Growing my money – is it too late to start investing in my 40s?

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The word brings chills down my spine.

It is a world of unknowns, a mysterious realm.

Especially when you don’t work in the finance industry or has had any education about the finance world.

When your financial literacy is gleaned from your mother’s teachings based on her mother’s experiences.

Recently, I read an article which struck a chord with me – “Why is it important for women to invest and not just save?”  from Women Who Money

This was my instinctive reply on Twitter –

What if you start investing late in life?

It’s such a conundrum – you don’t earn very much when you start working. So you don’t think you have enough money left over from daily living expenses to invest in anything. Then when you do start earning more money, you succumb to lifestyle creep and you still don’t have spare money to invest.

Because I am starting late in my 40s, I constantly feel I am behind. I am anxious that I will not have enough for my retirement, traditional or otherwise.

This anxiety makes me want to rush in and buy into anything that will give me a great return.

But the same principles still apply. Whether you are investing in your 20s or your 40s.

Know thyself

I need to know myself – what sort of risk can I tolerate? In investment language, the higher the returns the higher the risk. Will I sleep at night if my share portfolio is not doing well?

How worried am I that I will lose the money? Is it a justified worry? How will I mitigate these risks? My mother always advises me not to put all my eggs in one basket. So is there a way for me to spread the risk?

How much time do I have for this investment? What is the recommended time frame? When do I want to use the money invested?

Do I understand the investment vehicle? If I cannot explain it to a friend over a cup of coffee, then I will not invest in it. (That is my my very basic yardstick!)

I understand that compound interest works best when you are young and have many years ahead. But it sill works in your 40s if you can leave your money to grow into your 60s and beyond.

Yes, you do have a shorter timeline when investing in your 40s and time is not on your side to correct any wild swings or ride out the turbulence.

But it is not a good excuse to do nothing either. Unless you are sure of winning the lottery or have an inheritance coming.

So … what is investing?

Is it the same as saving?

To me, in a nutshell, saving is not spending money. Every dollar you save is one you did not spend.

And every dollar saved is a dollar that can be directed towards a goal.

Such as paying off debt – house mortgage, student loans, car, credit cards.

Or for spending later such as travel, a deposit for a house, wedding, children’s education, house renovation, retirement – there are endless ways you can spend the money you saved.

Or you can invest your savings. To me, investing is about building wealth, about growing your money. It is using your money like employees to work for you, to make more money for you. Eventually, you may spend the money invested but it is a long term, ten years or more scenario.

And it should not be at the bottom of the priority list.

Why should I invest?


The number one reason I invest is that I want my nest egg to beat inflation. One dollar does not buy the same things today as it did twenty years ago. And that one dollar will not buy the same things twenty, fifty years from now.

Australia enjoys a relatively low rate of inflation – currently at 1.3%. That is no guarantee that it will stay the same in the future.

So the money I save now must grow at a higher rate than 1.3%. Otherwise, I will not be able to afford the same or similar lifestyle in twenty years, as my money will have less purchasing power.

So why did I not invest earlier?


Of losing my hard earned money.

Of doing the wrong thing, making a gigantic mistake that I cannot recover from.

Investing also implies you have money in the first place – how can you invest without money? It implies not just money but LOTS of money. And I certainly never see myself as having that kind of money.

I used to think only smart people know how to invest and that you need to know complicated investment strategies. Or that you need a financial planner or advisor.

But my biggest mistakes were inertia and contentment. Besides buying a house, I did nothing. I was happy after buying my house and did not bother with other investment opportunities.

I shoved investing into the too hard basket. And because I was time poor, I never made an effort to learn or engage a financial advisor.

How do I invest now?

When I discovered FIRE (Financially independent, retire early) blogs and podcasts, I realised there was a whole community who DIY their investment. It was empowering – it meant that I too could learn how to invest.

Now, I just keep it simple. Well, as simple as my insecurity will allow.

I automate my savings and pay myself first from every pay cheque. My system is not perfect – I will tweak dollar amounts every now and then. Once my investment account hits a certain number, I transfer it to my brokerage account to purchase shares in the stock market. More on that later.

What do I invest in?

My investment strategy encompasses three assets broadly – cash, real estate and stocks. It is not written in stone – that is I will pivot and change if needed, if for example, more evidence comes to light in regards to certain investment vehicles. Or my circumstances change.

(a) Cash

It has the lowest return on investment but I will not lose the capital, my original investment sum.

My emergency fund is in cash, in an online high interest savings account earning 2.5% currently – if I fulfill the conditions of depositing $300 per month and do not withdraw any money at all. If I break these conditions, the interest rate reverts to 1%.

I like this account because if I have to withdraw any funds, I still get 1% interest which is 10x higher than some of the accounts out there paying a 0.1% interest if I break their conditions. This cash is still readily available – I can access it from any ATM in the country.

