“Am I too late to start investing?” is by far the most common personal finance question I hear from fully-fledged adults. Even now, most adults in the UK don’t start thinking about investing (outside of their pension) until at least their 30’s and often much later.

It is never too late to start investing in the stock market. Whilst your investing goals may change as you approach retirement, people in their 40’s, 50’s, 60’s and beyond should absolutely start investing if they haven’t done so to date to maximise the wealth they are able to retire with.

A lot of people reach their mid-30’s and 40’s and have an “oh s***” moment where they realise they probably should have started investing a little earlier and started to build up some funds for retirement. Whilst it’s always beneficial to allow investments to compound over as many years as possible, all is not lost for those who have put investing on the back-burner until now.

When is it too late to start investing in stocks?

It’s never too late to start investing in stocks. Whilst those who have already retired may prefer investing in less volatile asset classes like bonds or property, stocks are still a useful part of any portfolio and one of the best tools for wealth accumulation there is.

If you’ve managed to start investing in your 20’s, you really are ahead of the curve and have made big steps to a successful financial future. For the majority of adults in the UK, investing tends to be an after-thought until they reach their 30’s and beyond.

It should be clarified at this stage, many adults are investing their money via their workplace pensions. Whilst some may see this as just that annoying line on the monthly payslip which means they have less money to spend, these contributions will be invested by your pension provider in a pension fund that will almost certainly contain some stock investments.

If you haven’t done so already, read this post on How much to contribute to your pension each month: A full guide and make sure you are taking full advantage of your employers pension match.

Workplace pensions are only part of the conversation and these funds can’t be accessed before retirement age without incurring heavy tax penalties.

In the UK, a financial product called a stocks and shares ISA is a great place to invest any disposable income you have, allowing your money to compound over time, protected from any tax implications.

I’ve heard people in their 50’s, 40’s and even 30s tell me they think it may be too late for them to start investing and this seems to me to be a great example of a limiting belief. People are reluctant to embrace the perceived complexity and risk of stock market investing, so rule themselves out with an arbitrary excuse.

If you’ve been overweight for 20 years, you don’t rule out ever losing weight again because it’s too late for change. Whilst the years of being overweight may have had some negative effects, that doesn’t mean all is lost and it’s not worth trying. The same goes for investing. The best time to start was yesterday, the second best is today.

too late to start investing

What is the best age to start investing in the UK?

The best age to start investing in the UK is 18. As soon as UK residents are legally able to start investing, they should, with an amount they are comfortable tying up in an investment account for the foreseeable future. Investing this young will allow for compounding and growth over many years.

Whilst it may seem unrealistic to start investing as young as 18, many do and give themselves a great platform to build wealth off of.

To demonstrate the power of investing early, consider the following example.

Kevin starts investing £100 a month in the stock market at age 18 and throughout his life. Tom only gets around to investing at 40 but decides to invest £750 per month.

At age 65, Kevin will have contributed £56,400 (£100 * 12 months * 47 years). Meanwhile, Tom will have contributed £225,000 (£750 * 12 * 25 years).

So how much will both of their investments be at age 65? Assuming 10% annual returns, Kevin’s portfolio will be worth £1,263,070 whilst Tom’s will be worth £988,370.

Despite Tom investing much more per month and contributing £168,600 more overall, his portfolio at age 65 is worth less than Kevin’s. This is the power of compound interest and starting to invest young.

For those of you who relate to Tom’s situation above better- look at the bright side, Tom started at 40 and has a portfolio at his retirement age of just shy of £1million!

Should I invest more cautiously as I get older?

The older you get, the more cautious your investing should become. When you are in your 20’s and 30’s you can afford to invest purely in stocks as your investment horizon is long enough to ride the market fluctuations. As you approach retirement, it pays to invest in less volatile asset classes.

When it comes to deciding what to invest in, there are two key considerations. The first is your investing horizon which basically means how long you will invest your money over until retirement age. The second is your tolerance for risk which varies by person.

To work out your tolerance for risk, i.e. how badly investment losses will affect you, try using an online risk tolerance calculator.

When it comes to investing, the general rule of thumb is to take more sensible risks (investing a large proportion of your portfolio in stocks) whilst you are young and as you approach retirement age, increase the proportion of less volatile asset classes like bonds and property.

As you approach retirement, your portfolio should have benefited from many years of stock market growth and compounding and you will reach the stage where preservation of your portfolio is more important than further growth.

To achieve this, asset classes like bonds will earn steady if unspectacular returns but with much less volatility than stocks.

Is it safe to invest in stocks at any age?

It is safe to invest in stocks at any age. Many will continue to hold stocks in their portfolios long after retirement. As you approach retirement, it is prudent to reduce your exposure to stocks and invest in less volatile asset classes like bonds or property.

