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No matter how late you are to the party, some things are still worth doing. But is that true for something like stock ownership, where many people believe that real value creation comes from a long-term approach? Would it make sense to start investing in your forties, fifties, sixties, or beyond?
Maybe, should…
Yes, as a believer in long-term investing, I think it’s better if people start investing young. But, like so many other assumptions in life, we don’t always do the right thing at the right time.
It may still be worth the investment in the long run, though.
Say someone puts away £1k a month and compounds it at 5% a year. After 20 years, it should be worth £406k.
That’s true whether that 20-year period starts at 40, 50, or 60. So while an older investor doesn’t have as long a time frame as someone in their 20s or 30s, they can still build significant wealth by choosing to start investing.
Silver hair – and silver cloths
Also, I think that older investors have potential advantages over their younger or younger counterparts.
First, they may have a lot of money to spare.
One of the reasons some people don’t start investing when they want to is that the cost of raising a family eats up all their spare cash.
Moreover, all smart investors learn from experience.
That’s not just experience in the stock market, but it can be life experience in general. That’s something that grows with age!
Entering the game
But while it may make sense for someone to decide to start investing, it can also feel a little scary.
I think it shouldn’t be like that. One can help by getting some important ideas about how the market works, such as the different ways stocks are valued and how to build a portfolio.
Before you start investing, you need a way to do it. It would be worth spending some time comparing the different options for share trading accounts and Stocks and Shares ISAs.
A decade of profitable growth
Another question is what stocks should be included in that portfolio.
One contribution that I think is worth considering City of London Investment Trust (LSE: CTY).
Like other people, it has gotten better with age – and it is quite old, having been founded in 1861.
It’s up 56% over the past five years (closer to a 58% gain). FTSE 100 index at that time). In addition, it has increased its profits every year since England last won the World Cup.
Let’s hope that distinction continues even if England do it again this summer! With a yield of 3.9%, the trust is more profitable than the FTSE 100 with its current yield of 3.1%.
Shares are not guaranteed, but one reason the City of London has grown its payouts every year for decades – and why its recent performance is close to that of the flagship blue-chip index – is its focus on British blue-chip companies, which have similar assets to the blue-chip index. HSBC again A shell.
That means it could suffer badly if the UK economy weakens. But I like to focus on big, successful companies.
