Is It Too Late to Start Investing in Your 40s?

Recently, I read this Business Times article about how to start investing in your 40s and beyond. It struck me from a few angles: I am in my 40s and investing. 

I only started investing in my mid-30s. I’ve friends and family in a similar life stage but have not started investing.

So I forwarded the articles to my family and friends and told them: “Business Times wrote this for us, do read!” 

What came back was these responses:

• “My pay is so low and I thought we need lots of money to invest”
• “I wish to learn investing but I don’t have anyone or anywhere to learn from”
• “I want to invest but don’t know how to start and where to start”
• “I know I need to invest but I have no time to invest so I rely on bankers or agents”
• “I am still young and I can afford to wait”

Wow, so many different views above! Now these are self-limiting beliefs and I’m going to unpack all these when it comes to investing. Let’s go!

1. I don’t have enough money to invest

As a newbie more than 10 years ago, I also thought we needed a lot of money to invest! Until my friend shared I could start with OCBC’s Blue Chip Investment Plan (BCIP). 

This allows beginners like me to dip our toes into blue-chip stocks, REITs or ETFs on the Singapore Exchange for as low as $100 per month, and to lower average cost potentially through dollar cost averaging on a monthly basis. 

You purchase more units when price is lower and fewer units when the price is higher to average out cost.

As the saying goes, we need to learn to crawl before learning to walk, so for folks with a small budget or starting out investing, this is one possibility. 

There are other similar options out there including POSB’s Invest-Saver or Philips’ Regular Savings Plan (RSP), which allow newbies to start with monthly small amounts.

By investing a fixed amount consistently every month, this disciplined dollar cost averaging benefits investors regardless of price fluctuation, fear, greed or emotions.

2. I don’t know where to learn

In this knowledge economy, there is no lack of resources to learn from. I began to pick up and read widely from many free resources (e.g. Business Times, Singapore Business Review, The Edge Singapore etc.) 

There are also many other resources out there including Beansprout, The Smart Investor, DollarsAndSense. 

Of course, you can also check out all the free resources on our blog too.

Now, if you wish to learn more in-depth or wish for deeper guidance or mentorship, you could also consider paying for investing courses too. 

As I always say, investing is a lonely journey, definitely helps to have like-minded community members and mentors to guide us along!

3. I don’t know how or where to start

After learning to “crawl”, we can progress to learn to “walk” after gaining experience and knowledge in our investing journey. This was when I started with income investing into individual dividend paying Singapore stocks, banks or REITs. 

In addition to building a regular passive income stream for investors, dividend-paying stocks or even REITs are relatively stable since management can set aside cash to reward investors with regular dividends over the long run.

While there could be questions or FOMO of not investing into US, China/HK stocks, these are generally more volatile and may not be suited for beginner investors. 

Furthermore, the 30% dividend withholding tax for US stocks would also eat into investors’ returns.

4. I don’t have time – so I let my bankers manage my money

As the saying goes: “Never ask your barber whether you need a haircut, Never ask your beautician whether you need a facial.” 

I believe nobody cares more about money than ourselves!

With the advent of investment technology and advanced wealth management tools, for those who are busy, we could even  consider investing through banks’ digital portfolios.

For busy working folks, robo-advisors and digi portfolios are a quick and practical way to start investing with low cost, greater diversification, regional/global exposure with minimal effort.

5. I’m still young and can afford to wait

In recent years, it has been no secret that inflation has been piling onto our expenses and eating into our buying powers.

As our lifespan increases with better standards of living and healthcare, it also means our savings and investments will need to last us for a longer period of time.

While we may have other priorities – marriage, housing, kids, career – when we are younger, it takes time for investment gains to compound and to give it a longer runway to grow. 

From the figure below, we can see our investment returns approximately double for every ten years before we start investing (based on an example of 4% annual return rate). Hence, the earlier we start investing, the more and faster we can compound our wealth.