What is the primary objective of life-cycle investing?

The primary objective of life-cycle investing is to adjust investment allocations according to life stages and risk tolerance. This strategy recognizes that individuals experience different financial needs and risk appetites at various stages of their lives.

In the early stages of life, investors may focus on growth-oriented investments, such as stocks, which involve higher risk but also the potential for significant returns. As individuals approach retirement, they typically shift towards more conservative investments, like bonds or cash equivalents, to preserve capital and reduce risk.

This adaptive approach helps individuals balance their financial goals with their changing circumstances, thereby increasing the likelihood of achieving a secure financial future while managing risk in alignment with their age and life situation. It emphasizes a long-term perspective on investing rather than seeking immediate gains, which aligns with the principles of prudent financial planning.