by Arrnica Dayannandan

Created on: February 06, 2009

A lifestyle investment fund is generally a cocktail of several types of investments. The right mix of allocation of your assets to various investment opportunities is configured on the background of the given risk and expected return profile, acceptable to, and affordable by an investor. Various factors come into play while customizing a lifestyle fund around the investor under consideration. These include age, risk handling capacity, investment objectives, and time period in which the investor wants to accomplish his/her purpose.

You may evaluate your background in terms of the following lifestyle fund investment options, before choosing in on the most appropriate lifestyle fund, which suits you best:

- Auto-self balance portfolio:

When your investment manager happens to reconfigure your lifestyle funds on a continuous and uniform basis, then he is said to be sustaining a consistent level of risk. This risk is kept from exceeding any further. In the conventional form of portfolio management, if you had a portfolio of your own, your assets would be totally at the mercy of the rise and fall in the markets. This rise and fall would in turn indicate the asset value of your portfolio at any given time. This indirectly implies that if you do not consistently reallocate your assets to new sources of investment, that are the best fit for survival in the current market scenario at any given point of time, then slowly your portfolio will become more and more risky to hold onto. With lifestyle funds, this risk is diluted, as reallocation of your assets to meet you financial objectives within your affordable capacity of risk, is a continuous process.

- Short time, low risk for conservative investors:

Traditionally conservative investors would generally prefer an investment situation of high stability and easy liquidity from their assets temporarily locked in investments. To put it in short, they'd rather have the original capital unspent, while still having a steady source of regular income. The sum-total variance in such an investor's entire portfolio is generally negligible even on an annual basis.

- Medium time, medium risk for moderately conservative investors:

Such investors have a faintly elevated risk tolerance level, again over faintly longer time duration than the traditionally conservative investors. These people have a minimum expectation of a nominal capital appreciation, in addition to a nominal income on a regular basis. Such investments witness fluctuations on an annual basis.

- Longer time, more risk for moderate investors:

These investors are more on the look out for a stabilized increase in the total value of their invested assets, while remaining satisfied with a relatively lower level of income generated on a regular basis. However, the risk is still lower than the kind observed in stock markets.

- Long time, higher risk for moderately aggressive investors:

These investors have their eyes set on an above-average level of growth and are barely interested in any regular income from such investments. Such investments experience moderate fluctuations annually.

- Long time, high risk for aggressive investors:

These investors seek exponential growth in their asset value, while not seeking regular income. Such investments fluctuate substantially annually. However, this is not of much value to investors, who want to make some quick buck in a very short time.

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