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Identifying Your Stage on the Investor Lifecycle

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This Markets in a Minute Chart is available as a poster.

Investor Lifecycle Diagram

This Markets in a Minute Chart is available as a poster.

Identifying Your Stage on the Investor Lifecycle

As people age and progress through their careers, their financial goals continuously evolve. Understanding one’s current goals, while also planning for those in the future, are two important elements of financial planning.

In this Markets in a Minute chart from New York Life Investments, we outline the investor lifecycle, a three-staged theory designed to help individuals optimize their portfolios as they age.

The Three Stages

Each lifecycle stage is associated with a set of distinct objectives that, when incorporated into a long-term investment plan, will guide the investor through to retirement.

Lifecycle StageCommon Short-term ObjectivesCommon Long-term Objectives
Accumulation Stage (Ages 20-35)- Paying off student debt
- Buying real estate
- Building emergency savings
- Saving for children's education
- Accumulating wealth
Preparation Stage (Ages 35-60)- Taking vacations
- Funding children's education
- Planning for retirement
Retirement Stage (Ages 60+)- Achieving desired lifestyle
- Covering medical expenses
- Estate planning

These age-sensitive objectives will ultimately shape an investor’s risk profile and portfolio allocations.

The Accumulation Stage

Individuals in the accumulation stage are just beginning their careers, meaning they have a relatively low net worth and a long time horizon until retirement.

With over 30+ working years ahead of them, it’s often an ideal time for these investors to build more aggressive portfolios geared towards capital gains. In practice, this usually results in a significant allocation to equities.

This is because equities boast a relatively higher return potential, making them suitable for younger investors looking to accumulate wealth. Their long time horizons also allow them to ride out periods of short-term volatility that equity markets sometimes experience.

The Preparation Stage

Individuals in the preparation stage will likely reach their peak earning years, and as a result, will have a greater capacity to save and invest.

Getting the most out of this capacity will require these investors to establish a long-term financial plan centered around retirement. Because they now face a shorter time horizon, they may want to consider a more balanced risk profile.

While equities may still play a major role in these individuals’ portfolios, the asset class’s overall allocation is often dialed back in favor of safer securities such as investment-grade bonds.

The Retirement Stage

As individuals begin to retire, their risk profiles typically become more conservative. Capital preservation and steady income are the top priorities, and in most cases, portfolios become predominantly weighted towards fixed income and money market securities.

Retirees may want to retain an allocation to equities, however. The possibility of outliving one’s savings, also known as longevity risk, is a real possibility—especially given the higher medical costs associated with old age:

Age GroupAverage Annual Healthcare Spending ($)
0-18$3,749
19-44$4,856
45-64$10,212
65-84$16,977
85+$32,903

Source: Peter G. Peterson Foundation

According to the data, the average American experiences a sharp increase in medical costs once past the age of 45. This could spell the need for returns higher than what is provided by a fixed income-only portfolio. Maintaining exposure to equities—an asset class that has historically generated higher returns than fixed income—could help to mitigate longevity risk.

Putting It All Together

According to the investor lifecycle, a typical portfolio will transition through three broad stages over one’s lifetime. At each consecutive stage, the types of assets used should be adjusted to reflect the investor’s shifting risk profile.

By the final retirement stage, the appetite for risk is often low, and the core of a portfolio will be typically comprised of high quality, income-oriented investments. Careful monitoring of income and expenditures will also be required to reduce longevity risk.

While unique circumstances can sometimes warrant a deviation from the three stage lifecycle, its underlying theme still holds true—an investment portfolio should always be optimized to support one’s goals.

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Markets in a Minute

Mapped: GDP Growth Forecasts by Country in 2024

Will global GDP growth continue to be resilient in 2024? This graphic shows the economic outlook for 191 economies around the world.

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This map shows GDP growth projections in 2024.

Mapped: GDP Growth Forecasts by Country in 2024

Resilient GDP growth and falling inflation are spurring a brighter outlook for 2024, although cautions remain across global economies.

