Late to the Investing Game? Don’t Panic! Here’s What to Do

It’s not uncommon to hear financial gurus tell people who are over 50 to pull out of the stock market and cash in their chips. However, many advisors are changing their tune, as the way we build wealth and save for retirement is changing.

In fact, experts now recommend that people invest in the stock market—no matter what their age. If you’ve never invested in the stock market before and you’re feeling overwhelmed, don’t worry. It’s not too late to get started, and you shouldn’t panic because you didn’t invest more when you were younger.

Here’s what you can do to make smart investments for the future, regardless of your age.

Proceed with Caution

Just because conventional wisdom is changing doesn’t mean you should go out and dump all of your cash into a hot biotech startup that has great ideas but no real results yet. Even if you’re ready to start investing more doesn’t mean you should throw all caution to the wind. It’s important to think about an age-appropriate portfolio, rather than just investing without a strategy.

Bonds are a safe bet for your investment portfolio, but they shouldn’t make up the whole thing. To really grow your wealth, you need to incorporate some stocks and cash equivalents. The percentage of your portfolio that’s made up of stocks vs. bonds, though, is very personal and depends on your individual situation. A conservative portfolio might contain 70-75% bonds and 20% stocks, for instance.

If you’re not sure about what the right percentage for your needs might be, then it might be a good idea to look for a financial advisor you can trust. Creating your portfolio isn’t life-or-death, but it does have some major implications for your retirement and eventual lifestyle.

Give Yourself a Break (A Tax Break That Is)

We all know that taxes are important for funding government and infrastructure, but that doesn’t mean you should be paying more than you have to. Anything you save on taxes will go into your portfolio and will help to support your living expenses during retirement.

There are many ways to reduce, postpone, or otherwise manage your tax burden as you get older. Putting your money into deferred accounts, taking advantage of losses, and avoiding capital gains tax by holding onto your investments longer are all ways you can give yourself a break around tax time.

Make the Right Moves

Before retirement, you’re likely to be at your peak earning years. Making smart moves in your 50s and 60s can pay off big before it’s time to leave the working world behind. You’ll want to be able to enjoy your retirement, not spend your time feeling worried about finances.

During these years, there are several steps you can take to set yourself up for success, beyond investing in the stock market. Making a plan for how much you’ll need to retire, getting rid of any lingering debts, and paying off your house are all great pre-retirement financial goals.

When it comes to investing, shift your portfolio toward bonds slowly. You may want to consider having a high ratio of stocks to bonds until about 5 years before you retire. At that point, you can slowly move away from the stock market, but don’t eliminate your stocks entirely. Today, it’s important to have a higher percentage of stocks than in the past for financial health.

A Consideration for Retirees

Saving more and getting your investments in order aren’t the only financial health goals you need as you get older. It’s essential that you learn how to maintain a budget to ensure your financial health. If you want to lead a comfortable life after you retire, you’ll need to watch your bank account closely and limit your spending. By learning to budget, you’ll set yourself up for success whether you’re already retired or looking ahead to the future.

There are many ways to reduce your spending. Many retirees downsize, finding that they don’t need as much space as they once did. This will allow you to save on housing costs and put some more money in the bank. Always ask lots of questions when learning about financial topics—you never know when you’ll find unexpected benefits that could save you money.

Don’t Be Afraid of the Stock Market

Many earlier generations were affected by the Great Depression and were suspicious of the stock market. While it’s true that this market can be volatile, it’s also true that investing in stocks could be key to ensuring that you have enough for retirement. It’s all about balance. Do your research, and don’t be afraid to invest (cautiously) in the right markets for our modern world.

This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.