Here’s How You Need To Plan Your Investments While Stepping Into Your 40s!

Jul 2018 | Team Rubique

Are you stepping into your 40s? Fret not. You still have 2 decades ahead of you when you can work and earn. 

But since you’re in the mid of your working career – you should start planning for your life’s major goals – retired, child’s education, child’s marriage etc.The most important thing to do at such a point is to acquire assets that create money. Many a time we’ve observed that as people turn into their 40s, they start investing their hard earned money into buying costly vacation rentals or a vehicle without realizing that these are nothing but liabilities. All these purchases will ever do is to burn a hole in your pocket every few months. These investments consume your hard earned money rather than making you wealthier.

Here is a trick.

Whenever you invest, see the dollar as your employee. Now, a good employee will always hire more employees for you, i.e., in other words, an asset puts money in your pocket, and a liability takes money out of your pocket. The best way to plan your investments is to differentiate between the ASSETS and the LIABILITIES.

A few great investment ideas for those anticipating or dreading (whatever may be your stance on growing old) the 40 landmark are:

Stock Market

Investing in the stock market is the most basic advice people ever receive, yet what most of them don’t understand is where to invest and when to invest. When dealing with stocks, you should never put all your eggs in the same basket at the same time. Instead one needs to trickle the money over a period of time to get the best gains.

You buy less and sell more when the market is high and buy more and sell less when the market is low. When it comes to investing in stocks, you can either play safe or earn money. There is no other option in between. Do remember! You have to learn before you earn. The best places to invest are developing and high growth sectors but refrain from putting in all your investment at once. Other productive places to invest your money is into some well-renowned blue chip stocks. The returns may be less, but at least your money would be safe.

Peer-to-Peer Lending

While many people view peer-to-peer lending as unsafe and risky, it is seen as an alternative to the stock market by many financial advisors. There are many online platforms, that allow you to stash your investible money. The best part is that you get a decent return interest. In peer to peer lending, you lend your money to other people online. While some may have doubts about trusting strangers online with their money, the safe part is that you don’t give them a hefty amount. Instead, your money is split up into increments as small as you want.

Real Estate:

Real estate is the riskiest albeit the most valuable market in modern times. Not only does it require a substantial investment, to begin with, but there are also a large number of factors that might turn the investment into a liability. Fortunately, there exist a lot of ways to deal in real estate without having to deal with physical property. For instance, you can invest in real estate notes, where a dealer buys a property, and other people invest in his project. This is a more comfortable and more cost-efficient way of investing in real estates. Also, it makes sure that you don’t end up losing all your savings.

Mutual Funds:

To many people, mutual funds seem like a very confusing and complicated method of investment. In simple words, mutual investment groups together people with similar goals or objectives and puts their money in a stock or bond. A mutual fund allows an ordinary man to invest in a diversified and professionally managed basket of securities, that too at a minimal cost. The net profit is distributed among the investors proportionally once the NAV has been deducted.

Equity Investments:

Owning a share means that you own a bit of the company and its value. One can either hold a share individually or with a group of people that come together and make a collective investment, known as a fund. Owning a share individually makes you a shareholder and hence, gets you the right to vote in the company’s essential matters, This, however, doesn’t apply for investors of a fund. If you have spare cash and want to invest in startups, consider being an angel investor.

Retirement Planning:

Not everyone has a stable job that will pay them a pension when they retire. The best way for most people is to save for their retirement by opting for personal pension funds. In a personal pension, one can choose his provider and make the contributions accordingly. Your pension pot fills itself with the contributions you make, investment returns and tax relief. Once you retire, you can choose to transact your amount accordingly.

Insurance:

As you step into your 40s, opt for a large life cover for yourself to ensure your loved ones do not face financial difficulties if you’re not around for them. Also, buy a health cover for yourself and your family to ensure the high medical bills do not burn a hole in your pocket.

Improve Yourself

And at last, comes the most critical investment. Your investment in yourself, for 40 isn’t old enough to stop learning. You can read books and invest your free time to hone your skills or learn a new one. An average successful person reads about 60 books a year. Reading isn’t the only way to invest in yourself. You can choose from life, personal, leadership or even health and fitness coaches.

After all, you wouldn’t like it if you’re not fit and healthy enough to enjoy the fruits of the investments you made. The difference between a rich and a not-so-rich person is that a rich person makes assets while the other person buys liabilities which he thinks are assets. Choose your category wisely!