Investment strategies for all ages

Multi-generation family having dinner in the backyard

Today, the need for planning, saving and investing — especially for retirement — is more important than ever. The time to take control of your future is now. Whether you’re just starting out or find yourself late in the game, there’s an investment strategy for you.

Your 20s

Many of us make our first investment decisions when we enter the workforce. If you haven’t already, the first things to do is open a Share Account and a Checking Account. These interest-bearing accounts may not earn a lot of money, but your funds are safe, liquid and always available to you. Begin funding these accounts as soon as you collect your first paycheck — even if it’s as little as $25 per paycheck.

Enroll in your employer’s retirement plan and have your contributions automatically deducted from your paycheck. Employers often match your contributions, increasing your savings even more! Take advantage of the power of compound interest and watch these contributions grow over time. This is a long-term investment for retirement, so consider a portfolio of stocks, bonds mutual funds for growth consistent with your risk tolerance and retirement fund goal. Use a retirement calculator to help give you a good idea of how much money you’ll need once you stop working. This portfolio will change over time, so continue to study and learn about investing to help you gain confidence in making decisions.

Your 30s

The goal now is to work on increasing retirement contributions in your employer-sponsored plan to up to the allowable maximum. Evaluate your investment allocation annually to ensure it’s still in line with your risk tolerance. Proper diversification between stocks, bonds and money market funds helps control the risk within your portfolio. Investing more money in stocks could increase your risk while bonds and money market funds are typically lower risk investments.

Your 40s

These are your peak earning years, so use pay raises and bonuses to boost investment savings. Really focus on maximizing your retirement contributions each year. Consider establishing other retirement accounts established like a Roth IRA or Traditional IRA, if this fits within your budget.

Your retirement and investment accounts likely have grown in value over the years through monthly contributions and compounding. You may feel confident about making investment decisions, but it wouldn’t hurt to get a second opinion. Contact a financial advisor to review your investment allocation for proper diversification. Your advisor may suggest other investment options that are suitable for you. However, do not invest money in something you don’t fully understand.

Five years from retirement, consider shifting out of aggressive stock funds, and into bonds and money market funds to reduce portfolio risk. The goal now is to ensure your savings last as long as needed, and provide you with enough cash flow to fund your lifestyle.

Years of diligent investing have hopefully allowed you to build a substantial retirement nest egg. If not talk to a financial counselor for help mapping out a strategy to help you reach your goals.

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