A client who is comfortable with risk has moved from stage two to stage three...

Stage two of the investor life cycle represents the family commitment years, when mortgage payments, family expenses, and other obligations often constrain liquidity and the ability to invest for long-term objectives. The IFC material notes that Stage 2 investors can have difficulty allocating funds to long-term savings because more immediate financial commitments take priority. Moving into Stage 3—the mature earning years—normally brings improving income, greater accumulated wealth, and moderated financial commitments. Since this client is specifically described as comfortable with risk, a greater allocation to equities is appropriate to pursue long-term capital growth. Bonds, fixed-income investments, and money-market securities emphasize income, stability, or liquidity and therefore would not best exploit the client ' s stronger financial capacity and stated risk comfort.

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