While investors are hopeful that U.S. rate cuts could happen as early as May, the Fed has signaled that it won’t “declare victory” too soon. As countries around the world maneuver a complex landscape, they are faced with a scope of risks that include inflationary spikes, rising debt loads, and dwindling consumer savings.

This graphic shows global GDP growth projections in 2024, based on the International Monetary Fund (IMF) October 2023 Outlook and January 2024 update.

Global GDP Growth Outlook 2024

In 2024, real GDP growth is forecast to increase 3.1%, a slight rise from October’s outlook.

While positive growth is projected across all regions, it varies widely due to many factors spanning from the effects of higher borrowing costs to low consumer sentiment. Here are forecasts across 191 countries worldwide:

Country2024 Real GDP % Change (Projected)2023 Real GDP % Change (Estimate)
🇦🇱 Albania3.3%3.6%
🇩🇿 Algeria3.1%3.8%
🇦🇩 Andorra1.5%2.1%
🇦🇴 Angola3.3%1.3%
🇦🇬 Antigua and Barbuda5.4%5.6%
🇦🇷 Argentina2.8%-2.5%
🇦🇲 Armenia5.0%7.0%
🇦🇼 Aruba1.2%2.3%
🇦🇺 Australia1.2%1.8%
🇦🇹 Austria0.8%0.1%
🇦🇿 Azerbaijan2.5%2.5%
🇧🇸 The Bahamas1.8%2.7%
🇧🇭 Bahrain3.6%6.0%
🇧🇩 Bangladesh6.0%4.5%
🇧🇧 Barbados3.9%1.6%
🇧🇾 Belarus1.3%1.0%
🇧🇪 Belgium0.9%4.0%
🇧🇿 Belize3.0%5.5%
🇧🇯 Benin6.3%5.3%
🇧🇹 Bhutan3.0%1.8%
🇧🇴 Bolivia1.8%2.0%
🇧🇦 Bosnia and Herzegovina3.0%3.8%
🇧🇼 Botswana4.1%3.1%
🇧🇷 Brazil*1.7%-0.8%
🇧🇳 Brunei Darussalam3.5%1.7%
🇧🇬 Bulgaria3.2%4.4%
🇧🇫 Burkina Faso6.4%3.3%
🇧🇮 Burundi6.0%4.4%
🇨🇻 Cabo Verde4.5%5.6%
🇰🇭 Cambodia6.1%4.0%
🇨🇲 Cameroon4.2%1.3%
🇨🇦 Canada*1.4%1.0%
🇨🇫 Central African Republic2.5%4.0%
🇹🇩 Chad3.7%-0.5%
🇨🇱 Chile1.6%5.0%
