Investing in your 40s
InvestNow that you‘ve reached your 40s, you may have checked off some major life milestones. You may have a spouse, own a home, and children in school. There may be a few more notches on your career belt, too. With so much going on, it's easy to set your finances aside. Here are some ways to help tackle your family’s competing priorities. And they’re also some of the best investments to make in your 40s.
Paying for college
As your children get older, you may be thinking more about saving for college.
Costs are higher than ever with no signs of slowing down. If you haven't started saving yet, it's not too late. But it may be difficult to reach your goal by saving alone. Regardless of your timeline, the right college investing plan is key. Your strategy depends on a few factors:
- How much are you willing to contribute?
- How many years until each child goes to college?
- How comfortable do you feel about changes in the stock market?
The less time until your kids go to school, the more difficult it may be to reach your goal. You may also shift your investing strategy from aggressive to conservative. As you get closer to actually needing the money, you may be less willing to lose it.
Saving for retirement
By your 40s, you may feel more solid in your career. Chances are, you’re earning a higher salary and maybe enjoying more generous employee benefits than ever before. It may be tempting to spend the extra compensation on a bigger house, a newer car, or some other extravagance. But with retirement only a couple of decades away, it’s always good idea to care for your nest egg first:
- Contribute the maximum to your workplace retirement plan. If you can’t do that, at least contribute up to the qualifying amount to receive your company’s match.
- Consider opening an individual retirement account (IRA) or a health savings account (HSA). Both can provide an added boost to the quality of your life in retirement — with added tax advantages, too.
- Don’t skip retirement savings to pay for college. This could be a costly mistake. Remember, you can borrow money for college, but not for retirement.
Like your college fund, your retirement investing strategy depends on many factors.
If you begin investing in your 40s, there’s still plenty of time before retirement. This may allow you to take a bit more risk for higher potential returns. As you get closer to retirement, your investments may shift to a more conservative approach.
Boosting your savings potential
As you advance further in your career and into your peak earning years, you may want to look at other opportunities to accelerate your investment savings.
Like a digital investment platform that uses an algorithm to assemble an investment portfolio geared towards your goals and risk tolerance. Or try your hand at low-cost ETFs (Exchange Traded Funds).
Not sure what’s right for you? Maybe the best thing to do is to work with an Advisor to tailor a strategy that’s right for you today and for years to come.