 20% of your income for savings. Around half of that amount should be invested.

The benefits of starting to invest at a young age are twofold. First, you can capitalize on the magic of compound interest. $1,000 dollars invested at age 25 goes much, much further than the same amount invested at age 55. Second, you can pursue slightly more aggressive investments (which can have a higher return), while taking comfort in the fact that you will probably have ample years to make up any losses.

In short, if you’ve established an investment plan before the age of 30, you have a huge leg up on most of your peers and have given your future self much to be thankful for.

Increasing Responsibilities

The second stage in life is when budgeting really becomes crucial. After some time in the workforce, most of us begin creating a permanent foundation – a spouse, house, and maybe even kids. While not everyone will get married or have children, it’s this stage in life where expenses begin to ramp up and our salary may struggle to keep pace.

Buying a home requires a down payment (or costly private mortgage insurance). A marriage usually doesn’t happen without a wedding. And kids require, well, everything. If you learned how to budget early in life, you might already know how to balance these increased responsibilities while still keeping your financial goals on track. But your income will begin to be pulled in several different directions here, especially if you have children.

Nevertheless, it’s important to continue investing and saving. Shorter-term investment vehicles like CDs may be a good option to accrue funds for a down payment while keeping pace with inflation. If you welcome a child into your lives, then you’ll want to consider starting a 529 plan, which is a tax-advantaged savings plan that can be used to cover education expenses.

Additionally, if you haven’t started making regular contributions to a retirement plan yet, then you should absolutely start. Over the next few decades, you will have to work within the constraints of contribution limits, which means that it will become increasingly difficult to catch up to where you need to be for a comfortable retirement, especially after factoring in compound interest.

Peak Earning Years

Reaching middle age isn’t all bad. Yes, your hair might be a little thinner but your paycheck is much thicker and the major expenses relating to a house and childrens are mostly in the rearview. If you’ve managed to budget well during the first two life stages, this is the stage when you can start maximizing savings.

Now you might finally have the ability to max out your 401(k), open a Roth IRA, or utilize other vehicles like a Health Savings Account (HSA) to set yourself up financially for a comfortable retirement. With your current financial comfort, it may be tempting to invest in riskier corners of the market. Resist the temptation. Retirement is around the corner, which means it’s best to stay away from high risk investments that could sink your savings. After all, you no longer have the luxury of time to recover funds that are lost.


You’ve spent decades accumulating wealth, but now a different skill set comes into play – maintaining wealth. With no more employment, you don’t have human capital to utilize and must rely on your savings and investments to sustain you. That means budgeting. But retirement doesn’t have to be all penny pinching if you’ve planned properly.

Consult with your advisor about the best way to draw down your retirement funds while minimizing taxes. No one wants to pay Uncle Sam more than he’s owed, but minimizing taxes at this stage is crucial since your dollars are now finite. Your investment plan should be factored into your tax plan in order to limit year end tax liability.

Your asset allocation at this stage will likely be concentrated in lower risk, lower return investments, with a smattering of moderate risk investments that you may rely on for income in the later years of your retirement.

SGL and Your Investment Plan

Like your financial plan, your investment plan needs to be prepared for the twists and turns of life. That means designing a dynamic investment plan and adapting it to each life stage and new financial goal.

Working with a professional can help keep your investment portfolio properly balanced and you on track to achieve your financial goals.

SGL Financial includes investment planning as part of its comprehensive service offerings. The firm relies on evidence-based, modern theory-driven portfolio management with a sophisticated overlay system that works to ensure that clients’ assets remain balanced and at maximum efficiency. SGL believes in keeping costs low, taxes low, and returns high.

The SGL Financial investment philosophy hinges on the fact that you can’t time the market. It’s an unpredictable entity. Consequently, a successful investment plan requires a disciplined, long-term approach.

SGL prides itself on transparency, which is why the firm offers fee-based services. Moreover, the firm provides holistic services, making it a one-stop-shop for planning, investing, retirement, insurance, Medicare, taxes, and legal.