🇨🇳 China*4.6%1.4%
🇨🇴 Colombia2.0%3.0%
🇰🇲 Comoros3.5%4.4%
🇨🇩 Democratic Republic of the Congo4.7%2.7%
🇨🇬 Republic of Congo4.4%6.2%
🇨🇷 Costa Rica3.2%2.2%
🇨🇮 Côte d'Ivoire6.6%0.2%
🇭🇷 Croatia2.6%6.7%
🇨🇾 Cyprus2.7%1.7%
🇨🇿 Czech Republic2.3%5.0%
🇩🇰 Denmark1.4%4.6%
🇩🇯 Djibouti6.0%3.0%
🇩🇲 Dominica4.6%1.4%
🇩🇴 Dominican Republic5.2%4.2%
🇪🇨 Ecuador1.8%2.2%
🇪🇬 Egypt3.6%-6.2%
🇸🇻 El Salvador1.9%-2.3%
🇬🇶 Equatorial Guinea-5.5%3.1%
🇪🇪 Estonia2.4%6.1%
🇸🇿 Eswatini3.3%7.5%
🇪🇹 Ethiopia6.2%-0.1%
🇫🇯 Fiji3.9%1.0%
🇫🇮 Finland1.0%2.8%
🇫🇷 France*1.0%6.2%
🇬🇦 Gabon2.6%-0.5%
🇬🇲 The Gambia6.2%1.2%
🇬🇪 Georgia4.8%2.5%
🇩🇪 Germany*0.5%3.9%
🇬🇭 Ghana2.7%3.4%
🇬🇷 Greece2.0%5.9%
🇬🇩 Grenada3.8%4.5%
🇬🇹 Guatemala3.5%38.4%
🇬🇳 Guinea5.6%-1.5%
🇬🇼 Guinea-Bissau5.0%2.9%
🇬🇾 Guyana26.6%4.4%
🇭🇹 Haiti1.4%-0.3%
🇭🇳 Honduras3.2%3.3%
🇭🇰 Hong Kong SAR2.9%6.3%
🇭🇺 Hungary3.1%5.0%
🇮🇸 Iceland1.7%-2.7%
🇮🇳 India*6.5%2.0%
🇮🇩 Indonesia5.0%3.0%
🇮🇷 Iran2.5%3.1%
🇮🇶 Iraq2.9%0.7%
🇮🇪 Ireland3.3%2.0%
🇮🇱 Israel3.0%2.0%
🇮🇹 Italy*0.7%2.6%
🇯🇲 Jamaica1.8%4.6%
🇯🇵 Japan*0.9%5.0%
🇯🇴 Jordan2.7%2.6%
🇰🇿 Kazakhstan4.2%1.4%
🇰🇪 Kenya5.3%3.8%
🇰🇮 Kiribati2.4%-0.6%
🇰🇷 Korea2.2%3.4%
🇽🇰 Kosovo4.0%4.0%
🇰🇼 Kuwait3.6%0.5%
🇰🇬 Kyrgyz Republic4.3%2.1%
🇱🇦 Lao P.D.R.4.0%4.6%
🇱🇻 Latvia2.6%12.5%
🇱🇸 Lesotho2.3%-0.2%
🇱🇷 Liberia5.3%-0.4%
🇱🇾 Libya7.5%74.4%
🇱🇹 Lithuania2.7%4.0%
🇱🇺 Luxembourg1.5%1.7%
🇲🇴 Macao SAR27.2%4.0%
🇲🇬 Madagascar4.8%8.1%
🇲🇼 Malawi3.3%4.5%
🇲🇾 Malaysia4.3%3.8%
🇲🇻 Maldives5.0%3.0%
🇲🇱 Mali4.8%4.5%
🇲🇹 Malta3.3%5.1%
🇲🇭 Marshall Islands3.0%3.2%
🇲🇷 Mauritania5.3%2.6%
🇲🇺 Mauritius3.8%2.0%
🇲🇽 Mexico*2.7%5.5%
🇫🇲 Micronesia3.1%4.5%
🇲🇩 Moldova4.3%2.4%
🇲🇳 Mongolia4.5%7.0%
🇲🇪 Montenegro3.7%2.6%
