5 Tips For Investing In Your 50s
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The decisions on how to invest, when to retire, and other financial planning topics are some of the most important financial decisions you will make in your life. I urge you to seek professional financial advice as you make this decision. Ideally, from a financial adviser, AND a CPA AND an attorney. Having the perspective of all three professions will help you make the right decision for you and your family.
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As you enter your 50s, retirement may be on the horizon, and your financial priorities may shift. Investing in your 50s requires a different approach than when you were in your 20s or 30s. It’s important to make the most of your savings and investments during this critical time in your life. Here are five tips to help you navigate investing in your 50s.
1. Assess Your Financial Situation
Before making any new investment decisions, take stock of your current financial situation. Look at your retirement savings, assets, and liabilities. Determine your net worth and assess your financial goals and risk tolerance. Make sure to also take into account your health and future healthcare costs, as these can be a significant expense in retirement.
2. Maximize Your Retirement Contributions
In your 50s, you have the advantage of catch-up contributions to retirement accounts. For example, in 2021, individuals 50 and older can contribute an extra $1,000 to their IRA and an extra $6,500 to their 401(k) on top of the standard contribution limits. Take advantage of these catch-up contributions to boost your retirement savings.
3. Diversify Your Portfolio
Diversification is key to managing risk in your investment portfolio. As you near retirement, you may want to consider shifting your asset allocation to have a more conservative mix of investments. Consider reallocating some of your assets to bonds and other fixed-income investments to provide stability to your portfolio. At the same time, don’t abandon stocks altogether, as they can still play a role in providing growth and inflation protection.
4. Plan for Healthcare Costs
Healthcare expenses can be a significant burden in retirement. As you approach your 50s, it’s important to consider how you will cover these costs. Research Medicare options and consider purchasing supplemental insurance to help cover healthcare expenses. You may also want to invest in a health savings account (HSA) if you have a high-deductible health insurance plan, as the funds in an HSA can be used tax-free for qualified medical expenses in retirement.
5. Seek Professional Advice
As you near retirement, it may be beneficial to seek the guidance of a financial advisor. A professional can help you create a comprehensive financial plan, assess your readiness for retirement, and help you navigate the complexities of investing in your 50s. They can provide personalized advice based on your individual financial situation and goals.
Investing in your 50s requires careful consideration and planning. By assessing your financial situation, maximizing retirement contributions, diversifying your portfolio, planning for healthcare costs, and seeking professional advice, you can set yourself up for a financially secure retirement. Remember, it’s never too late to start investing for the future, so take the time to make informed decisions and ensure a comfortable retirement.
Hi Azul, the subject of asset allocation often comes up in your videos, but it is always discussed as a ratio of shares to bonds. But what if you have investment property? Is it treated as an equity risk or somewhere between a share and a bond? Due to the high price of a typical property, it is very hard to get a correct ratio as you would with shares & bonds. I think this might be an interesting topic for future videos.
THANKS. Just what I needed to watch. My wife and I are administrators of our farming business and our own properties, as well as small pensions. I am almost 56, my wife is 52. We have started saving for retirement from the farm and maybe live off rental income, I would really appreciate it if you would do a video on how to earn passive income online and retire comfortably let's say 3 million bucks.
Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly.
Sequence of return risk is an odd thing. Imagine a 50% rise and a 50% fall. No matter which event comes first, the portfolio will end up below where it started.
Life expectancy is mostly affected by infant mortality…overall life expectancy factoring out infant mortality with modern science has only raised life spans about four years. If you doubt this look at the ages many historical figures lived to even in Roman times.
I truly enjoy and appreciate Azul's videos. This is the fourth one where I've heard him share his industry's "joke" about the absurdity of having to pay income tax on every loaf of bread one buys. I have to say: I still don't "get it."
I've been working since I was 14 and I've been paying income tax on every loaf of bread I've ever bought, so far. If I save money in after-tax accounts so that someday I can pull that money out to buy a loaf of bread, I've still paid my income tax on it (perhaps long enough ago that I've allowed some "senioritus" to creep in to help me forget?).
If you want to count the tax-free growth of after-tax accounts as providing "tax-free" bread, you're neglecting the "loss" (delta) of additional growth that the pre-tax money would have racked up if you'd deferred that income tax until later.
Of course there are reasons to diversify one's taxable positions, but either the "joke" is only indicative of how financial advisors lose sight of the forest-math for the trees, or I just still don't get it… And I'm pretty well above average at math.
I'd strongly suggest either losing the "joke," or explaining it to a deep level of detail. Every time I hear it, I take it as a sign that this industry is led by folks without a firm grasp on elementary math. (Which is fine, to a certain extent — Knowledge and attention to changing laws and rules is still a service of value, and doesn't require math fluency — It's just a little terrifying… Like trying to absorb medical or political advice from a paper where a quarter of the words are misspelled)
ABB = Always Be Buying
A=A0 * exp(kt). t is the time in the exponential term…start young!!!
