Investing Tips for Each Decade of Your Life

Learning how to strategize your investments throughout your adult life can help make the process easier, as well as more beneficial.

Maze with the word Plan in the center.

Don’t wait until you are in your 40’s to think about saving for your retirement. By then you will out of time!  The best investment strategy begins in your 20’s and continues through every decade of your adult life.

Get Started in Your 20’s

You may be just starting out in life, but that does not mean that you should put off thinking about the future.  Every decade comes with its own challenges, and your 20’s are no exception.

You are making less today than you will be in 10 years; you probably have student loans to deal with; and you need that start-up cash to get the things you need.  But wait!  Starting a retirement account should be high on your to-do list. Here’s why:

  • The Sooner You Get Started the More Money You Will Make.  Compound interest is a beautiful thing.  Saving just $100 a month beginning at age 20 and continuing until age 65 could equal more than $350,000 in retirement savings.
  • Setting the Habit Now Means More Money in the Future.  The savings habit isn’t always an easy one to start; especially if you allow life to get in the way. By establishing a solid savings habit with your first job, you will teach yourself the importance of saving throughout your lifetime.
  • You’ll Get More From Your Employer. If your company offers a 401K match, than use it as soon as you are eligible. The longer you are in the program, the more “free money” your company will be giving you.

When it comes to investing in your 20’s, most experts agree that this is the time to set your expectations, build the right habits and take more risk.  Your 20’s are e a good time to consider higher risk investments that can garner higher returns.  At this stage of life, you can handle some set-backs and rebuild your portfolio if something goes awry.

Investing in Your 30’s

Life is in full force during this decade. Maybe you have recently married, bought a house and started a family. These are all expensive changes that can thwart your savings effort.

While this may not be a time when you can invest more, be sure to continue at a steady pace.  Take at least a small portion of any annual raises to increase your 401K contributions and avoid accruing nay additional debt. Use savings for larger purchases whenever possible.

Your 30’s are also a good time to invest in both high and medium risk stocks.  With time on your side, you should be able to weather any financial storms, while giving yourself ample opportunity to experience the benefits of higher yields.

Investing in Your 40’s

Retirement doesn’t seem so far off at this stage of life.  If you have managed to control your debt, you are beginning to see many of your bills beginning to dwindle away. Take that extra money and put it into retirement investments.

This is the time to become a bit more conservative in your investment approach. Opt for safer (albeit lower-yielding) stocks and bonds.  With less time to recover after a financial collapse, now is the time to let your money build more slowly - and safely.

Investing in Your 50’s and 60’s

Nearly a third of all 50-somethings have less than $10,000 socked away for their retirement. The Employee Benefit Research Institute reports that less than 25% have saved at least $250,000 for their retirement years. This is scary news for the millions who face retirement in the next decade but have failed to prepare.

Still, there is hope. Research shows that most people save the most during their last decade on the job. The reasons are twofold:

They are running out of time and know it, so they make savings a priority

Those big expenses like mortgages, children, and tuition are gone, freeing up more of their cash

This is good news for those eager to stash away enough cash to live on comfortably in their later years.

While your 50’s is not the time to make risky investments, there are some simple strategies you can use to garner the most benefit:

  • Consolidate 401K Accounts.  By the time you hit this stage in your career the odds are good that you have has several employers – and several retirement accounts. Pulling all those separate accounts into one can give you more investment choices; allowing you to make more money.
  • Increase Your Contributions.  The federal government allows older employees the opportunity to save more in their 401K plans ($7,500 more).  Plus, if your employer matches contributions, saving more will increase their contribution to your retirement too.
  • Open new accounts. If you are maxing out 401K savings ability, consider opening a ROTH IRA to give you more savings power.
  • Downsize sooner rather than later. Many people make the mistake of waiting until they retire to downsize.  Why wait?  Moving to a smaller home now can save you thousands in extra expenses, plus, any profits you make on the sale of your home can be invested for more retirement savings.

Saving for retirement can be a daunting experience. But, learning how to strategize your investments throughout your adult life can help make the process easier, as well as more beneficial.