🇲🇦 Morocco3.6%2.8%
🇲🇿 Mozambique5.0%0.5%
🇲🇲 Myanmar2.6%0.8%
🇳🇦 Namibia2.7%0.6%
🇳🇷 Nauru1.3%1.1%
🇳🇵 Nepal5.0%3.0%
🇳🇱 Netherlands1.2%4.1%
🇳🇿 New Zealand1.0%2.9%
🇳🇮 Nicaragua3.3%2.5%
🇳🇪 Niger11.1%2.3%
🇳🇬 Nigeria*3.0%1.2%
🇲🇰 North Macedonia3.2%-0.5%
🇳🇴 Norway1.5%0.8%
🇴🇲 Oman2.7%6.0%
🇵🇰 Pakistan2.5%3.0%
🇵🇼 Palau12.4%4.5%
🇵🇦 Panama4.0%1.1%
🇵🇬 Papua New Guinea5.0%5.3%
🇵🇾 Paraguay3.8%0.6%
🇵🇪 Peru2.7%2.3%
🇵🇭 Philippines5.9%-0.7%
🇵🇱 Poland2.3%2.4%
🇵🇹 Portugal1.5%4.0%
🇵🇷 Puerto Rico-0.2%2.2%
🇶🇦 Qatar2.2%2.2%
🇷🇴 Romania3.8%6.2%
🇷🇺 Russia*2.6%0.5%
🇷🇼 Rwanda7.0%8.0%
🇼🇸 Samoa3.6%2.2%
🇸🇲 San Marino1.3%0.8%
🇸🇹 São Tomé and Príncipe2.4%4.1%
🇸🇦 Saudi Arabia*2.7%2.0%
🇸🇳 Senegal8.8%4.2%
🇷🇸 Serbia3.0%2.7%
🇸🇨 Seychelles3.9%1.0%
🇸🇱 Sierra Leone4.7%1.3%
🇸🇬 Singapore2.1%2.0%
🇸🇰 Slovak Republic2.5%2.5%
🇸🇮 Slovenia2.2%2.8%
🇸🇧 Solomon Islands2.4%0.9%
🇸🇴 Somalia3.7%3.5%
🇿🇦 South Africa*1.0%2.5%
🇸🇸 South Sudan4.2%4.9%
🇪🇸 Spain*1.5%3.2%
🇰🇳 St. Kitts and Nevis3.8%6.2%
🇱🇨 St. Lucia2.3%-18.3%
🇻🇨 St. Vincent and the Grenadines5.0%2.1%
🇸🇩 Sudan0.3%-0.7%
🇸🇷 Suriname3.0%0.9%
🇸🇪 Sweden0.6%4.0%
🇨🇭 Switzerland1.8%0.8%
🇹🇼 Taiwan3.0%6.5%
🇹🇯 Tajikistan5.0%5.2%
🇹🇿 Tanzania6.1%2.7%
🇹🇭 Thailand3.2%4.3%
🇹🇱 Timor-Leste3.1%5.6%
🇹🇬 Togo5.3%1.5%
🇹🇴 Tonga2.5%5.4%
🇹🇹 Trinidad and Tobago2.2%2.6%
🇹🇳 Tunisia1.9%2.5%
🇹🇷 Türkiye3.0%1.3%
🇹🇲 Turkmenistan2.1%2.5%
🇹🇻 Tuvalu3.5%3.9%
🇺🇬 Uganda5.7%4.6%
🇺🇦 Ukraine3.2%2.0%
🇦🇪 United Arab Emirates4.0%3.4%
🇬🇧 United Kingdom*0.6%0.5%
🇺🇸 U.S.*2.1%2.1%
🇺🇾 Uruguay3.3%1.0%
🇺🇿 Uzbekistan5.5%5.5%
🇻🇺 Vanuatu2.6%1.5%
🇻🇪 Venezuela4.5%4.0%
🇻🇳 Vietnam5.8%4.7%
🇵🇸 West Bank and Gaza2.7%3.0%
🇾🇪 Yemen2.0%-0.5%
🇿🇲 Zambia4.3%3.6%
🇿🇼 Zimbabwe3.6%4.1%

