Changes of Investments Needs
Investments are of different types such as unit trust, bonds; exchange-traded funds, shares, contracts for differences, structured deposits and they all change over time throughout the life cycle. The change is affected by return and risk which are associated with the terms of the investment (Maginn, 2007). In the UK, the investments plans are carried out without considering of risk changes over time.
The various stages in the life cycle affect the investments decisions, for instance in the early years when the investor is young or the venture which is the investments is young. In the early stages, it is necessary to establish an emergency fund, since the risks might be severe leading to loss of the entire investment. At this stage, it is essential to have an insurance policy. The insurance policy concerns the investment due to unforeseen circumstances where the investment may require to be covered to pay the losses or unexpected costs. At this
The later operational years are the second phase where the investment is expected to take care of most of the needs of the investor. A long-term insurance is considered in this case as it will be used even in the later life. Other sources of saving should be considered since the risks are more at this stage it is necessary to save for something unexpected and future use (Maginn, 2007).
The last phase of the cycle is when very less income is being realized from the investment. It is necessary for the investor to analyze the risks which will be achieved on there is no more income and plan how to handle all the expenses. An investor should make predictions of possible risks and determine how to cover them so that the investment does not lose everything.
Bibliography
MAGINN, J. L. (2007). Managing investment portfolios: a dynamic process. Hoboken, N.J., John Wiley & Sons.
