Financial stability for yourself and your family takes center stage when you’re in your 40s. Naturally, you want to ensure you have a solid retirement plan and that everyone you care about will be better off.
Below are some pointers on how you can make wise investment decisions during your high-earning years. And if you’ve been remiss in making some key investment moves, it’s never too late to start, as the saying goes.
Thoroughly review your financial situation
By the time you reach 40, you’ve most likely gone through several jobs and had good stints with good companies. As a result of all that hard work, you’ve carved out a decent amount of savings and investment.
At this age, you need to take stock of your portfolio. See if there are opportunities to invest more in a specific account or redirect your focus. Aside from looking at the total money that you have right now, take into account your spending habits, future savings, and investment returns.
Use these insights to inform vital financial adjustments. For instance, you may find that allocating more savings for your retirement or your children’s education will be an excellent way to maximize the final years of your working life.
If you haven’t had the chance, now is a good time as ever to seek a financial advisor. And if you’re looking far out into the future, consulting an insurance agent selling final expense insurance products is also a good move.
Consolidate all your accounts and investments
It’s an excellent strategy to diversify and have multiple savings options. But if you haven’t been reviewing where everything is located, it can be tedious to go through various accounts on different platforms.
That’s a common experience for many, but you don’t have to go through that. You can gather all those retirement accounts under one reference point.
A good way to start consolidating everything is a 401(k) rollover into an individual retirement account (IRA). That is great if you have quite a few 401(k)s under your belt and it offers the most control over your savings.
For instance, an IRA can allow you to customize your portfolio and get the most out of the world of investments. In contrast, the plan administrator will dictate your options in a workplace retirement plan.
Be cautious but take on a healthy amount of risk
It’s normal to go on the defensive as you inch closer and closer to your 60s. That’s a good strategy to apply. Finding more stable investments helps decrease your overall risk.
However, that can’t be your only strategy. You’re indeed at the midway point, but remember that you still have 20 years or more to go before you retire. That’s an excellent timeframe to ramp up savings further.
Dabbling in stocks is a good option if you want to gain high returns over a long period. Additionally, investment experts often observe that stock exposure drops over 70 percent, 15 years before retiring.
Of course, the decision to pursue a particular investment will mostly depend on your risk appetite, specific needs, and vision for retirement. Ensure that you make the appropriate one to avoid severe losses.