*Reflect updated figures from the January 2024 IMF Update

In the United States, GDP growth is projected to remain moderately strong, supported by rising real wages boosting consumption across the economy.

Yet compared to last year, growth is set to slow amid a softening labor market. In 2024, Citigroup announced it was laying off 20,000 employees after a disappointing year. Meanwhile, tech firms such as Google, Amazon, and Salesforce are reducing headcounts. Along with this, package delivery giant UPS announced 12,000 job cuts.

In China, property market woes are dragging on economic growth. Declining real estate values have impacted incomes, assets, and the public mood. Due to these headwinds, consumption growth is forecast to drop over the year.

Over in Latin America, Chile and Brazil were among the first emerging countries to hike interest rates in 2021—and they were some of the first to cut them last year. Thanks to improving domestic demand amid dissipating price spikes, the IMF upgraded the outlooks for Brazil and Mexico in 2024.

The lowest growth across all regions is forecast to be seen in Europe, at 0.9%. In late 2023, Signa, a multi-billion European property firm collapsed following the sharpest rise in interest rates in the European Union’s 25-year history. Also dimming the outlook is low consumer sentiment and the impact of high energy prices.

What are the Key Risks?

While no one holds a crystal ball, there are certain risks outlined by the IMF that could negatively impact global GDP growth:

  • Sharply Rising Commodity Prices: If geopolitical tensions escalate in the Israel-Hamas war, it could spillover into the broader region leading to spikes in energy prices. Over a third of global oil exports are based out of the region, in addition to 14% of global gas exports. Adding to this, 11% of international trade passes through the Red Sea, which has seen continued attacks between Iran-backed Houthi rebels and strikes from the U.S. and its allies.
  • Stubborn Inflation: A return of supply disruptions paired with an overheated labor market could add inflationary pressures, potentially leading to higher interest rates. In turn, stock markets could respond adversely and financial stability could deteriorate.
  • China’s Economy Slows: A property market rout could hurt domestic growth and consumer confidence, leading to declining consumption across the country. Accounting for nearly 19% of global GDP (PPP) in 2023, a slowing Chinese economy could impact countries that rely on trade with China.

While these risks remain present, the economy could witness positive surprises as well. Should inflation fall faster than expected, it would likely lead to monetary easing and a boost to global economic growth. Overall, the global economy defied expectations in 2023, and it may do the same in 2024.

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Markets in a Minute

Chart: Is ESG Investing in Decline?

After the pandemic boom, ESG investments lost their luster amid high interest rates. Could they make a comeback?

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This graphic shows flows of ESG investments in the U.S.

Is ESG Investing in Decline?

These days, ESG investments have lost their luster given high interest rates, political backlash, and greenwashing scrutiny.

In 2021 during the pandemic boom, U.S. sustainable funds hit a record $358 billion in assets, up from $95 billion in 2017. But since then, investor interest has waned as higher borrowing costs impact capital-intensive clean tech stocks.

This graphic shows the drop in sustainable fund flows—often considered an indicator of investor sentiment—based on data from Morningstar.

Slowing Demand

In 2023, investor appetite cooled for sustainable investments, as fund flows notched their worst year on record.

Overall, flows sank $13 billion as fund performance lagged behind conventional funds. Adding to this, concerns surrounding the murkiness of environmental, social, and governance (ESG) ratings were put under the spotlight.

As ESG pushback intensified in U.S. politics, at least 165 anti-ESG bills were introduced in 2023. Politicians have claimed that ESG criteria negatively impacts financial returns, but evidence behind that is mixed.

While sustainable funds underperformed traditional funds in 2023, a separate study showed that ESG portfolios had as much as 6% excess returns annually compared to benchmark indexes between 2014 and 2020.

ESG Investments: A Closer Look

One key aspect of ESG funds is whether they hold investments that align with the UN Sustainable Development Goals (SDGs).

Globally, 542 funds with $125 billion in assets are associated with at least one of these objectives. The table below shows the top five SDGs, by ETF assets under management (AUM).

SDGGoalNumber of ETFsAUM
SDG 13Climate Action275$65.4B
SDG 7Affordable
and Clean Energy
80$15.3B
SDG 9Industry, Innovation,
and Infrastructure
49$13.4B
SDG 6Clean Water
and Sanitation
16$9.1B
SDG 11Sustainable Cities
and Communities
34$5.5B

Source: Trackinsight. As of January 7, 2024.

We can see that Climate Action is the highest overall, with companies held in these ETFs making commitments to lower emissions and advance sustainability.

For instance, Home Depot has cut electricity use by over 50% since 2010 in U.S. stores, and aims to use renewables for all of its electricity by 2030. In addition, Microsoft has committed to this goal through a number of initiatives, including providing access to clean water to over one million people across Indonesia, Brazil, India, and Mexico in 2023.

While investor interest has slowed, 35% of advisors said they used ESG funds last year, based on a Journal of Financial Planning survey. As the industry matures, it remains to be seen if ESG investments will see a resurgence, especially if interest rates fall in the coming years.

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