The very idea that different times in our life call for different investing strategies may sound strange. Investing is a specific, clearly defined action, explained in the Oxford English Dictionary as expending money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, property, or by using it to develop a commercial venture. Why, then, these expectations of the material result or the schemes and shares employed to achieve them should vary with the investor’s age? Don’t we all share and, more importantly, retain throughout our lives the same realization that when the invested money doubles, it is good and when it triples, it is even better? The truth is that even though we may entertain a consistently similar attitude towards profiting from our investments – unless we become greedier with age and stop regarding tripling of our money as a sufficiently positive outcome – our practical approach to investing must change as we grow older. When we hit our forties, investing should attain the urgency for us that it has never had before. It is that time of our life when we have our last chance to provide for our comfortable old age, since investments do not (usually) bring gains overnight. If we start worrying about our retirement later, in our fifties, we just might not have enough time to accumulate a required amount of money from our investments to make it carefree and pleasant. Regarding the age forty as the last call to action, we will show you here not only how to invest but also how to do so in this specific time of your life, when you cannot allow yourself to lose and take a big gamble with your advanced years.
What first and foremost you need to do to enter on an investment career is to lay money away to invest. Although it is sometimes possible to profit from an infinitesimal amount of money, it is still better to invest a fairly palpable quantity of it to earn a handsome profit. Unless you have free money floating in your account, you have to save it to make investments. Indeed, if you have not started saving earlier yet, you absolutely must begin to put money aside, once you turn forty. Statistically, this is the period in people’s lives when they receive the fattest checks at their work places. By now, they had acquired needed work experience, honed their expertise, and proved their professional worth to others. Yet your high earnings should not seduce you into thinking that you can constantly go on spending spree and forget about savings. Because your retirement years are looming on the horizon, you should do precisely the opposite: to hoard money in your account and spend as less as it is practically possible. If,
If you do not have a particular business in mind in which you want to put your money, you can always invest in stocks. It is surely true that joining volatile stock market is risky, and the nearer you approach your retirement years the less money you want to lose. Driven by these sentiments, many people prefer having a bird in the hand than two in the bush, holding onto what they already have. But while avoiding squandering money is prudent, by not taking investment risks, people simultaneously stunt their financial growth. Financial analysts suggest that people aged forty who plan to retire in approximately twenty-five years should have as much as 87 percent of their savings in stock funds and about 13 percent of them in bonds. If your aim is early retirement, then this ratio is different. Fifteen years before the retirement, you should have about 72 percent of your money invested in stocks and 28 percent in bonds. Your other personal circumstances should also be factored in the calculations of this ratio. Your decision to remain in the workplace after your retirement date or your more modest living expectations in your old age can easily influence your asset allocations in stock market.
Another investment you should make in your forties is creating a good retirement plan. The Traditional Individual Retirement Account (IRA) and even more so the Roth IRA are particularly good arrangements for you to consider. Even if you have an employment retirement plan such as 401 (K), the Roth IRA offers good conditions to save money for your post-employment years. Unlike other retirement schemes, it allows you tax free early withdrawals. It also does not oblige you to take distributions once you turn seventy. Should you so choose, you can keep money in your Roth IRA account forever and continue making contribution to it after your seventieth birthday, if you carry on working.
Buying good health insurance and paying off your debts can also help you reach your retirement age with solid financial support. Comfortable, secure retirement is practically achievable, you only need to start making investment in your future no later than in your forties.