Investing Late in your Career

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This is the next post in a series on life-long investing strategy.  The series starts here.

If you have been following the stages of investing strategies, you should have a lot of money in retirement accounts and individual investment accounts.  You should also have paid off your house.  You should also have a lot of “pipelines” set up – different stocks and investments that you can draw on as needed to supplement your income from work.  You should therefore  have plenty of money to just pay the tuition bills for your kids in college, take care of buying cars as needed, be able to take a nice vacation or two a year, and take care fo all of your household expenses without running up any debt.   Here you are finishing up your career, maybe working beyond 65 just because you just want to.  Hopefully you will have found something you love and never want to
retire even though you could just give your salary to charity each month.  Your 401K and IRA accounts should have several million
dollars in them, as should your investment account.

By this point most of your money should be well-diversified, including a number of mutual funds – some of which provide growth and others which provide income for expenses.  Because you have so much money, you will also have a number of individual stocks.  Some growth stocks, some larger more stable companies that pay good dividends.  You will also own
bonds, REITs, convertibles, and other assets.

Here, if you wish, you can put a small percentage of your money in concentrated positions on stocks you like.  By this point it is merely for entertainment,because you really don’t need the growth.  You also have enough money to buy some small positions in things like penny stocks (maybe $5000).

Note that if you started later, didn’t put money away, or don’t have the large accounts listed for some other reason but are in that age range, it will be very difficult to make up the lost ground.  The power of investing requires long time horizons since it is impossible to get high returns with reasonable amounts of risk unless you have the time to recover from the drops that occur because of market forces.  Because you don’t have the time to counter risk, you must rely on large amounts of diversification.  You should only have a very diversified portfolio invested in stocks of all kinds, bonds, and cash.   You’ll need to make sure you preserve all you can.  You should also be working hard, getting all of the income you can, and all every dime.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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