How should you plan your investments at 40 years of age?

How should you plan your investments in 40 years of ageHow should you plan your investments at 40 years of age?

In today’s world, most of the professionally successful individuals are not happy and unsatisfied with their management of funds. There is a dominant sense of regret of not saving sufficiently and also not channelizing the savings properly. They have a feeling that they do not possess enough knowledge and act smartly as do in their professional lives. How should you plan your investments in 40 years of age? What steps would help you to be smart at 40 years of age?

How should you plan your investments in 40 years of age?

At 40 years of age, you would be focusing on the career, earnings and have kids who are in school. Here are some investment tips that can help you to plan your financials.

Also Read: Best Investment Plans for newly married couple

You should know that peak income is in 40s and 50s

The peak income of the most salaried and professionals is earned by them in 40’s and 50’s.  Few business owners and CEO’s are the exception to this who earn too high in the 30’s only. If an individual possesses skill, experience and qualification, his career will take off with flying colors in 40’s. By the time, he attains the age of 45, he should earn a lavish income for himself, kids and still have sufficient savings. So, the main feature of 40’s for an individual is to focus and focus hard on his career and earnings.

Increase your savings each year

The phase of 40’s is tougher for the most. There are expenses in the name of family, kids, EMI’s to pay, lifestyle expenses and the earnings seem inadequate. The savings rate should range around 25-30% of your total income by the time you attain the age of 40. Women who opted to be house wives over working due to kids should return back to work. The EMIs of the home should get over. Holidays to be restricted to one or two according to the schools of the kids and spending on the clothes, home, accessories should be done in a limit. One should ensure that the saving target is well achieved every year and this rate should be increased every year.

Focus on growing your investments instead of expecting income from them

The target of investment should be growth and not only income. Managing investments and funds is an important aspect of your life otherwise you would end up choosing a conservative and low-return investment portfolio. Many of them invest in typical income-oriented investments like PPF, bank deposits and poorly framed insurance schemes. Choose diversified equity funds to build a good portfolio. It is the most promising way to sizeable wealth as you approach towards retirement.

Keep investing in a lump sum over SIP

Invest in a lump sum to make a difference. Maintaining a SIP of just Rs. 5,000 or less would not do anything good. If you are two earning members in the family, try to save the salary of one in the form of SIPs while spending the income of another. Investing small sums in this or that or investing very minimal in the fear of risks are all counterproductive. A diversified mutual fund portfolio along with 10-20 best stocks or securities across companies and sectors is a very good option. Choose your funds and invest in large amounts to create wealth. A 50,000 monthly SIP or 500,000 lump sum may appear big today, but fifteen-twenty years later, these amounts will be much smaller in the context of inflation and appreciation of wealth.

Create Budgets and limits

Make mental budgets and limit. Make strict rules for yourself related to the expenditure that may drain your income. Limit your routine expenses on a monthly basis to not more than 50% of your monthly income, so that even after the unexpected expenditure of 10-12%, you still have 40% to save for your future. An individual should ideally be debt free when he is crossing 45 years of age.

Also Read: How Billionaire Daughters in India helping their parents to grow their business?

Invest in financial products for liquidity

If you feel like to shift in a bigger house that reflects your social status, do not buy that second house without disposing out the first one unless you can afford. Instead of houses, invest in financial products. It provides with the facility to liquidate easily, use, transfer or divide. The phase of 40’s and 50’s may bring unexpected changes to your life. That second house will take away all your liquidity of the funds and to use your asset as per your wish.

Conclusion:  The period of 40’s is the most critical period of your life when you plan your entire life, family spending along with the savings for future. You have to manage your kids, their higher studies and their marriages too. This is the only time when you are full of enthusiasm and vigor to prosper in life. So focus hard on your earnings together with systematic investment planning and channelizing your savings and investments, so that your wealth multiplies manifolds.

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How should you plan your investments in 40 years of age


  • Rajeev

    Dear Suresh


    I have posted a query ealier also but could not track it. I am 43 year old guy need guidance from you…

    I have just started my financial planning 7 months back with SIP amouting 20k & increasing it to 30k now. SIP Funds are – Birla Frontline, SBI Bluechip, JP Morgan small & mid cap, UTI Mid Cap, Frankline Prima plus.

    Other than this i have put 1 lac in HDFC Balance fund.

    I am planning to start STP with ultra short term funds of BIRLA Savings fund, Frankline ultra short term inst.(Please suggest some ultra short term funds) 

    Please suggest me if i need to change my portfolio or something needs to deleted/added in this.

    Other than this i am also investing in FD(Wife/mother name to avoid tax liabilty).

    Your gusidance would by really helpful to build a strong corpus in next 15 years.

    My kids are 13 & 9 years of age & would be needing money for their education etc in future.



    • Hi Rajeev, Portfolio is good except for following. JPM Small cap fund – You can exit. You can consider Franklin india smaller cos fund or HDFC mid cap opps fund. You can take short term funds only for emergency fund, otherwise invest in large cap funds. Going forward, add more in large cap funds into your portfolio

      • Rajeev

        Thanks suresh I would definitely exit from jpm. I am planning to start stp through ultra short term funds as I have mentioned above . Is it a good way to invest in equity. My budget i's 10 lack and horizon is 4 years. Also if you could suggest Me if I take a regular income debt fund/short term debt fund  or corporate bond funds like  birla dynamic etc instead for going for fd in bank.

        Regards. .rajeev

        • Rajeev

          Dear Suresh

          I would be eagerly waiting for your advice..It is really help ful in making my portfolio..



          • Hi Rajeev, Regd STP, yes it is good way to invest in stocks. Alternatively you can keep investing during every market correction. If you want regular income, you can go for MIP mutual funds.

  • vivek

    Dear Sir ,
    please guide me i am in a lot of trouble

    last year a metlife agent fooled me into investing into Pnb Metlife easy super policy
    he told me it is for 5 years , no need to pay any premiums , the invested amount will be cycled every year .

    So i invested 1 lakh INR

    but after a year passed , they are demanding me rs.1 lakh premium …or else policy go in discountinued fund . Now the net value is 83000 [ i lost 17000 rs since i signed up this hell]

    what should i do , they are saying its in lock-in period of 5 years ,
    only after 5 years u will be allowed to withdraw ur money after policy maturity .

    please guide me , i am in a lot of emotional stress :S


    • Sanyam Jain

      Hey Vivek dont be worried. Please read the following

      If the policy holder stops paying the premium, the insurance cover will cease and the fund value net of any discontinuance charge will be transferred to the Discontinued Policy Fund. The Discontinued Policy Fund will earn a minimum guaranteed interest rate of 3.5% p.a. and the proceeds from this will be payable after the fifth policy anniversary.

      As per above you can stop paying premium and get your money after 5 years with interest at 3.5% per annum.

      • vivek

        thanx sanyam , ihave learned lesson the hard way 😐
        never ever trust any agent , EVER
        it was my first investment and i feel so stupid … sigh …

  • hitesh

    yes we need to plan our funds very efficiently….your tips are very useful…

  • Ravi Chandiran S

    Dear Suresh,
    Thanks for your writing which is in line with my discussion with my wife since we have Rs.2 lacs and discussed with her where to invest as my age is nearing 50. Finally as a safety point of view, we decided to put in FD @ 8.5%. Confirm me whether I am correct or Is there any other schemes available which yields 9% or above.
    S. Ravi Chandiran

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