Thinking of investing in your 60’s? If you haven’t saved enough for your retirement there are still things you can do to maximise your savings while if you have met your target now is the time to make changes to your portfolio and make your money work for you.
If you’re in your 60s and thinking about investing, this is an easy step-by-step guide to helping you get started.
Assess your expenses
Consider your future expenses, both foreseeable and unpredictable. Are you confident that you have enough money set aside to cushion any costly and unexpected events?
Look at your existing financial situation
Next, assess the state of your finances at the moment. Are you satisfied that the nest egg you have carefully built up is enough for you or do you need to do more to fill up a shortfall in your finances?
Let’s say you have nothing saved for a rainy retirement at all. Don’t panic, there are still things you can do. Given their generous tax advantages – you can get tax relief up to 100% of your annual earnings – private pension plans are very probably the way to go.
Select an investment focus
It is important to think about your goals and expected time horizon before making any investments. In the world of investing there is a relationship between risk and reward and so “risk” is neither a good or bad thing: you need to take an appropriate amount of risk.
Financial markets, especially equities, can be volatile over short-term time periods, but have historically delivered much higher real returns – that is, returns that beat the effect of inflation – over the long-term. Therefore the time horizon is incredibly important in determining how much exposure to equity markets you should consider taking, versus less risky, but lower returning, types of investments such as bonds, or cash savings.
If your time horizon is ten or 20 years until you expect to use your investments. for paying off something like a mortgage, then there is plenty of time to recover from any short-term dips in the value of your investments, which inevitably happen from time to time. However, those with a shorter-term horizon, for example less than five years, should adopt a much more cautious approach.
Diversify! Don’t put your nest eggs in one basket
Diversification is an important principle, both to temper risk and gain access to a wide range of opportunities: don’t put all your eggs in one basket! This means blending exposure to different types of investments – equities, bonds, perhaps gold, property and cash – and within your exposure to equities, a selection of shares from different regions and industry sectors.
“This can be achieved by either investing in several investment funds, each of which specialises in a particular market, or buying a single fund – sometimes referred to as either a ready-made portfolio or multi-asset fund – where this is done for you, providing a “one-stop-shop” approach.”
Invest with personal goals in mind — choose your investment style
As you look towards a life free from the constraints of work you might want to make your investment work differently to the way it has done before. Instead of aiming to grow your overall nest egg you might want your egg to provide you with an income stream. Think of it as an egg producing chicks for you! There are different styles of investment, depending on whether you want to prioritise future growth or income now. It’s all about tailoring the way you work your money to suit your individual needs.
If you’ve reviewed your options and made the decision to invest, use our comparison tools to help you find the best home for your money. If you like the idea of managing your own money, then the DIY platform comparison tools will help you find the best one for your needs. Alternatively, if you prefer someone to make the investment decisions for you, then the digital investing app comparison tool is for you.