Smarts buys and investments to make in your 40s

Are you reaping the rewards yet?

Life tends to diversify for many people in their 40s. For some, it’s all about family life, for others, it could be a new business venture, a new relationship, the end of old relationships, or moving up the career ladder. Wherever you are in this picture, the need for proactive financial planning still applies, including looking at investment options like a business for a secure financial future.

Smart buys

Property. If you don’t yet have a roof over your head, this is the time to do it, or if you do own your own home, investing in property as a business venture could be a smart buy in your 40s. Most experts agree that buying property, whether for your own use or to rent out, is a smart choice – though, like any investment, always seek independent advice from professionals like your accountant or financial advisor.

Budgeting software. One of the smartest moves to make in your 40s is to keep your spending in check. Even if you haven’t been that successful up until now, this is the decade in which the balance between what comes in and what goes out really matters. Using software can provide an objective perspective on what you do with your money – this kind of enlightenment can help you cut out bad money habits for good.

Investments

Optimum savings. During your 40s your earnings are likely to be peaking so this is the right time to ramp up the amounts that you’re putting aside for the future.

Tax-free ISAs, high-interest savings accounts that lock in your cash and online savings present the best chance of a good return – even with interest rates at their current historic low.

Your kids’ future. You may already have started putting money aside for university tuition fees and property deposits for your kids – or you may not. In the decade that will represent the best opportunity to earn for most of us, this is a great time to start setting aside essential cash for the future of the next generation. However, a word of warning – providing for your children’s education and future should never come at the expense of your retirement. If you don’t yet have retirement finance, start with that. Your children have another 50 years of earning power; you don’t.

Risk factors

Debt. Everything is a priority at this stage in life, from family holidays you will treasure forever to providing your child with their first car. However, taking on new debt in your 40s can be risky. Unless you know you can clear the debt before you want to retire, you could be creating a situation where you must postpone retirement to service these new debts. Debt management is key to your future, insofar as how you manage your debt. There is good and bad debt; knowing the difference is necessary to get ahead financially.

Life. People in their fifth decade can have a tough time of it – from illness to redundancy, divorce, and bad investments, a lot can start to go wrong in this decade. Protect yourself financially with cash savings, smart investment and insurance choices, and the right healthcare cover; then all you have to do is deal with challenges as they happen.