There is a misconception that it is too risky to invest in stocks, particularly as you approach retirement and once you’ve retired. Whilst it does make sense to reduce exposure to the stock market as you age, stocks should still make up a reasonable proportion of any portfolio.

Unlike many other asset classes, stocks represent a good inflation hedge. Inflation can be simply defined as a general increase in prices and a fall in the purchasing power of money. 50p today can buy you 1 Freddo chocolate bar, 15 years ago 50p could have got you 5 Freddo’s which shows how the purchasing power of money has been eroded over time.

Leaving your money in a bank account will expose it to the erosive powers of inflation. Stocks, on the other hand, are more naturally protected as the inflated prices of services and goods are reflected in the stock price to some degree.

Is 40 too late to start investing your money?

It is not too late to start investing in your 40’s. Whilst the over 40’s may have missed out on a few years of compounding, they still have more than enough time to save up a healthy retirement portfolio value. The important thing is to get started with investing as much as you can afford.

For those wondering if the 40s is too late to start investing, let me put your mind at ease, the majority of people don’t start getting serious about their finances and investing until this sort of age. As most people retire in their 60s, this gives the 40s crowd plenty of time to start investing and allow their money to grow.

Is 50 too late to start investing your money?

It is not too late to start investing in your 50s. Whilst this isn’t the ideal time to start, your financial situation will be much better come retirement if you start investing now rather than not at all. This is still 15 years out from retirement age which is plenty of time for your investments to grow.

Whilst it’s not too late to start investing, for those in their 50s who are yet to invest, you really do need to get started soon. The good news is, earnings tend to be at their peak around age 50 while should allow new investors of this age to contribute a good chunk each month. If lucky, they will have been contributing to their workplace pensions over their career which will have built up a nice balance for retirement.

Too late to start investing

Should I be worried if I haven’t started investing by age 30?

You should not be worried if you haven’t started investing by age 30. It’s very common to start investing in your 30’s and this leaves more than enough time to get a regular investing system in place and allow your portfolio to grow over a number of decades.

The truth is, very few people in their 20’s (outside of personal finance nerds like myself) are investing their money outside of their workplace pensions. If you start investing in your 30’s, you’re in a great position to build wealth and achieve financial freedom.

At what age should I stop investing in stocks?

There is no set age for when you should stop investing in stocks. Whilst it’s prudent to diversify to less volatile asset classes like bonds or property as you age, many will hold stock investments long into their retirement and often leave such investments as part of their estate planning.

The only exception I can think of to this is when it comes to estate planning. In the UK, inheritance tax rules mean money is due to the government on the assets you leave behind when you die, including on stock investments.

For this reason, as people approach old age (80s and 90s) they may begin to think about estate planning and minimising the tax burden they will incur on their death (the tax is paid out of the assets left behind).

For this reason, it may be wise to stop purchasing new stocks as you approach this stage of your life.

What should the over 70’s invest their money in?

Those over 70 should be investing in common asset classes like stocks, bonds and property with a more cautious ratio of stocks (a more risky volatile asset) to bonds (a less volatile asset). A ratio of 20:80 or 40:60 stocks to bonds is quite common and will depend on each individuals risk appetite.

Whilst age and whether you’re retired does play a part in determining a good investment strategy, the key asset classes remain the same. Whilst each retirees investment strategy will depend to some degree on their tolerance for risk and personal situation, a good rule of thumb is to stick to time-tested asset classes like stocks, bonds and property.

As alluded to above, as you age and move into the wealth preservation rather than growth stage, it makes sense to increase your exposure to lower risk, lower expected returns asset classes like bonds or property. These asset classes are very unlikely to lose money over time (which stocks can during a negative fluctuation) and will provide a reliable return.

What is the earliest you can start investing in the UK?

You can start investing at 18 years of age in the UK in your own right. Those younger than 18 can’t hold stock market investments in their own name but can benefit through products like Junior ISA’s which allows parents to invest on behalf of their children.

Very few teenagers are thinking about whether they should start investing, but the benefit of getting started this young, even if it’s only £5 a month from a Saturday job can’t be understated. Not only will this establish a great investing habit, but even small amounts like this will also grow to significant sums over a 50+ year period.

If you’re a parent with disposable income, you may consider opening a ‘junior stocks and shares ISA’ on behalf of your child which they can access on their 18th birthday.

For more on these ISA’s check out this article.

As always, please remember I am an Accountant, but not your Accountant. In this post (and all of my others) I share information and oftentimes give anecdotes about what has worked well for me. However, I do not know your personal financial situation and so do not offer individual financial advice. If you are unsure of a particular financial subject, please hire a qualified financial advisor to guide you.

This article has been written by Luke Girling, ACA – a qualified Accountant and personal finance enthusiast in the UK. Please visit my About page for more information. To verify my ACA credentials – please search for my name at the ICAEW member finder. Please comment below or contact me here to get in touch with questions or ideas for future posts.