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

How 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

Suresh KP


  1. Right now I am in 37 years old.

    1.I want to invest 300000 through STP lumsum amount for 15 years for Dauther education.
    2.I want to invest 400000 through STP lumsum amount for 23 years for Daughter marriage and own retirement.

    Pls suggest me best liquid and equity fund for mentioned goals.Pls suggest how much I will achieve after 15 and 25 years through two investment.

  2. Hello Sir,

    I am 40 years old,Below is my goal sheet

    Son study  2022 16 lakhs
    Daughters study 2025 22 lakhs

    Son marriage 2029 8 lakhs
    Daughters marriage 2032 16 lakhs

    Retirement 2037 3Cr

    I can invest monthly 40k. I have last month fully paid my home loan.

     Current investments

    EPF 15Lakhs

    PPF 11 Lakhs

    Mutual fund ELSS 5lakhs

    eNPS 1.5lakh

    Wife Ppf 4 lakhs

    Sunayna Samruddhi 2 lakhs

    Bank FDs 3.6lakhs

    Gold ETFs 2 lakhs

    Monthly  investments for
    EPF 8K
    eNPS 4K
    PPF 12K

    I have following SIPs underway since 3 months
    Kotak Select Focus Fund – Direct Plan – Growth – Rs 4000/- per month
    Axis Long Term Equity Fund – Regular Growth – Rs 4000/- per month
    Mirae Asset Emerging Bluechip Fund Direct Plan- Growth- Growth – Rs 4000/- per month
    Aditya BSL Tax Relief 96- Direct Growth – Rs 4000/- per month

    Please guide how best should I fine tune my portfolio.

  3. hi,

    i am 40 years old, i have10 yers 1 child  wants to purchase a home by liquidating retirement savings
    fund and taking a home loan for the next 10 to 15 years. i wants your
    opinion whether this is an appropriate strategy for a Retirement Plan

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