Having a pension that can cover expenses reduces your withdrawal rate risk. Constrict spending during down markets and live on the pension.
Hi Azul. Fidelity assesment about salary and age. Are your numbers before or after taxes? Thanks for your work
90% equities in etf's and mutual funds that track the s&p500 and nasdaq. 10% bonds. Live off the bonds in a down market.
actually your job is your bonds if you're working.
Could someone please tell me how someone accumulates $750K by age 60? I have a college degree make $90k/yr and am at age 50 with about $100K invested. Inflation is killing me and my family at the grocery store and my portfolio still hasn’t recovered from the stock market losses after December 2021.
I will be forever grateful to you, you changed my entire life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Michelle Stewart
Its great to have that much invested, but how much of a emergency fund should you have in savings at 50? Just a baseline not a hard number?
I completely agree again!! I was lucky that I didn't lose money lately……I started being less risky until 62. Now that was WAY to risky! Now I feel much better with much less risky and I can sleep better!! Thanks Azul!!
Appreciate your videos and valuable insights. The topics and content are becoming quite redundant for subscribers.
Wow, just watched an eye-opening analysis of Bitcoin's latest price twists. It's amazing to see the impact of funding rates, media hype, and big players' actions on the market. This crypto journey is full of surprises, and insights like these are invaluable. It really highlights the power of technical analysis in navigating these waters. For anyone on the fence, now's a thrilling time to dive in and potentially ride the wave to success. The market's complexities are daunting, but also full of opportunities for the savvy investor. At the heart of this evolution is Evelyn Infurna, whose deep understanding of both cryptocurrency and traditional trading has been instrumental. Her holistic approach to investment and commitment to staying abreast of market trends make her an invaluable ally in navigating this new era in cryptocurrency investment…
I think this is awful advice. Do not de-risk. You are doing it because you fear a recession the year you retire and locking in those losses. But what you are doing is guaranteeing a recession on your portfolio for the rest of forever. Losing 20% instead of 10% one year might hurt, but its not going to hurt as much as getting 6% instead of 10% over the next 30 years. Its just maths! Do not buy into this re-risk nonsense. Get a calculator! And if there is a recession the year you retire … work an extra year or defer large purchases like cars and cruises until your portfolio recovers. I'm not saying go buy bitcoin, but equally don't start stuffing your portfolio with bonds.
Retirement becomes truly fulfilling when you posses two essential elements: ample financial resources and a meaningful purpose in life. Make prudent investment choices to secure goof returns and ensure a comfortable retirement.
your mic was low and hard to hear you at 100% volume
your mic was low and it was hard to hear you
Hi Azul, You talk about getting advise from a financial planner but that requires spending money. How do you place a value on financial advice only services. I know that I don't want to have someone manage my money at this point in time.
This is great advice, but it is sometimes hard to understand what is low risk these days. I'm approaching 60 and probably have enough invested, but too much is in equities. How do you truly de-risk when bonds seem so unstable these days?
I don’t understand why the investment companies talk about saving X times your salary. Shouldn’t it be X times your expenses?
Your explanation is concise and practical. However, the market can be manipulated in many ways. I had an early understanding of trading crypto assets but was limited by my technical analysis skills. That changed when I discovered John Grayson strategy. Day trading should be given more attention as it is less affected by the market's unpredictable nature.
Nervous Nellies and Excitable Eddies are the whole reason the market moves like a roller coaster. Buy and hold. It's simple, but Nellie and Eddie are too thick to follow such an easy concept.
Hi Azul, I'm a new subscriber, 62 in March. My situation is I'm starting financially at ground zero. I was disabled in 2014 and worked hard to regain my health. I have been back to work for a year on the SSDI ticket to work program and that is over and I am working full-time at a warehouse. I love my job. I will be debt free by July this year. I plan to work another year and simultaneously begin my dog breeding business (a passion). My current employer pays the rent on the house I am renting because its so cold here its hard to get employees. I want to buy a small house and get my business going in the next year. I don't know if I should take early retirement or not, because of the earned income limits ??? And should I keep working so my rent is totally paid each month??
Why fear again, I am just over 50 and invest in ETF with the highest Risk (Shares Developed Countries and not World Wide). I have 5 percent in bonds and don't feal the risk and am not afraid. I'm also not afraid of Risk in Crypto. I Live wel below my means and have a good savings rate of 50 to 55%. Did you notice what the bonds did the last few years when Intrest was below zero? Bonds didn't act as a hedge compared to stocks. Please your opinion about the bonds that didn't act as a hedge against stocks. Interesting channel with some good insights from a professional.
I met Kathy at a Burger King. Her side hustle was flipping burgers in Peoria! She has her system down. No more than 10 Pattie’s at a time.
I know nothing about trading /investment and l'm keen on getting started. What are some strategies to get started with?