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Investment Planning in Your 40s

Updated on :  

08 min read.

Investment planning is an important part of every earning individual and should be given due importance to realize the value and benefits of one’s hard-earned money. Each and every individual depending on their profession and the income should plan their investments accordingly. This article covers the following:


While it is always recommended to start your investment plans as early as possible, it is never too late to begin rectifying that error. Whether you are in your early 20’s or in your 40’s, there is always time for investments; of course the risk profile and the options to pick frm would differ depending on how much time you require and what your end goal is in accordance with your ability to save and invest.

Significance of Investment Planning in the 40’s

As with today’s generation which believes that 40 is the new 30, but the fact remains that nobody is getting any younger. One must, therefore, seize the opportunity in time to make the most of it.

Investment forms a major part of one life by 40 as most employed individuals have financial responsibilities towards family and households. It often may not seem enough earnings to manage the rising expenses and demands of the times.

The truth is most individuals at times tend to live beyond means or find meeting their financial needs quite challenging owing to many reasons. It is very important to have an investment plan in place to ensure that your hard-earned money is not only spent in meeting the expenses wisely but also invested in good rewarding schemes, so you know that you have a good investment to rely on in the future.

Things to Consider for Investment Planning at 40

Financial Responsibilities

Nowadays young individuals have tend to become more independent financially and focus immensely on their career and jobs to ensure career growth. This could also mean they have become more informed money-wise and realize the importance of increased earnings.

Whether you are at your 20’s, 30’s or you are already at age 40, financial earnings well invested will bring with bring along much-needed benefits that will sustain you when your active income takes a backseat.

Besides saving for your future you will have further responsibilities towards others that mandate that you invest wisely; From family to children’s education, to health expenses, household expenses, future savings, one must consider all of these issues when planning their investment at 40.

Focus on Savings

Even with rising inflation and the cost of living, one must take into account the importance of savings and this will be a life-saver in difficult financial times. You must cut the unnecessary and unwanted expenses to increase the savings amount. Look for investment options that are focused on income generation rather than just a lump sum return.
While a Fixed Deposit and a Savings Account will help you save for the future, mutual funds and SIPs can help generate future income for you that is not only higher in terms of the return but allows you to invest in diverse asset classes to balance the risk and reward tradeoffs.

The Right Kind of Investment

When at the prime of their careers individuals often earn more than they previously did, so the investment made at 40 should be in line with keeping their earnings invested in good investment schemes that promote growth for the future.
Know your risk profile and accordingly identify the right platforms for investment. PPFs can be one option of investment but given the duration of the investment, investments in income generating mutual funds will again serve you well.
Debt investments would be one of the best options to consider given their diversified range. Build a portfolio that encourages diversity in performance, having a mix of debt and equity.
ClearTax has a list of handpicked mutual funds suited for every risk profile; you may want to look through our offerings before making a pick.

Plan and Chart your Budget

Higher earnings mean higher standards of living and higher expenditure. This may often upset the savings plan and adversely affect one’s planned investments. It is a wise thing to plan one’s budget in advance and keep tab of the expenses as one goes along. This will ensure that the expenses are met in a planned fashion and will help realize the savings for better investments.

Education and Marriage Plans for Children

In today’s world, higher education can be a big financial burden that can put anybody under severe strain. One must plan in advance and keeping in mind the resources at hand to ensure they meet these requirements without much difficulty.
Making timely investments to ensure you save enough to bear the minimum required cost of your child’s education is definitely one of the bigger decisions to take. You may want to explore mutual funds that are curated especially for purpose of saving for future education expenses.
Same goes with cost arising out of the marriage of young children, one must plan and invest in such events beforehand so that one must be adequately sound to meet such financial needs. There are various such plans available on ClearTax that will help you make the right investment decision.
For instance, you may want to consider the Sukanya Samriddhi Yojana for your young daughter as an investment avenue to ensure that her education and marriage is never a burden for you.

Insurance against adversities

One can not overlook the uncertainties of time and events. It is very imperative to understand that life is very unpredictable and therefore one must be prepared to face the consequences of such an event as and when they appear.

It is prudent to invest in insurance against all such advertise to minimize the risk of financial burden in the future times. One way to be prepared is by having an emergency fund that you can contribute towards on a monthly basis to save for the rainy day.

Explore the various offerings for such investment to make sure you get the right mix of liquidity and interest rates. Liquidity is of prime importance as inaccessibility to the funds at the time of need will defeat the purpose of the investment.

Retirement Corpus

Time goes by slowly but in retrospect, it just doesn’t seem likewise. Sooner than you realize you would soon be heading towards your retirement. Some may even choose to opt for early retirement.

It is an integral part of your investment planning in 40’s to ensure that you have a smooth and comfortable retirement and a life financially good enough thereafter. Pension plans offered by mutual funds not only secure your future they also offer tax benefits under Section 80C of the Income Tax Act.

It is good to research and explore as many options as you can before making these investment decisions. Seek professional help if need be; or visit ClearTax where you can access in-depth details investments and investment funds.

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