It’s Never Too Late! Learn How To Build Your Wealth in Your 70s.

Advisor August 11, 2020

As you enter your 70s, it isn’t uncommon to want to change your investment strategies. Long gone are the days when you were active enough to have an eye on the market 24/7. You might be thinking that now’s the time to opt for safer and less risky investment options, like bonds and cash equivalents.

While this is a perfectly sound strategy to follow, it might not be the best idea to pull all your cash from the stock market, as you can continue earning from the growth and dividend income.

Deposit Photos | You can be just as active in your old age too

Who says you have to stop building wealth in your 70s? You still have a lot of retirement years ahead of you. If you continue working on your portfolio, you could use your free time (and money) to travel to countries you’ve always wanted to see. If you’ve lived a full life and have no other major desires remaining, look at your grandkids- wouldn’t you like to commission their higher education?

Either way, we’d like to walk you through the ways in which you could maximize returns on your investments and keep building your wealth well into your 70s.

1. Build a Strong Core Portfolio

If your portfolio, throughout your investment tenure, lacks strength at its core, bye-bye goes the chances of earning big in your 70s. A strong portfolio is all about having your assets well distributed among different low-risk:high-return industries and sectors. A common mistake that a lot of people make is investing in perhaps Apple, Google, and Amazon at the same time, and they think their stocks are well-diversified.

But, they’re wrong.

All these companies lie within the Tech sector so, the fact is, if the sector comes tumbling down, so will all your investment.

2. What’s Your Exit Strategy?

Learning how to buy stocks isn’t the only important thing when building a strong portfolio- you must also know the right time to sell your stocks.

One great exit-strategy is applying stop-losses to all your assets, perhaps at 25% under the current price of the stock. So, essentially, if your position continues to rise, that’s great! But, the market is unpredictable and you can lose all your investment if you don’t play smart and add a stop-loss to determine how much of a loss is bearable for you.

Deposit Photos | If you follow key tips, the market will reward you3.

3. Be Careful with Your Position Sizing

Position sizing is another way to keep your portfolio well-diversified and is basically the amount of one stock that you own at one time. Experts recommend not putting in more than 4% of your total investment into one stock so that, if that stock collapses, you don’t have to say goodbye to your entire portfolio. Now, no matter how tempted you might be to put in more than 4% into one extra-favored stock, we urge you to resist that temptation as it will not play out well for you in the future.

Know why so many people lost their entire investments in the financial crash of 2008? Essentially, most people had their savings tied to a single stock or didn’t care to diversify their investments enough. Don’t make the same mistakes they did.

4. Keep Your Expenses in Check

Remember, building wealth is directly proportional to saving as much money as possible. So, every dollar that you put into your mutual fund manager’s pocket is a dollar less than what goes in yours. Plus, Wall Street basically runs on pretty high fees, which you definitely don’t want.

There are so many free trading platforms out there now- you don’t need Wall Street sucking your savings dry. No one knows the worth of your money, except you!

Deposit Photos | You need to keep the cash flowing inwards, rather than outwards

Take Away

Building wealth in your 70s is all about gaining higher returns on your investments, while actively preserving the wealth you’ve made throughout the course of your career. If you have good discipline and are eager to make the most out of your retirement age, following this preservation ethic should be a breeze for you.