Over 40 But Never Invested? Here’s How You Can Start
When you turn 40 – you’re midway between the start of your professional career and your official retirement – you’re ultimately midway through life, considering the average lifespan in Singapore is 82. Are you sufficiently prepared for life after retirement? Not everyone is.
There are three categories of people that exist in this world. The first type is the kind to start their retirement plans before they turn 30. The second type is the kind to start late, and yet, gets by as a result of timely investments post 40. The third type never wakes up, and thus sinks into misery when they realise they have negligible savings when they finally retire. Ideally, it’s best to the first type. But, here, we intend to guide the second type to ensure they have a fulfilling retirement.
Laying the Groundwork
Before considering specific investments, let us focus on the basics. Once you’ve ascertained the points listed below, you can move on to actual investment planning.
Set Concrete Goals
What are you investing for if you don’t have tangible goals you intend to achieve? You need to set concrete goals because that essentially dictates your future course of action. If you intend to retire to the countryside, the nature of investments will change. On the other hand, if you intend to maintain your urban lifestyle in all its glory, you have your work cut out for you. Additionally, you can also set short-term goals such as setting up an emergency fund or getting health insurance. You can always refer to the Goal Setting page hosted by the Singapore Government for additional help.
Assess Your Financial Position
Before you start considering investments for the future, it is useful to understand your current financial position. Singaporeans can refer to the governmental financial tools to get started with the process. The purpose of knowing your financial position is that you can accordingly assess the amount you need to save.
Note, assessing your financial position isn’t simply about accounting for the assets you own or the monthly earnings you draw in regularly, it is also about accounting for the debts you’re entitled to pay. Those who are debt-free will have an easier road ahead since they can concentrate their resources towards their retirement plan. Furthermore, assessing your financial position is the best ‘wakeup call’ there is to be more serious about your future investments.
Find Scope for Savings
The reason you haven’t already made progress on the investment front is probably that you weren’t disciplined with your savings. Not everyone has a naturally keen sense of money management. To get started with practical investments, you must first find a means to accumulate the requisite capital from your existing income. You can start this process by listing down your monthly expenses and finding areas where there is possible room for savings. You might have to inculcate practical lifestyle changes to achieve this, but that’s a small price to pay when you’re considering the long-term rewards that it will lead to.
Get the Basics Right
And finally, before you consider hard-core investments to pump your retirement fund, it’s imperative that you have essentials accounted for. For instance, if you have young ones, it’s important for you to ensure you have enough financial reserves that will last at least five academic years. As a second step, you should seek to setup a fund for medical emergencies. Healthcare is expensive, and you don’t want an emergency to disrupt your calculations beyond repair. And lastly, concentrate on ridding yourself of all debt. For starters, it helps you save up on the additional interest associated with debt. But more importantly, it helps you concentrate exclusively on fattening your retirement funds.
Making the Right Choice
The world of investment is limitless and complicated. You’re probably overwhelmed by the countless choices you can select from. Playing the market could’ve been an option earlier on. But for the sake of security, it’s better to bank on safe, steady returns at the expense of the riskier avenues. Steady returns are all the more important if others depend on you.
Yes, the intention is to safeguard you against the many uncertainties of life. You have several options to choose between. You can consider a disability insurance to prepare for the unpleasant possibility of not being able to work because of a mishap. Your other options include long-term care insurance, which acts as an excellent backup option for your old age as you retain the bulk of your retirement fund for medical expenses. Unfortunately, medical expenses are going to be a greater part of your monthly expenses as you age further. Lastly, consider renewing your life insurance out of concern for those who depend on you. Here’s what theLife Insurance Association of Singapore has to say.
Construct a Solid Portfolio
As we’ve elaborated above, it’s wiser to invest on instruments that guarantee you steady returns instead of high returns but no sense of certainty. In the light of your requirements, consider a standard fixed-deposit bank account, investments in mutual funds, or even investing in an affordable fixed asset. Fortunately, you already have the compulsory Central Provident Fund to protect you. It is wise to stay wary of equity investments if guaranteed returns are what you’re after. Also, it is said leaving all your eggs in one basket is folly. And, in that case, you ought to diversify your portfolio. Regardless of your choice, it’s worthwhile to consult a financial expert for discussing the consistency of your portfolio.
As a parting thought, it’s important that you understand you still have a lot of time left to make the correct investments for your future and for that of your loved ones. Lastly, you have most likely worked very hard to get to the position you have, and it’s also important that you enjoy the pleasures of life. Don’t stop yourself from going for a vacation to unwind simply because of your future plans. Moderation, however, remains the key.
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