How to invest in your 40s

It’s common for people to hit their stride professionally when they’re in their 40s. But juggling the costs of childcare, mortgage payments, home renovations, and your retirement means any extra cash needs to be handled with care.   

Keen to start investing but wondering where to start? We’ll share some valuable tips to help you make sound investment decisions in your 40s to help you grow your money.   

1. Identify your goals  

Knowing what you want to achieve financially can help you decide how to invest any spare cash.  

You might want to overpay on your mortgage, put aside some savings for your child or boost your retirement savings.  

Once you’ve identified your short and long-term financial goals, consider the following questions:  

If you’re happy to play the long game and expose yourself to some risk, you could consider investing in the stock market.  

You could also consider a savings account to boost your cash, although the returns are likely lower than the stock market.  

2. Review your retirement savings  

Is your retirement account in the best possible shape? Before investing in the stock market, ensure you’re happy with your savings.  

Retirement might still seem like a long way off, but making regular contributions is one of the most efficient ways of maximizing your money. A healthy retirement fund also gives you financial security and peace of mind in the future.   

You’ll likely already have at least one 401(k) if you're employed. Check to see if you can increase your contributions and whether your employer will match any increases.  

If you’re self-employed, consider a retirement account for your needs, such as a Roth IRA or Solo 401(k). It’s worth talking to a financial advisor to find the best one for you.  

3. Consider stocks and shares  

Thinking about investing in stocks and shares? Whether you’re new to investing or have been doing it for a while, diversification is the key to helping to minimize your risk exposure.  

This means spreading your investments across different asset classes, such as stocks, bonds, property, and mutual funds.  

You can also buy shares in different types of companies and various regions worldwide. That way, low-performing investments can be balanced out by ones doing well.  

4. Consider investing in a fund  

If you’re new to investing, you might prefer to buy a fund, meaning a professional fund manager selects your investments.  

You should review your portfolio regularly with a qualified financial advisor to ensure your investments meet your goals.  

5. Hedge funds  

For high-net-worth individuals, hedge funds can offer high financial returns but can be riskier. 

Hedge fund managers tend to use more aggressive investment strategies to get higher returns and may invest in non-traditional assets such as property and foreign currencies.  

To invest in a hedge fund, you need to be an institutional or accredited investor. For the latter, you must have a net worth of at least $1 million or an annual individual income of over $200,000.  

If that’s the case for you and you’re prepared to adopt a high-risk strategy in the hope of high returns, a hedge fund is a viable option.  

The key to success  

Your unique circumstances and financial goals will determine a successful investment strategy in your 40s.   

Your first step should be to pay off any debt and ensure you have a financial buffer in place for emergencies. Next, look at your retirement account and make sure you’re happy with your contributions.  

Whenever you decide to invest, it’s worth getting advice from an independent financial advisor. Unbiased works with regulated financial advisors; we can match you with one in your local area. Just fill in a few details, and someone will be in touch when we have a match.    

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