A:

Unlike the accumulation phase – where emphasis is placed on growing wealth – the consolidation phase is a balance between growing and protecting one's investments. The consolidation phase usually begins during the middle of an investor's life, when children are nearing college age and the distance between the beginning of one's career and retirement are roughly equal (although the consolidation phase will last until retirement).

During the consolidation phase, significant home equity should exist, as should sufficient education funding, so that retirement planning can take center stage. The consolidation phase is so-named because it is usually when investors begin to organize the hodge-podge of investment and savings accounts that have grown up over the years: an old 401k here, IRAs there and checking and savings accounts scattered over various banks become a single retirement account and a single bank – sometimes all under one roof – handling the investors financial affairs.

Finally, during the consolidation phase, investments may be balanced between growth and income, although price appreciation should take precedence – albeit less so than during the accumulation phase – over current income. (For more on this read, The Season's Of An Investor's Life and Bonds for Every Stage of Life.)

This question was answered by Justin Bynum

RELATED FAQS
  1. When phase of the economic cycle tends to be strongest for companies in the retail ...

    Learn why retail's cyclical nature leads it to perform best during periods of expansion and how savvy investors use sector ... Read Answer >>
  2. What are the three phases of a completed initial public offering (IPO) transformation ...

    While some large and successful companies are still privately-owned, many companies aspire toward becoming a publicly-owned ... Read Answer >>
  3. What are the key metrics used to measure the business cycle?

    Learn what key metrics are used to determine if the business cycle is in a period of expansion, contraction, or at a peak ... Read Answer >>
  4. When during the economic cycle should I invest in the banking sector?

    Learn how your individual investing style determines what phase of the economic cycle is the best time to invest in the banking ... Read Answer >>
Related Articles
  1. Financial Advisor

    How to Help Clients Plan a Phased Retirement

    The notion of phased retirement is gaining traction. Here's how advisors can help clients plan accordingly.
  2. Retirement

    What Is a Phased Retirement and How Do I Get One?

    Workers around the country are redefining what retirement looks like. One way is a phased retirement, in which you gradually exit the workforce.
  3. Trading

    The Stock Cycle: What Goes Up Must Come Down

    Stock prices seem random, but there are repeating cycles. Learn to take advantage.
  4. Retirement

    Bonds: They're Not Just For Seniors

    In this article, we'll show you how investors at any stage of life can keep these fixed-income investments. Keep Reading.
  5. Retirement

    Journey Through The 6 Stages Of Retirement

    Financial planning is important, but emotional planning is the key to retiree bliss.
  6. Personal Finance

    What Does Consolidation Mean?

    The term consolidation has multiple meanings depending on its context.
  7. Financial Advisor

    Retirement's Evolution: How to Be Prepared

    For many, retirement might not be the full stoppage of work and living a life of leisure but rather one of slowly phasing out of the workforce.
  8. Financial Advisor

    Three Stages of Retirement: A How to Guide to Plan for Them

    Retirement isn't something you can plan for and forget. Your needs will change at different points, which is why you need to plan for the different stages.
RELATED TERMS
  1. Spending Phase

    The period in a person's life following retirement in which earning ...
  2. Industry Life Cycle Analysis

    A form of fundamental analysis involving the process of making ...
  3. Life Cycle

    The course of events that brings a new product into existence ...
  4. Phase 2

    The second phase of clinical trials or studies for an experimental ...
  5. Phase 3

    The final phase of clinical trials for an experimental new drug, ...
  6. Annuitization Phase

    The period when the annuitant starts to receive payments from ...
Hot Definitions
  1. Benchmark

    A standard against which the performance of a security, mutual fund or investment manager can be measured.
  2. Mobile Wallet

    Mobile wallet is a virtual wallet that stores payment card information on a mobile device.
  3. Leverage

    1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. ...
  4. Trumponomics

    Trumponomics is a term for the economic policies of President Donald Trump.
  5. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  6. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
Trading Center