I plan to hold my emergency fund at 6 months of living expenses – I am 85% there. Once I have reached this milestone, I will continue depositing the minimum $300 per month and build up to 1 year of living expenses, at which point I will open a term deposit account for 6 months’ of living expenses. Provided I can find a better rate.

My plan is to save 2 years of living expenses in cash. It will be my FU money. And it will guard against sequence of return risk. I will use this cash instead of selling my shares in the case that the stock market is experiencing a downturn when I finally retire.

Yes, I understand that there is opportunity costs here. I can invest this money in the stock market for a theoretical greater return on investment. But I know myself – I will sleep better at night with my strategy, knowing that I have a cash back up if the stock market crashes right at the time I retire, or just before or just after.

(b) Real estate

It was drummed into me that you must have your own home for security reasons. Especially by my mum. She grew up in rental homes and always credited her mum for having the foresight to buy a shophouse for their retirement. While my grandparents have long departed this world, that shophouse is still in the family.

A company house came with my parents’ work when I was growing up. I never lived in our own home until I was an adult after our move to Australia. So owning a home was an important goal for me. Plus I wanted to be independent  and have an asset to call my own.

Many years later, I now own my home after paying off my mortgage. Now, some of you will argue that my home is not an investment, that only rental properties ie properties that generate an income should be considered an investment. Or if I have housemates paying me rent.

However, I do consider my home to be an investment because of its value to me. From now on, I live ‘rent free’ or technically ‘mortgage free’. Worrying about whether or not my rent will increase because my landlord can’t get any tax deductions or if there is a shortage of rental homes, is absent from my life. I need not be anxious that my landlord wishes to sell the property and I have to look for another roof over my head.

I absolutely acknowledge that I was fortunate and bought at a time when property prices were high but not crazy.

And yes, there are ongoing costs to owning a home – insurance, maintenance, council rates, to name a few.  But my home’s value has also more than doubled since I purchased it 16 years ago. Its financial value will be actualised when I sell it to fund my move into an aged care facility or if I geo arbitrage or if I want to downsize to a smaller home. Fingers crossed, it will continue to hold its monetary value.

I list my home here only to demonstrate I have some exposure to this asset class. All money spent on the house are really just living expenses.

(c) Stock market

I invest in the stock market inside and outside my Superannuation, my retirement account.

Inside Superannuation

There are many funds within your Superannuation to choose from – the default is the Balanced fund, in most cases. This was my option ever since I started working 20 odd years ago because I never cared about retirement funds in my 20s and 30s. Now that traditional retirement is looming, never mind wanting to retire early if at all possible, I care! Very much!

My superannuation funds are now invested in low cost index funds –

Current asset allocation in my Superannuation fund


My plan is to continue salary sacrificing into my superannuation ie supplementing my employer’s compulsory contribution. I will not be able to access these funds until I turn 60. If possible, I would like to delay accessing my superannuation until I am 65 or 70 to give it the best possible chance to grow.

Outside superannuation

My portfolio of shares in the stockmarket outside superannuation reflects who I am – I like variety in my daily life so I am very much into diversification. And also – remember, not all eggs in one basket? I know the stock market is one basket – but I can have different eggs just in case some of them don’t hatch. Or they can hatch at different times. (Hmmm … not sure if this analogy works!)

Nevertheless, my basket currently looks like this:

Individual shares – 44%

Listed investment companies (LICs) – 27%

Exchange traded funds (ETFs) – 29%

Individual shares

Initially, I invested in a portfolio of individual shares – 10 companies from the top 200 of the Australian Securities Exchange (ASX 200), one company in each sector. I wanted to spread my risk across all sectors so if one sector isn’t doing too well, perhaps another sector will pick up the slack. The only sector I don’t have any exposure in currently is information technology, after I sold Afterpay.

My plan is to keep these shares and participate in all their Dividend Reinvestment Plans (DRP) to very slowly build up their value. But I will not be investing new money into expanding this portfolio. Frankly, I don’t have the time to monitor each holding or research new companies to add. I am not selling any in this portfolio though as the costs of selling them and the capital gain is not advantageous to me at the moment.

Listed Investment Companies 

I first learned about Listed Investment Companies (LICs) from the Barefoot Investor  (affiliate link) and later from Peter Thornhill and Strong Money Australia.

These are companies that invest in other companies. And thus you are exposed to lots of companies simply by buying one share. So diversification is effectively achieved by owning one LIC.

Each LIC has its own focus eg one may own shares in the ASX200 only; another may not own any shares in the mining industry and so on.

Another thing I like about LICs is that they pay dividends. And historically, they have paid dividends even in the bad times, for example during the Global Financial Crisis. They don’t have to pay out all the dividends they receive from the companies they own all at once. And can therefore smooth out the ride in lean times.

