How to invest at each stage in your life

Estimated reading time
 10 min

Learn all about

• Building healthy money habits in the early years
• Getting the most out of your investments in your 20s and 30s.
• Diversifying your investments when you hit your 40s and 50s.
• Retiring in comfort (and style) in your 60s and beyond.

Investing early in life can set ‘future-you’ up for financial success - but it’s never too late to start! Whether you’re young or young at heart, there are many different ways to invest.

Things like buying a property you can rent out or purchasing a share in a telco – there are plenty of options right at your fingertips.

Ready to learn how to invest at each life stage? Hop in our time machine and buckle up as we show you how to make the most of your investments, no matter your age.

Your early 20s

While there’s no minimum age to start investing (parents can hold shares in their kids’ names, for example), the sooner you do it, the better the rewards could be when you’re older, and especially when you retire! But if you’re stumped on how to invest or where to begin, don’t stress. You’re more than likely already investing and don’t even know it!

• Build healthy money habits: Establishing good habits like setting goals, budgeting and saving can help you invest now and later in life. For example, you can open a savings account and stash your cash (even if it’s a dollar a day) to grow your savings. Or learn how to budget so you can be in control of your money situation in the future. Remember, good money habits can pave the way for good investing.
• Get smart with super: Let’s say you worked part-time at a florist during or after high school. Did you know your employer would have been contributing to a superannuation fund on your behalf? They will have made contributions to either a default fund or one you’ve chosen to help you build wealth when you stop working later in life. Through the power of compound interest and investing over the long term, superannuation is an investment to grow your wealth for ‘future-you’ without having to lift (much of) a finger. It’s a good idea to stick to a single fund to avoid paying fees on multiple accounts. And make sure you look into how it’s invested. This will have a significant impact on what you have when you decide to hang up your boots and retire from the workforce. You can also consider making voluntary contributions to increase your super if you find yourself with some extra disposable income. Do your research - check the T&Cs, fees & charges, and get financial and tax advice to work out what is best for you and your circumstances.

  Brain hack

Make yourself a reward program to stick to your money habits using incentivisation (when you reward yourself for a certain behaviour). These incentives can be a strong motivator to keep up those good habits. For example, if you reach your monthly saving goal, maybe treat yourself to a pastry from your local bakery. Do whatever works for you and your money situation.

Your roaring mid-20s and 30s

Your mid-20s to early 30s are a great time to be planning for your future. Whether you’re planning for a wedding, thinking about starting a family or adopting a kitten, these big life-changing moments could be a good jumping-off point for investing.

• Think about what you want from investing: One thing that makes a smart investor is smart goal setting. Even if your goals change over time, it’s a good idea to think about what you want from future investments. If you plan on having kids, buying an investment property you can rent out now and give to your children later might be a smart way to earn passive income. Or it could be a good time to consider making voluntary contributions to boost your super and grow your wealth while earning compound interest.
• Consolidate your super accounts: At this time in your life, you may have worked a few jobs. If that’s the case, you may have more than one super account in your name. Head to the ATO website to see how many accounts you have and work out if you should consolidate them. Having just one account means paying just one set of fees. Plus, you’ll be earning interest on a single (higher) amount, which means more money for your future. Before making any decisions, you will need to consider whether there are any adverse consequences for you, including loss of benefits (e.g. insurance cover), investment options and performance, functionality, increase in investment risks and where your future employer contributions will be paid. It might also be the perfect time to set-up salary sacrificing with your employer or make additional contributions. For people in their 20's, this can make a significant difference for minimum effort.
• Work out how much risk you’re willing to take: As you settle into adulthood, it’s a good time to find your investment style, including just how much investment risk you can stomach. For example, investing in shares at this age could yield higher rewards for the future if you invest for “growth” (but it’s also good to know it can come with considerable risk). Generally the younger you are, the higher risk appetite you can afford to have, as you have longer to ride out periods of volatility. However as you move closer to retirement, you may want to take a step back if you are going to start drawing an income. Each investment comes with some level of risk, so knowing your investment and financial goals will help you decide whether to go for a higher-risk, higher-return investment option or keep things simpler and safer.
• Consider an investment journey with ETFs: An exchange traded fund (ETF) is a managed fund that owns a group of investments (stocks, bonds, or commodities) and sells units of the entire fund through a stockbroker. Buying shares of your chosen ETF gives you access to investments you might not otherwise be able to afford and they can come with lower fees. However, ETF’s can be volatile and would usually require a long-term investment to see returns, so make sure you consider the risks and consult a professional before you dive in.

Before you make any decisions you must do lots of research: check the T&Cs, fees & charges, and get financial and tax advice to work out what is best for you and your circumstances.
 

  Wild Card

One creative way to break into investing when you don’t have a lot of cash to play with is to pool your resources with a group of like-minded people you trust. Teaming up to create a deposit for an investment property can get you in the game sooner! Just make sure you get Legal advice and are fully covered contractually so things are clear around the ownership structure.

Your thriving 40s and 50s

When you get into your 40s and 50s, your career and income might be peaking, so it could be a great opportunity to go hard on your savings goals and investments.

• Check-in with your super: You can use a super balance calculator to see the average super amount for your age. This can help you work out if you’re on track with your retirement goals and if you need to change your money habits to boost your super. For example, you might make more voluntary contributions to increase your super, and make a budget to see where there’s spare cash that you can put towards your future.
• Try to diversify your assets: Diversification is where you invest in different assets, like a combination of property, super, shares (a unit indicating your stake in a company), stocks (the term given to your overall investment in a company), and cash savings. But if you want to stick to one asset type, then you can diversify within that – like investing in shares across different industries. This type of investing means you’re spreading your risk across multiple assets, or asset types, so if one investment doesn’t bring in the goods, then you’ve got others that can.
• Invest in assets you can own for 10 to 15 years: At this stage of your life, you can find opportunities to increase your income by investing, so you can earn additional cash in the lead-up to retirement. Ideally, these would be investments you can own and benefit from for 10 to 15 years. This can mean investing your super into medium risk assets and stocks (after doing your research of course). During this age bracket, it really is time to take stock and accelerate wealth creation, there’s no time like the present!

Of course, don’t forget that before you make any decisions it’s crucial to do lots of research: check the T&Cs, fees & charges, and get financial and tax advice to work out what is best for you and your circumstances.

Your swinging 60s and beyond

As retirement approaches, it’s time to make some big decisions about your future and finances.

• Reinvest your super: When you retire, you’ll have access to the super you’ve been building up over the years, so it’s a good time to think about what you want to do with that money. Speak with an expert, like a financial adviser, at this stage to ensure you have the right investment strategy for you.
• Apply for the pension: When you retire, you can also consider applying for the pension. This can help with financial security on top of your investments and super. But remember, the amount you’ll receive will depend on the assets you own and the income you earn.

No matter what your age, even as you become older and wiser, it’s critical to do your research before you make any decisions. This includes to check the T&Cs, fees & charges, and get financial and tax advice to work out what is best for you and your circumstances.