If you haven’t built any serious savings at 50, life may feel a little bleak right now. Failing to have built a big enough pension for retirement would be a worry at any time, but particularly so during the Covid-19 pandemic.
At times like these, it pays to have a pot of savings to help you see whatever the future throws at us. If you have no savings at 50, please don’t despair. There’s one piece of good news, right now. If you want to build your wealth in FTSE 100 shares, the stock market crash may work in your favour.
As I write this, the FTSE 100 stands at just over 6,000. That means it’s more than 20% below its January high of 7,674. Some top blue-chips have fallen by up to half. This gives you an opportunity to pick up bargain stocks today.
No savings at 50? Now’s your chance
You should never buy shares unless you plan to hold for at least five years. Ideally, it should be 10 or 15 years. In fact, the longer the better. That’ll allow time for the stock market to recover, before you start drawing income to fund your retirement.
In the interim, you should reinvest all the dividends you receive back into your portfolio. These will buy you more stock, which then pays more dividends. An endless virtuous circle. If you invest via a Stocks and Shares ISA, all those returns will be free of income tax and capital gains tax… for life.
If you have no savings at 50 to speak of, you can’t hang around waiting for the perfect time to buy shares. You will never find it, in any case. Nobody can time the stock market with any accuracy, although they might get lucky once or twice.
What you need to do is put your money to work right away. Time is the best friend an investor has. The longer your money sits in the stock market, the more opportunity it has to grow, as those dividends roll up.
Start building wealth now
Yes, buying today is scary. There’s a serious danger we’ll get a second stock market crash. That’s why I would recommend drip feedings regular amounts into the market. This will reduce the impact of any future correction, while helping you build your wealth.
If the stock market does crash again, then take the opportunity to pay more money in. You’ll pick up more shares at the reduced price.
If you haven’t got much in the way of savings at 50, time’s no longer on your side. However, by investing today you can put yourself in a much better position than if you do nothing.
I’d play relatively safe with my stock picks, given your age and current uncertainties. Focus on companies with steady revenues, solid balance sheets and minimal debts, as they should be best placed to survive the pandemic.
Please don’t delay any further though. You don’t want to find yourself with no savings at 60. Or even worse, at 65.
