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Investing in Your 50s: What to Do Differently

19 Aug 2022

Investing in Your 50s: What To Do Differently | VI College

What is your definition of "too late"?

I often have people walk up to me and say "Pauline, I'm in my 50s, it's too late for me to invest now. What should I do?"

But here's the thing, it is NEVER too late. Investing in your 50s is possible.

You are younger now than you will be tomorrow, right? And who knows, if you get to live up to your 80s or 90s, you still have a good 30 to 40 years to compound.

If you don’t start investing just because you think you’re "too old", wouldn't that just be years of compounding wasted away? 

I'm an advocate of "invest as early as you can" because then, you can make use of the power of compounding.

But let’s be real. Not everyone had the privilege to do that.

Maybe they aren’t paid very well or they have a big family to support, which causes them to have no savings every month.

Or maybe they had the money but didn't have the exposure or education that taught them how to invest, their money was just sitting in the bank.

Some didn't think they would need to invest when they were younger, only to realise later that they actually do.

Well, good news for you. Even if you're no longer in your 20s or 30s, you can still start investing in the stock market and compound your money.

However, investing in your 50s is a different game than those investing in their 30s. There are more things you need to look out for and you cannot afford to make a lot of mistakes.

That said, you also now have advantages you wouldn't have in your 20s.

Here are some pointers to start:

1. Set clear objectives

Investing in your 50s means setting crystal clear objectives and a timeline for yourself.

When in your 20s or 30s, you can afford to make mistakes because time is on your side. Some would even experiment with different instruments or investment products to see which suits them best before settling on one.

Should anything unfavourable happen, you would still have many years ahead to recoup your losses and learn from your mistakes.

However, when investing in your 50s, there is a lot more at stake. You're nearer to your retirement age so you don't have that many more years in your career compared to a 30-year-old. You also have less job and income security because companies have the propensity to hire younger professionals.

Realistically speaking, you have lesser room to explore and a smaller buffer for mistakes.

So by setting a clear objective, e.g., "After I'm retired, I expect to spend $X a month, so I need $Y in my bank by year Z", you will have a clear target and you know EXACTLY how much you need to earn each month, you won't be wasting any time.

2. Don't let age scare you

Investing in Your 50s | VI College

A lot of my students in their 50s would always say "I'm too old already" or "I don't have much time left”.

Admittedly, investing in your 50s means you have a shorter runway compared to those in their 30s, but would you do better on this short runway than not investing at all? Yes, you would!

In fact, you have an advantage a 30-year-old wouldn't have, and that is the amount of money you already have to invest.

There are also a lot of people who constantly look for ways to earn fast money because "time is running out" for them – one of the deadliest investing mistakes ever. Remember those who invested big amounts into Hyflux preferential bonds and lost everything in the end?

When investing in your 50s, your focus should be to gain the right knowledge before investing so you can minimise your losses, not get into "risk-free" investments that guarantee high returns over a short period.

Slow is smooth and smooth is fast.

3. Learn portfolio management

Unlike those in their 30s, you cannot afford to just "invest and see what happens". Instead, invest with intention and make sure you safeguard every area possible in your personal finance.

Different types of stocks play different roles, so by investing in each category, your risks are lowered and it is easier to reach your financial goals.

In the bootcamps I teach, I would usually emphasise the PDA strategy: Protection, Defence, Attack.

To defend against inflation, you would need a certain percentage of dividend-paying stocks to supplement your active income, if not replace it.

To attack, you would need to have a percentage of growth stocks in your portfolio so your money can compound and grow.

By covering these areas and more, your hard-earned money can be better protected.

4. The right support network

Investing in Your 50s | VI College

We're living in a technologically advanced world, and the world is moving faster and faster each day.

You might've even heard of the phrase "metaverse" a lot lately because major companies are now moving into the augmented reality (AR) space to grow their business.

It is important to be updated about all these when investing so you can make the right investment decisions promptly. However, it is also hard to keep up on your own because changes happen so swiftly.

So apart from learning about all these yourself, make sure that you are surrounded by the right network of people who can share the correct knowledge about these with you. By joining hands with people who have the same goals, you can receive and share information much faster.

5. Prioritise your health

Health is wealth, there's no doubt about it. What's the use of having millions to your name but being constantly ill and disease-ridden?

When you prioritise your health, you will have a healthy body and mind, therefore having a clearer head to make sound investment decisions and invest better.

Also, with good health, you will have the chance to live longer, creating a longer runway to compound your money and enjoy your wealth.

To most, investing in your 50s may sound ambitious or "too late". But when it comes to growing your money, the only best time to start is NOW.

Please be careful to take an extra step and do your due diligence whatever you decide to invest in, because there are always risks involved, however low.

Also, be wary of any investment that promises you high returns over a short time because usually, these are signs of bad news.

Thanks for reading this article. As my token of appreciation, I want to gift you with a free seat to our bootcamp about how you can start investing, regardless of which age you’re in. Just click this link to claim your gift.

Cheers, and see you!

~ Pauline Teo


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