We’re continuing our series looking at finances in your fifties.
We have looked at what is probably your biggest expense and your biggest asset – your home, and how you could pay off your mortgage if you have not already done so. This time, in our second article, we look at ways of potentially increasing your wealth, and protecting yourself and your family.
With your fifties here, you may be finding that things may be getting a little easier with money – the children are off and your mortgage may be out of the way.
But although in your fifties you may have a little more spare cash, you may not be seeing any lasting improvement in your long-term financial outlook.
At Continuum, we want to help you with that.
Getting yourself organised
Actually, the basics of making the most of your finances are the same in your fifties as they are at any other time of life. Deal with debt first. Paying off high interest loans should be your priority at any age. High interest debt is going to hold you back from investing in your future. This includes car loans, large consumer purchases like home improvements or white goods. The interest you’re paying to the lender could be growing in an account for your future.
The biggest source of high interest debt are credit cards. They were only ever designed to be for short-term debt, not funding long term purchases.
With low interest rates, credit card switching is back. Switch your outstanding credit card debt to zero interest accounts and use another credit card for your regular payments and pay it off every month.
It does take some self-control, but once you are out of debt you will be amazed at how much extra financial resource you have to call on each month.
But what should you do with the money you have suddenly discovered is yours?
Savings – or investment?
The problem with spare cash these days is deciding what to do with it. It used to be that putting a regular amount away each month would earn you a very useful sum in interest at the end of a year. With low interest rates, those days are gone, and savings accounts are hard pressed to keep up with inflation.
The answer could be to become an investor. It can be much simpler than you might think – you can even make a regular monthly payment to an investment fund, which ensures that it is as easy as saving.
The difference, of course, is that with investment, although there is a risk, there is also the opportunity to make money.
At Continuum, we believe that if you are ready to look at investment, the way to do it is to adopt a long-term investment strategy based on proven principles.
A successful investment strategy must reflect your current resources, your future plans and your timescales, and your attitudes to risk. It will help you build a balanced portfolio and determine the markets and sectors you need to be in, which shares you need to hold – and the most cost-effective ways to hold them.
Investing for a minimum of five years and preferably for much longer can smooth out volatility and let the underlying growth of the market work for you. Time is money. The longer your investment has to grow, the greater the returns can be.
The protection you need
Investing could mean a much more comfortable retirement in the years to come. But there is another side to the financial planning you need in your fifties. Protection, for your family and for yourself.
Protecting your home if you are too ill to work is a sensible precaution. Not just to protect your biggest investment, but to keep a roof over the heads of your loved ones. More than 40% of people with a mortgage in the UK have no cover in place if they died.
The fact is, the bills don’t stop coming in just because an income does, and by definition the unexpected can strike at any time. Illness, unemployment, the loss of a key contract if you run your own business – they all have the potential to derail your finances.
We use polite terms, like ‘unexpected’ or ‘unplanned,’ but we shouldn’t sugar-coat what we are talking about. Financial protection means putting insurance policies in place in case our partner dies, loses their job or becomes too ill to work. It is to cover our income or to help us make changes if our lives are affected by an accident or if our children need full-time care through illness.
The risks – of illness and worse – increase in your fifties.
We can help you arrange a financial safety net offering all-round protection for yourself and your family.
Getting some help
Investment, protection – they all need to be carefully considered as part of your overall financial planning.
With Continuum, financial planning means having a financial expert to call on to help you make the most of your money and your life. You can see more about our services by visiting our website.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products or investment strategy, you should seek independent financial advice before embarking on any course of action.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The value of investments can fall as well as rise and you may get back less than you invested.
The Financial Conduct Authority does not regulate deposit accounts and personal finance
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