Can I start to invest at 45?

Good morning and how are you doing?

Are you looking forward to the weekend? 

Friday letters are dedicated to taking questions from our community. Do you have a question for us? Please feel free to send an e-mail to [email protected] or a DM to any of our social media channels. 

Question:

How do I know what dollar investments to make? 

Answer:

The type of dollar investment you need to make depends on your risk appetite, age and the purpose of the investment. 

In terms of risk, dollar investments can be divided into low-risk, medium-risk, and high-risk. Dollar savings, for instance, fall under the low-risk category. A dollar mutual fund can be categorised as a medium-risk investment. Stocks are a high-risk investment. 

Age plays a key role when it comes to investing. If you are in your 20s and 30s, you can take a fairly large amount of risk. But as you grow older, you will need to dial back. 

What is the purpose of the investment? For instance, if it is for paying school fees abroad, then that would be better suited for a low-risk investment. 

If they form part of an investment portfolio for young children, then you could begin to consider high-risk investments such as growth stocks. 

Question:

I will be 45 years old by May. Is it too late to start investing? Where do I start from? 

- BG

Answer:

Hi BG,

It is never too late to begin investing. The first thing you need to do is map out your financial goals. 

Are you self-employed or in paid employment? If you are in paid employment, do you have a pension plan? If you are self-employed, you can also set up a pension plan.

If you are in paid employment, what is the retirement age in place? You may have to consider working a few years beyond the retirement age. 

Do you have health insurance? If you do not, you should look into getting one. 

Do you have children? Are they in school? What are your plans for their education? 

After mapping out your goals, the next thing is to decide on an amount you will be investing. Since you are in your mid-40s, a greater proportion of your investments should be in the low- and medium-risk category. For your children, you can take a bit more risk. 

You can also look at improving on your skill set. Are there new skills you can learn in addition to what you have? You can map out a plan for that. 

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Have a great weekend.