Lifestyle strategy

Some individuals may find it difficult to choose between funds offered, even with effective communication. For those individuals that decline to make any kind of selection, then we would suggest the lifestyle default strategy. Lifestyle funds got their name from the idea that they offer asset allocation moves that can complement situations in an investors life.

A lifestyle strategy attempts to achieve strong investment performance relative to salary inflation in the early years (the growth phase) and then protect an individual's fund values in the lead up to retirement (the consolidation phase).

A typical lifestyle approach would be to adopt a medium risk strategy, starting out with an investment strategy similar to a typical managed fund, i.e. an investment allocation of 70% in equities, 20% in bonds and 10% in property.

The recommended switching period is likely to start 10 years from retirement.

The lifestyle fund is an investment option that can be beneficial to the individual for the following reasons:

• it provides a solution to concerns and helps avoid common traps in relation to timing; and
• it avoids some of the mistakes individuals commonly make prior to retirement by having excess exposure to equities. This can help avoid a situation whereby an individual's fund can fall sharply in value close to retirement following a downturn in markets.

Grant Thornton Financial Counselling Limited is the Financial Planning arm of the Grant Thornton practice in Ireland and has offices in Dublin and in Limerick.

Grant Thornton Financial Counselling Limited is regulated by The Central Bank of Ireland. Registered office: 24-26 City Quay, Dublin 2. Company registration no. 102489.

Grant Thornton is authorised by The Institute of Chartered Accountants in Ireland to conduct investment business under the Investment Intermediaries Act 1995.