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Why You Should Start Investing at 40

date November 4, 2020 time 4 min read 888 views

If you start investing at 40 you may be apprehensive about your potential earnings. But don’t fear, it’s never too late to start earning. This article covers all you should know about starting to invest at 40, why you should invest, investment strategies for 40-year-olds, and the best investment options.

Here’s something you may not have thought about when you celebrated your 40th birthday: You’re almost as close to traditional retirement age as you are to your high school graduation. 

From family expenses to planning for retirement, your 40s can be a stressful time for your wallet. While investment is a waiting game and 40 may seem like it’s too late to get a great ROI it’s always better to invest than not.

Here’s why you should get started today and some ideas on how to start investing at 40.

Investing at 40 requires different strategies than investing at 30 or 20
Investing at 40 requires different strategies than investing at 30 or 20

Why should you start investing at 40?

Why should you start investing at 40? A very interesting question! You should start investing at age 40 to retire a millionaire!

Yes, you read right. While gaining that kind of capital in a mere 20 years may seem impossible, if you save properly, and invest in the right things you’ll be surprised how fast things can add up.

Think about it: if at 40 you sock away $40,000 a year for 25 years with no extra interest you’ll have $1 million by the time you’re 65. While $40,000 a year may be a bit unrealistic for some, throw a little interest on top of your savings and you may be closer than you think. 

Plus, statistically, 40 is around the time when your salary peaks. Maybe you aren’t making quite what you want right now. But give it five years and your savings may increase astronomically.

You need a financial plan to make the right investment decisions at 40
You need a financial plan to make the right investment decisions at 40 (source:

Investment strategies for a 40-year-old

Investing at every age comes with different strategies and pressures. There’s a huge financial difference between investing strategy at 20 and 40.

Your financial plan is usually closer to a retirement checklist at 40. You are likely caught between a looming retirement encouraging conservative investment and the desire to make a bunch more money quickly encouraging risky investments.

Before investing you should make sure you hash out:

  • Your  sources of retirement income
  • How your income will be taxed
  • Your retirement expenses
  • Your retirement date

The best investment strategies for a 40-year-old

Have a retirement goal: You need to know much income you want by the time you retire. This helps you set targets and remain on track. 

Be precise: Allocate your assets correctly and find a balance between conservative and aggressive investment.

Set up an automatic investment: Setting aside money automatically is a great way to make sure your investments happen.

Decide your risk level: Conservative investment is risky if you don’t have much money and want a large amount for retirement. Aggressive investment is risky because if you lose money, you won’t have much time to make it back. You need to decide exactly what you can afford to invest and lose.

High risk, high return options to consider

Low risk, low return options to consider

You can invest in anything at 40, even Bitcoin The first cryptocurrency
You can invest in anything at 40, even Bitcoin: The first cryptocurrency

Saving tips for retirement if you started late

An interesting piece of advice we found online for you parents out there: don’t skimp on retirement savings to send your children to college.

Your kids have more options and opportunities than you do. They take out student loans but you can’t take out a “retirement loan”.

Here are some other saving tips for late retirement plans at 40;

Play catch up— At 40, you can save $19,500 a year in a 401k retirement fund. At a 7% rate of return, you could have $1 million before you hit 65.

Understand how much you’ll need— Once you retire be prepared to withdraw at least 3% of your retirement portfolio each year.

Factor in insurance—You’ll need health insurance, car insurance, and maybe even disability insurance.

Pay your debtsPay off credit cards, car loans, and other high-interest or non- mortgage debts.

Also, be on the lookout for investments that can give you the best returns with the most safety possible.

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George Schooling

George Schooling

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