Five Stages of Investing

by John Kibilko
Investment strategies include education, low-risk options for beginners and sophisticated strategies for veterans.

Investment strategies include education, low-risk options for beginners and sophisticated strategies for veterans.

There are various theories about how to structure an investment strategy, and many experts suggest a five-tiered approach for investors. Although differences in the five stages exist, there are enough similarities to justify a strategy that combines elements of several theories. There also are strategies for investors at varying stages of their lives that take into account investment experience, resources and goals.


Beginners should focus on saving money, and should educate themselves about investment terminology and basic strategies. Gather your financial information, then prioritize family, career, insurance, education and retirement goals. The Council for Economic Education recommends creating a so-called put-and-take account to provide spending money and establish a small cushion for emergencies.


Exploration is the second stage of investing. Ask yourself if have the resources to invest and create realistic short- and long-term investment plans. You may want to consider a strategy of medium-term --- five to 15 years --- investments, such as education funds, early-retirement goals, weddings and buying a new home. This stage is when beginning investors, often in their 20s and 30s, dip their toes in low-risk investments, such as mutual funds and bonds.


People in their 30s and 40s should try to optimize returns from savings and investments with a focus on wealth accumulation, and priority should be given to retirement goals. Select a strategy and develop a budget. This stage is often a time for people in their 30s and 40s to begin systematic investing, including committing to a larger, regular paycheck contribution toward investment goals.

Strategic Investing

Strategic Investing includes managing investment portfolios, as well balancing and diversifying your investments. Protecting assets through a preservation strategy. Investors in their 50s should be looking toward less risky investments and moving to enough passive income to be financially independent and able to retire. Implement your plan by choosing investment options specific to your risk tolerance. Know your own conservative or risk-taking nature, then select investments based on appropriate asset classes.

Follow up

Monitor your investment plans regularly and determine if you're still achieving your goals. Decide if goals have changed and why. Self-sufficient, financially independent and retired people should re-establish goals to ensure that wealth is preserved. Take steps to assure handing it off to the next generation. For some people, this stage includes speculative investing. High-risk securities, penny stocks, antiques and other collectibles can be acquired by using money that's not necessary for meeting retirement goals.

Single-Business Investing Stages

Some investment strategies address single business ventures and include stages such as investing early, choosing the correct market sector, focusing locally, taking a lead in determining goals and developing an exit strategy.

About the Author

John Kibilko has been writing professionally since 1979. He landed his first professional job with "The Dearborn Press" while still in college. He has since worked as a journalist for several Wayne County newspapers and in corporate communications. He has covered politics, health care, automotive news and police and sports beats. Kibilko earned a Bachelor of Arts in journalism from Wayne State University.

Photo Credits

  • Thinkstock/Comstock/Getty Images