Morningstar
Personal Finance

7 Ways Investors in their 50s Can Prepare for 2023

If you’re in your 50s and you need to make some money moves, here’s what you should do to get ahead in 2023. 

Ruth Saldanha 12 January, 2023 | 4:08AM
Facebook Twitter LinkedIn
Font-Size

Road horizon

Investors in their 50s are getting ready to retire, and can already picture their ideal retirement, but still have some work to do before they get there. In their 50s, investors need to navigate complex financial needs and life commitments, and that means repositioning portfolios for optimal return and risk levels.

This can be scary for investors, as they have to juggle multiple priorities including balancing their peak earning and saving years, managing their busy professional lives and family commitments, and also keeping on top of health and personal maintenance.

“Workers at this life stage may be at their peak earnings level, and therefore may have more complex financial needs than their younger counterparts,” says Christine Benz, Morningstar’s Director of Personal Finance, and this includes not just earnings and savings rates, but also the tax efficiency of their investments.

Some of the questions on an investor’s mind may include:

• Given the market moves, will I have enough capital to reach my goals? Are my goals realistic?

• How do I make the most of my savings? What are my smartest investment options?

• What impact would a market crash have before retirement?

To help with some of this, the team at Morningstar Investment Management has some tips:

7 Actions for Investors in their 50s to Consider

  1. Address the impact of taxes: As investors in their 50s accumulate savings outside tax-advantaged wrappers like RRSPs and TFSAs, taxable gains become more important. Making the most of the available investment structures could help.

  2. Behavioural coaching: Research shows that behavioural coaching can add meaningful value. Or conversely, bad behaviour is destructive. To avoid bad outcomes, focus more on the principles of good investing and associated habits.

  3. Consider different portfolio combinations: Meeting goals is an individual experience and tracking the TSX 60, or S&P500 is not for everyone. Embrace a portfolio combination that you feel positive about, but don’t overcomplicate the situation.

  4. Maximise saving: As your earnings near their peak and some costs subside, it is more important than ever to maximise the amount being saved. Focusing on your progress toward your goals is key.

  5. Shift the conversation to value drivers: Could you benefit from broader financial planning? All too often, we think about investing first, but the foundations are just as important.

  6. Discuss investing in real terms, after inflation: After inflation, cash is often a terrible investment, eroding the purchasing power. With cost-of-living increases, could a real return strategy work?

  7. Reconfigure the “why” of investing Goals are a north star. Research shows that 71% of people change one of their top 3 goals by doing a simple review comparing to a master sheet of common goals.

TAGS
Facebook Twitter LinkedIn
Font-Size

About Author

Ruth Saldanha

Ruth Saldanha  is Editorial Manager at Morningstar.ca. Follow her on Twitter @KarishmaRuth.

 
 
 

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility

The Morningstar Star Rating for Stocks is assigned based on an analyst's estimate of a stocks fair value. It is projection/opinion and not a statement of fact. Morningstar assigns star ratings based on an analyst’s estimate of a stock's fair value. Four components drive the Star Rating: (1) our assessment of the firm’s economic moat, (2) our estimate of the stock’s fair value, (3) our uncertainty around that fair value estimate and (4) the current market price. This process culminates in a single-point star rating that is updated daily. A 5-star represents a belief that the stock is a good value at its current price; a 1-star stock isn't. If our base-case assumptions are true the market price will converge on our fair value estimate over time, generally within three years. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Morningstar Star Rating for Stocks, please visit here

Quantitative Fair Value Estimate represents Morningstar’s estimate of the per share dollar amount that a company’s equity is worth today. The Quantitative Fair Value Estimate is based on a statistical model derived from the Fair Value Estimate Morningstar’s equity analysts assign to companies which includes a financial forecast of the company. The Quantitative Fair Value Estimate is calculated daily. It is a projection/opinion and not a statement of fact. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Quantiative Fair Value Estimate, please visit here

The Morningstar Medalist Rating is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please go to here

The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.

For information on the historical Morningstar Medalist Rating for any managed investment Morningstar covers, please contact your local Morningstar office.

For more detailed information about conflicts of interest, including EU MAR disclosures, please see the “Morningstar Medalist Rating Analyst Conflict of Interest & Other Disclosures for EMEA”here

Select Your Site Edition To make sure the site is relevant to you, we need to know if you’re an individual investor or a financial professional.