The Motley Fool

FTSE 100 rally! Is 40+ too late to invest? Look at Warren Buffett!

Image source: Getty Images.

Warren Buffett is 90 years old and shows no sign of slowing down in his approach to investing. He has been making money from stocks almost his entire life, but I think he would agree that getting started in my 40s is not too late. And with the FTSE 100 tipped to rally into 2021, this could be a great time to discover the lucrative world of long-term investing.

Investing in my 40s

At 40+ years old it may seem too late to invest, but I don’t believe it is. It’s true that time and patience are the most important assets a long-term investor can strive for, but at 40, we’re not even halfway through an average lifetime. With retirement age rising and the likelihood of at least another 30 years of working life ahead, that leaves loads of scope for building a substantial retirement nest egg.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

While it’s great to invest before hitting the big Four-Oh, for many people it’s just not practical. The cost of living can leave little extra for saving. Then there’s getting on the housing ladder, and if we throw children into the mix, finding extra cash to set aside can seem an impossible dream. But for many, once the shock of turning 40 has worn off, the financial burden often gets easier.

Many 40-somethings find themselves settled. The career ladder has been sufficiently climbed, all the big outlays accounted for and the prospect of a pay rise or promotion on the table. This can be the point at which investing doesn’t seem so inconceivable.

Investing £250 a month

Warren Buffett’s advice is to invest regularly, buying stocks to hold for many years. The benefit to this is gaining capital growth through share price progression. If dividends are earned and then reinvested, then this can create compound interest, which exponentially builds wealth.

close-up photo of investor Warren Buffett

As an example, if I can afford to invest £250 a month, with an effective annual rate of 5.5%, then after 40 years I’ll have a considerable sum of over £421,926.

If I increase the effective annual rate to 9%, I’ll achieve one million pounds in the same time frame. I realise that makes me over 80 years old, which doesn’t give me much time to enjoy it, but it leaves a nice nest egg to my dependents.

Alternatively, if I bring the time frame down, then in 30 years at 9% I’d achieve £428,595. That would be a very respectable sum to start my retirement at 70.

How much should I have saved up at 40?

I don’t even need to have anything already saved at 40. The key is to drip-feed cash regularly. Although £250 is a good sum, it could be less or more. I think anything is better than nothing and even a monthly investment of £50, could build over time to a decent reserve.

The FTSE 100 contains the UK’s largest stocks, by market capitalisation. It’s often deemed the safest place to invest when buying UK stocks. While all investments carry risk, we expect most FTSE 100 companies to stand for years to come. This makes it a good place for beginners to invest in their 40s.

2020 has been a stressful time for financial markets globally. If the vaccine comes to pass and we finally put Brexit behind us, then some analysts believe it sets the FTSE 100 for a 2021 rally. I think Warren Buffett would agree, this presents a great opportunity for investors.

No matter what age you are, the Motley Fool can help boost your chances of making money through investing.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.