As you approach your 50s, your financial priorities are likely to change. Retirement is on the horizon and you may have children or parents to support, so now is the time to provide yourself with an adequate financial cushion.
Investing your hard-earned cash can be a powerful tool to help you achieve your financial goals. However, with so many options available, it can be difficult to know exactly where to start. Here are four tips to help you invest wisely in your 50s.
Concentrate on your pension
As a rule of thumb, you should aim for a pension that is 10 times your average salary, but this will vary depending on individual circumstances. For example, if you’re earning £30,000 a year, your pension pot should be upwards of £300,000.
It’s also suggested that you aim for an annual income of between 50% and 70% of your working income, so if you currently earn £50,000, you should look to achieve somewhere between £25,000 and £35,000. However, to calculate a more accurate figure, you must look at your monthly expenditure at the moment and what it will look like once you retire.
If you’re worried that you may not have enough financial freedom, you should prioritise paying into your pension. While riskier, investing in the stock market can lead to greater returns. Alternatively, you may wish to set up a self-invested personal pension (SIPP), that allows you to have more control as you approach retirement.
Diversify your portfolio
When in your 50s, it’s vital that your investment portfolio has a good balance between risk and reward. Maintaining a diverse investment portfolio is key when approaching retirement in order to limit your risk exposure. By spreading your investments across different asset classes, you can ultimately reduce your risk.
Your portfolio might include a mix of lower-risk asset classes such as cash and bonds, as well as alternative investments like commodities or real estate. Once you get closer to the age of retirement, look to move to lower-risk investments to protect your capital and receive some income.
Consider life insurance
Life insurance can provide your loved ones with a financial safety net in the event of your death. While you may have had a life insurance policy at some point in the past, it might be time to review your coverage needs now that you are in your 50s.
Over 50 life insurance policies are specifically designed for older individuals and can be more affordable than traditional policies. Generally, there’s no medical and you can opt for a monthly payment and payout that works for you.
Seek Professional Advice
Investing isn’t easy, especially for those with no previous experience, meaning it is often useful to seek professional advice. A financial advisor can help you set realistic financial goals and recommend the right mix of assets, accounting for your investment timeline and outlook on investment risk.
Before choosing a financial advisor, always do your due diligence and select someone qualified and reputable. The key to finding the right adviser is knowing exactly what advice you need. There are various services you can utilise too based on your current situation.
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