There are currently four LICs in my portfolio. As each LIC is managed by a team who decides which company to buy and in what quantity (according to their focus), I am spreading my risk with the four LICs in the event that someone makes a less than stellar decision. I am insecure, can you tell?

Exchange Traded Funds (ETF)

An exchange traded fund is an investment fund that can be traded ie bought and sold on the stock market.  They track a certain index eg the ASX200 – they are passive investments and don’t try to outperform the index it is tracking, just mimicking it. So the returns are closely tied with the index it is tracking.

For me this is the most economical way to own low cost index funds. And the best way for me to diversify my assets.

As my LICs are heavily weighted towards the ASX200, I have not bought any ETFs that track the ASX200. Instead I have one that track smaller companies (the 100 companies after the ASX200),  two that track overseas markets, another that tracks Australian property trusts and a final one that tracks fixed income.

So I am quite diversified not just in the different sectors of the Australian stock exchange, but also in the different asset classes with some exposure to overseas markets. After all, Australia makes up only 2% of the global market.

I will decide each quarter which LIC or ETF to invest in, moving forward.

Final thoughts

It has taken me  a while to write this post – but it has been really helpful in crystallising my thoughts on my investment strategy. I confess it sounds complicated. That is due to my insecurity and needing to diversify greatly.

I am not sure if this need for diversification is a result of my investing late in my 40s or that this insecurity is inherent in my personality and upbringing.

Please don’t let that deter you. Your strategy doesn’t have to be complicated. You just need one that works for you and allows you to sleep peacefully at night.

I am not a numbers person – I have tried to show the thinking behind my strategy – I apologise if I have confused you instead!

But I absolutely believe it is not too late to start investing in my 40s. I really don’t have any choice, with no expectation of winning any lotteries or coming into any inheritance.

Disclaimer: Nothing I write here should be considered as financial advice – these are my opinions only. How I personally manage my money may be vastly different to how you manage yours. Please seek professional financial advice should you need it. 

What is your investment strategy? If you are in your 40s, how has your strategy changed? Am I needlessly diversified? Hit me with your comments below! Thank you in advance 😉


Will my money last till I die?

Swanky aged care facility

Mrs T is 78 years old and lives in a very swanky aged care facility. Her room is large and comfortable, with photos of children and grandchildren. 

She is fairly new, having moved in eleven months ago. She tells me she was always available for everyone in her family. But no one was there for her when she needed them.

So she chooses to move into an aged care facility.  In her words, she is still alone but all she has to do is open her door and there is company on the other side.

But Mrs T worries about her dwindling resources. She has always looked after her money. Now she sees ‘her money going down, down very fast’.  She had not expected her money to be depleted at this rate.

Mrs T asks me “Will my money last till I die? It is OK if I die tomorrow but what if I live many many years?”

I have no answer, of course, not knowing what her financial situation is. I can only assure her that she is being well looked after.

We are living longer

Mrs T is right. There is no doubt that we are living longer.

Australian data indicates that a boy born between 2014 and 2016 has a life expectancy of 80.4 years while that for a girl is 84.6 years.  This is an increase from 75.9 years for males and 81.5 years for females during 1996-98 as per Australian Bureau of Statistics.

I have been visiting residential aged care facilities (or nursing homes, in the old terminology) as part of my job for the last twenty years.

Twenty years ago, when someone turned 100 in a nursing home, it was a major to do – they invite the local newspaper, TV news, read out letters from the Queen and the Prime Minister and have a huge party overall.

Nowadays turning 100 is more common and does not garner much attention beyond having a big party.

Unless there are three residents turning 100 in the same month. And swells the number of over 100s to six in the same facility which equates to 7% of the residents!

These birthday girls (sorry, fellas but they are almost always women) are not confined to their beds – no, they made speeches and danced at their party (albeit with walking frames).

Doris looks after the indoor plants – waters and weeds all pot plants on her floor, knits and is a Collingwood supporter.  Merle is a social butterfly and loves shopping – still goes out weekly to shop. Mavis is a keen Carlton supporter and does the footy tipping for the facility!

It is so very pleasing to see these 100 year old women still enjoying an excellent quality of life.

But like Mrs T, I can’t help wondering if my money will indeed last till I die. What if I am privileged to live to 100 and beyond?

What aged care services are available right now?

There are three types of aged care services in Australia, subsidised in part by the federal government.

The first is home aged care ie I am able to stay at my home but I may need help with shopping or cooking or house cleaning or some personal or nursing care.

The second is residential aged care ie I can no longer live independently at home even with home aged care help and I have to move into a residential aged care facility. Where I will receive ongoing support to do every day tasks such as showering, toileting and feeding myself. And have access to support and help for health care such as medication administration 24 hours a day.

