How to invest in your 50s

By the time you hit your 50s, you should have a good idea of where you stand financially and hopefully have a decent-sized retirement fund.  

But your 50s can also be a time when your expenses start rising. 

You might be supporting your child or other family members financially. Perhaps you’ve had to deal with some unexpected healthcare costs. These responsibilities, along with preparing for retirement, can feel daunting.  

Here are some tips for how to make the most of your money when you invest in your 50s.  

1. Figure out your financial priorities  

Before deciding how to invest your savings, it’s worth considering your immediate financial priorities.  

First, look at any debt you may have and consider clearing that first. The quicker you clear your debt, the less interest you’ll pay. If the interest you’re paying on your debt exceeds the return on savings or investments, clearing your debt first makes sense.   

If you can make overpayments on your mortgage without incurring a penalty, that’s also worth considering.  

2. Build an emergency fund  

It’s generally recommended that you set aside three to six months’ worth of expenses in case of emergencies. 

When you’re in your 50s with family members who might depend on you, a contingency plan is more important than ever.  

Any emergency fund should be easy to access. So, you should look into an easy-access savings account that offers some interest and allows instant withdrawals.  

3. Don’t neglect your retirement  

If you’re in your late 50s and considering retiring in the next few years, ask yourself whether your current savings are enough for the type of retirement you’d like.  

If it’s looking like you won’t have enough for your ideal retirement, you should prioritize paying into your retirement fund.  

Even if your retirement is not immediately on the horizon, boosting your savings may be less risky than investing in stocks and shares.  

Investing in the stock market can deliver greater returns but also comes with more risk. You need to be invested for a few years to ride out any volatility.   

If you’re unsure what the best retirement plan is for you, it’s worth talking to a financial advisor.  

4. Limiting risk  

You might already be a seasoned investor with a healthy investment portfolio, but it’s worth reviewing your investments to ensure they align with your financial goals.  

Maintaining a diverse investment portfolio should remain a priority to limit your risk exposure as you approach retirement.  

That means spreading your investments across asset classes, varying the size of companies you invest in and choosing a mix of companies across established and emerging markets.   

As you get closer to retirement, you can move to lower-risk investments. For example, by increasing your exposure to bonds, you can protect your capital and receive an income.  

5. Prioritize income over growth  

While a diverse portfolio is essential, a general rule of thumb is to choose investments that offer you income rather than capital growth.   

This means you can use your investments to boost your savings. High-income funds typically include corporate bonds, government bonds, and dividend-paying shares.  

6. Consider an index or exchange-traded fund (ETF)  

Index funds and ETFs can be a simple way to diversify your portfolio.   

Choosing one of these funds means you don’t need to research and analyze each stock. An experienced, independent financial advisor can guide you on the best funds to choose from.  

Alternatively, investing in a hedge fund is an option that can deliver higher returns. These are restricted to accredited investors, and you have to meet certain criteria to be able to invest.  

Hedge fund managers tend to take a more aggressive approach to investing, so there’s more risk. A hedge fund might not be the best option if you have a low-risk appetite.  

Managing your wealth  

It makes sense to take an increasingly conservative approach to managing your wealth as you approach retirement. Depending on your situation, that might mean moving your investments into bonds, prioritizing your savings, or boosting your emergency fund.  

For tailored advice on getting more from your money in your 50s, Unbiased can connect you with a qualified, independent financial advisor near you. Just fill in a few details, and someone will contact you when we have a match.    

Find your perfect match now.