Investing in your 50s? Here's how you should invest

Prasanth Menon

05 Jun 2017

New Page 1

Justin lived with his wife in one of the top locality of the city. He has a good job in a multi-national company that pays him quite well. He also has two children who are still in their high school. Life has granted him everything he wished for. Yet, he has been having sleepless nights since a week. He came to realize that although he is earning good, it would only be for a decade more. Getting caught in the race of making the present life comfortable, he somewhat neglected his future. His retirement savings were nil and investments would barely manage to get him a meal twice a day. Was he scared? You bet. Could he do anything about it? Yes!

The dawn of the fifth decade of a man's life is a very curious one. He is heading towards retirement, while still having much of the family's responsibility balanced on his shoulders. It is this time when you stand at the crossroad; one suggesting 'saving up for the future', while the other suggests 'investing for the future.' Certainly, an avid investor would be inclined to opt for the latter. If you are stuck at one such crossroad, this might help you choose the right path.

You are never too old to consider investing in anything; ranging from stocks and mutual funds to real estate and businesses.

Roadmap to investment

1: Set your priorities right

The first and foremost idea is to identify your priorities. Consider what are your present expenses and potential expenses that might come up. If you have some hobbies, check about how expensive that could be. You might not have a job so figure out what are your substitute income source to meet these priorities. Be wise to choose the right one for yourself. For instance, if you plan to retire by 58, it will be wiser to choose an investment option that would give back dividends once you retire.

2: A keen observation of surrounding

You need to have a keen eye on your surrounding activities. The slightest of physical/natural changes in the society sends ripples through the investment market. Investing in a water bottle manufacturing company that sells water in a city, which has recently received abundant rainfall would be a dud idea. Research well before you invest. Pay heed to the advice of financial experts and analysts who can help you with the right investment options.

3: The Retirement Angle

Retirement is inevitable. But what you can avoid is a retired life filled with stress. Your investments mustn't be at the expense of a comfortable retired life. It will certainly not be wise to take a gamble and end up being debt ridden. You can approach professional financial planners who can help you with this. They could help you with goal-based investing that can help you reach fixed targets post retirement.

4: Review your lifestyle and pay attention to taxes

Since retirement would give you a lot of free time at hand, you might want to pursue your passions as well. Be it travelling, dining out or such other recreational activities. You might want to enjoy them without having a dip in your retirement savings. So, consider this when you build your retirement fund. Another thing to focus on is your tax outgo. Since you might be in the peak of your career, you would be in a higher tax bracket. Ensure that your investments then focus on tax-saving options. This could then contribute to your retirement fund.

In a nutshell

You stop growing when you stop learning. Investment is not that difficult after all. You just need to plan it in a way that it helps you achieve your goals. You can take professional help also when necessary. Ensure you have a stock-bond portfolio that could provide both stability as well as good returns for your investment.

Have Referral Code?

Similar articles

  • Responses
  • Patidar Samaj

    - 2 hrs ago

    This article claims RJio was given a "Backdoor Entry" into the 4G Based Voice Routing. The peculiar aspect is without the Voice License, Rjio would have been a mere ISP. With the license, it is now a holistic communications service provider, with ability to exponentially scale the bouquet of products. The events indicate it was meticulously planned way before the auctions because the auctions were clear on the agenda: 4G for internet only.

Load More
mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


Banner

Investing in your 50s? Here's how you should invest

Prasanth Menon

05 Jun 2017

New Page 1

Justin lived with his wife in one of the top locality of the city. He has a good job in a multi-national company that pays him quite well. He also has two children who are still in their high school. Life has granted him everything he wished for. Yet, he has been having sleepless nights since a week. He came to realize that although he is earning good, it would only be for a decade more. Getting caught in the race of making the present life comfortable, he somewhat neglected his future. His retirement savings were nil and investments would barely manage to get him a meal twice a day. Was he scared? You bet. Could he do anything about it? Yes!

The dawn of the fifth decade of a man's life is a very curious one. He is heading towards retirement, while still having much of the family's responsibility balanced on his shoulders. It is this time when you stand at the crossroad; one suggesting 'saving up for the future', while the other suggests 'investing for the future.' Certainly, an avid investor would be inclined to opt for the latter. If you are stuck at one such crossroad, this might help you choose the right path.

You are never too old to consider investing in anything; ranging from stocks and mutual funds to real estate and businesses.

Roadmap to investment

1: Set your priorities right

The first and foremost idea is to identify your priorities. Consider what are your present expenses and potential expenses that might come up. If you have some hobbies, check about how expensive that could be. You might not have a job so figure out what are your substitute income source to meet these priorities. Be wise to choose the right one for yourself. For instance, if you plan to retire by 58, it will be wiser to choose an investment option that would give back dividends once you retire.

2: A keen observation of surrounding

You need to have a keen eye on your surrounding activities. The slightest of physical/natural changes in the society sends ripples through the investment market. Investing in a water bottle manufacturing company that sells water in a city, which has recently received abundant rainfall would be a dud idea. Research well before you invest. Pay heed to the advice of financial experts and analysts who can help you with the right investment options.

3: The Retirement Angle

Retirement is inevitable. But what you can avoid is a retired life filled with stress. Your investments mustn't be at the expense of a comfortable retired life. It will certainly not be wise to take a gamble and end up being debt ridden. You can approach professional financial planners who can help you with this. They could help you with goal-based investing that can help you reach fixed targets post retirement.

4: Review your lifestyle and pay attention to taxes

Since retirement would give you a lot of free time at hand, you might want to pursue your passions as well. Be it travelling, dining out or such other recreational activities. You might want to enjoy them without having a dip in your retirement savings. So, consider this when you build your retirement fund. Another thing to focus on is your tax outgo. Since you might be in the peak of your career, you would be in a higher tax bracket. Ensure that your investments then focus on tax-saving options. This could then contribute to your retirement fund.

In a nutshell

You stop growing when you stop learning. Investment is not that difficult after all. You just need to plan it in a way that it helps you achieve your goals. You can take professional help also when necessary. Ensure you have a stock-bond portfolio that could provide both stability as well as good returns for your investment.

Have Referral Code?