The third is respite care where I stay at a residential aged care facility on a short term basis to give my carer a break.

When will I need aged care services?

This is the 64 million dollar question.

Obviously I cannot predict exactly when I will need any of these services.

My aim is to stay at home independently for as long as I can. And delay moving into a residential aged care facility for as long as I can.

The statistics are quite encouraging. Nationally, in 2016-17 while 86% of people entering residential aged care facilities permanently are aged 75 years and over, the biggest proportion are those aged 85 to 89 years.

Fingers crossed, I remain healthy enough not to need residential aged care till I am 85.

Because I fear that residential aged care is costly, despite being subsidised by the government.

The cost of residential aged care

My Dad asked me to look into the cost of residential aged care more than a year ago. I have been dragging my feet. It is a hard issue to confront as I contemplate my Mum needing to enter an aged care facility because we can no longer care for her at home.

Mrs T’s question reminded me of Dad’s request and finally spurred me into investigating how much it costs to live in an aged care facility.

It turns out that it is rather complicated. The government’s own website states that ‘there are no standard costs for aged care services’! Basically, it all depends on your financial situation.

Everyone is asked to do a formal income and assets assessment with the Department of Human Services. That is if you want to be assessed for your eligibility for government subsidies.

The outcome of this assessment affects how much you have to pay for aged care. If you do not qualify for government assistance, you will pay 100% of costs.

Fee structure

The four fees are as follows:

(1) Basic daily fee

(2) Means tested care fee

(3) Accommodation costs

(4) Optional fees for extra services

Basic Daily Fee

This fee covers your day to day costs such as meals, laundry, cleaning. It is set at 85% of the single person rate of the basic age pension and at the time of writing is $51.21 per day. It is also reviewed twice a year by the government. The majority of people have to pay this fee.

Means Tested Care Fee

This is an extra contribution towards the cost of care that you may or may not need to pay, based on your financial assessment. There are annual and life time caps ie there are limits to the maximum that can be charged. It is a daily fee.

Accommodation costs

Each facility charges a once off fee for their rooms. Depending on the type of room eg how big it is, how luxurious or basic the fittings are, what sort of amenities etc, the fee can range from $250 000 to more than a million dollars. This fee can be paid as a lump sum or daily fee or a combination of both.

If you qualify for government assistance, you will pay a reduced amount.

The lump sum works as an interest free loan to the facility. It is refundable to you or most likely, your estate, minus any fees or charges when you leave or pass on. Your daily fees can be deducted from this lump sum. But you will be asked to top up this lump sum if it drops below a certain amount as agreed with your facility.

All facilities have rooms set aside for low income people – as requested by the government and can range from 16% to 40% of rooms.

Most people end up selling their homes to fund this lump sum. Unless a spouse or partner or dependent child is living in the property.

Optional fee for extra services

Some facilities charge an optional extra daily fee that covers you for hair dressing, outings, physiotherapy sessions, gym, daily newspaper, pay TV, daily cappuccino from the in house cafe and so on.

Beyond all the fees above, there are also ongoing bills from your doctor, pharmacy, mobile phones, internet etc.

My conclusion?

It can be costly to enter an aged care facility, particularly if fees amount to hundreds of dollars per day in a new and glittering facility.

That was a very simplistic overview of fees and charges for a residential aged care facility. There is a whole industry of aged care financial advisers who provide advice on how to structure your finances in order to maximise government contributions.

There are also more considerations one needs to take in regards to entering aged care facilities which this post does not address at all. Cost is only one issue. The physical appearance of the facility is only one issue. The level of care, competency of staff, diversity and languages spoken, locality of home, types of activities for residents and so on should also be considered.

Final thoughts

Currently the Australian government subsidises the cost of aged care for those who cannot afford it. So my parents will be taken care of, should they need to enter an aged care facility.

They can sell their house and use that towards the lump sum payment from which daily fees can be deducted. And depending on their assets and income at the time they enter the facility, they may qualify for government assistance.

But who knows whether there will be government assistance by the time I need aged care services. I would love to be able to afford a decent facility, not necessarily an extravagant one. Or perhaps, in 40 years, there will be alternatives to aged care facilities.

And because I am single, the probability of me needing to move into a residential aged care facility eventually is very high. I don’t have any children to look after me in my old age. 

So will my money last till I die?

My best answer is maybe, hopefully. It will depend on how long I live, when I enter an aged care facility (which is a function of how healthy I am), how I choose to spend my money now and what my retirement nest egg eventually amounts to.

I can only control what is within my power to control – stay as healthy as I can, reduce overall expenses and save as much as I can while still living a life I want to live.

How about you – will your money last till you die? Are you anxious about the cost of aged care? 






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