By the time you reach your 50s, you’ve reached a pivotal moment in your life when it comes to retirement. You’ll be thinking about how to close out your career and making plans for how you’ll spend your senior years.
Not only that, but you may also have unpaid debts to consider along with other expenses that continue to eat away at your income.
That’s why you should consider these three moves when it comes to investing during your 50’s.
When it comes to investing during your 50’s, you have a few choices you can make. You can either ramp up your contributions to your retirement savings plan or you can put money toward a traditional brokerage account.
Keep in mind that putting more money into your retirement savings plan can be a smart move, at least from a tax perspective. That’s because traditional 401(k) and IRA contributions go in tax-free. Investment gains are also tax-deferred.
A huge benefit of being in your 50s is your ability to contribute more to a 401(k) or an IRA than when you were younger. In other words, you can put extra money into both, and being able to make these catch-up contributions can be a crucial asset if you had a slower start to your retirement savings.
By investing strategically during your 50s, you can set yourself up for a much more secure retirement.
Just because you’re inching closer to retirement doesn’t mean you should start moving away from stocks. This is especially true if you plan to retire closer to your mid-60’s or beyond instead of during your 50’s.
Your stocks during your 50’s should represent about 50-60 percent of your total portfolio. You can add on a little more, depending on how much risk you’re comfortable with taking.
However, any stock purchases you make during your 50s should be stocks you believe will continue to hold well into your 60s and even later. Long-term value is what matters most here.
A goal everyone should have when it comes to creating a portfolio is to make it well-diversified. This is even more important the older you become. That’s because if the stock market falls, having a more diverse mix of investments can help minimize any losses.
Not only that, but you should also consider low-cost index funds. This can allow you to acquire a bucket of bonds or stocks with a single investment.