5 investment mantras for investors in their 40s and 50s

There is a common misconception regarding investment. Most people in their 40s and 50s think that there is no harm in keeping their investing approach the same as in their 20s, but that is not true.

As we get older, our responsibilities increase, risk appetite changes, the margin for error changes and financial plans need to be well determined. Hence, with a change in age, it becomes necessary to change how you invest and plan for your retirement.

This article will provide you with five investment mantras you should adopt to get better and steadier gains in the middle ages of your career.   

1. Draw the curtains close on loans

While debt is not something desirable, many people have to acquire it to fulfil their aspirations. It can be a home, car, personal, or even education loan for your children. Whatever the loan is for, this is the time when you should be closing it as soon as possible.

This is because the age range of 40-50 is when your focus should be on your family and your life after retirement. By dragging on a loan for a longer tenure, you are paying a big chunk as interest and missing out on investment options by spending extra money.

Many financial experts believe that if the time left for your loan tenure is not less than one year, it is a better deal to pay the foreclosure charges and close your loans early.

2. Planning for you and your family

As your age increases, so does the number of people rely on you for support. With increased responsibility over your spouse and children, all financial planning must be done keeping their future in mind.

Before planning your investments, consider some expenses you might need to shell out in the upcoming years. Creating a separate goal for your children's higher education expenses, medical expenses and miscellaneous emergency fund requirements would be best.

You should also check your insurance policies and make changes while considering the possible medical needs of you and your loved ones.

3. Restructure your investments

Just as your expenses are not the same as they were 10-15 years ago, so is your risk appetite. With added responsibilities and a looming time limit to your years of employment, you cannot afford to take high-risk and high-reward investment routes.

As you reach your retirement age, it is better to alter the fund allocation of your investments. For example, suppose the investments in your 30s had 70% fund allocation in equity and 30% in debt. Once you reach the age of 40, you should change the allocation to 60% equity and 40% debt. Similarly, by reaching 50, the distribution should be 50-50 regarding equity and debt.

4. Diversify your portfolio

Most people belonging to the age group of 40-50 have a steady income and have reached their respective career goals. With a steady inflow of income, it is time to diversify your portfolio and generate passive income.

Apart from restructuring your financial investments to make them less risky, you can also look for other assets to diversify your portfolio. You can buy gold, allocate more money in EPFs, or even consider renting a residential property that you might have.

With a diverse portfolio, you safeguard your assets from negative financial impacts and ensure secured retirement years ahead.

5. Consult an expert

The need for a financial advisor was never as critical as it is at this point in your life. Unlike your 20s, when risky career bets or poor financial choices did not have that many repercussions, the decisions you make in your middle ages will shape your post-retirement life. This is why consulting financial advisors will be one of the best decisions you can make now.

A financial advisor will gather inputs from past debts, cash flows and spending habits and chalk up an amount you need to save before retirement to live comfortably. Furthermore, they will also provide you with a roadmap for investment to reach your financial goals.

To sum up

Making the right investment decision becomes much more crucial between the age of 40s and 50s. With added responsibilities and approaching retirement, you should make intelligent and efficient decisions to create a stable post-retirement life. 

Thankfully, with Tata Capital Wealth, you are not alone in this journey. Offering a wide range of investment, wealth protection, and financial services, Tata Capital Wealth is there to assist you during your final stretch before retirement.

Visit our official website today!