Investing in your 20’s, 30's, 40's and 50's


Our relationship to money changes as we get older as every new stage of life brings different needs and new financial challenges.

Investing in your 20s

Starting out in your career means you can be more “aggressive” with investing, so that you can build an amount that can grow over the next few decades.

This may seem contradictory, as income is limited at this age. However, the compounding power of time is on your side, so that the small amounts of money you set aside will roll up to a significant amount later on.

Yes, it might seem like a huge sacrifice to save 20% of your income. But think about it this way: in saving as much as you can while there are fewer demands on your income (compared to your 40s or 50s, when you may have kids in college, or need to pay your mortgage) you are putting yourself ahead of the game.

So what types of investments can you consider at this stage?

In your 20s, you can consider equity based mutual funds or UITFs (Unit Investment Trust Fund). These require smaller amounts of money and can give you higher returns long term. In the Philippines for instance, the minimum amount to start investing in a mutual fund is Php 5,000 (and Php 1,000 subsequently). 

Investing in your 30s

In your 30s, your finances and other commitments start to get real.

For instance, life isn’t as flexible anymore; you may need to build your career where you are, rather than switch jobs whenever you feel like it; you might also want to start “putting down roots” so purchasing a home may be high on the list. This equates to a lot of complex financial questions piling up all at once.

Now is the time you need to start investing for retirement and if relevant, for your child’s college education. Mutual funds or UITFs as well as unit linked investments may be a good option for these medium to long term goals.

Your 30s also may be the time for you to invest in a property – because you can now afford it and have a better idea of what property you need (apartment or house? Location? Investment or to live in?).

Investing in your 40s

Your 40s are a critical time to step up those retirement savings. Envision your life for the next 15 to 20 years and make sure you’re taking the right steps toward achieving it.

You also need to make sure that you able to pay your mortgage quickly enough ie., complete all your mortgage payments before you retire.

College expenses for children and care for aging parents will affect your finances.

With a couple decades to go before the official retirement age, you still have a decent investment horizon in which you can maintain a well-balanced investment portfolio. Make sure you check in with your portfolio a few times a year to see which investments have grown and which have shrunk.

Depending on the complexity of your situation, you may want to consult a finance professional (financial planner or investment advisor).

Investing in your 50s

A nightmare scenario for those in their 50s is the realization that they may not have enough money for retirement.

There are also those who may be living in the fantasy that they have enough for retirement.

Whichever side of scale you are, the first thing to do is this: find out how much you will really need once you retire.

If you have not started setting aside funds for retirement, you may need to be more ruthless about carving out as much of your current income as you can for investing.

You may also want to shift to a more conservative investment strategy, such as fixed income mutual funds.

As you approach retirement, prepare your investment portfolio for withdrawals. In other words, look at what investments you can start cashing-in or selling to use for your expenses once you stop working.

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