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Investing 101

Everything you need to know before you build a portfolio

How to Start Your Wealth Journey at Any Age

May 16, 2020

When it comes to your wealth journey, age truly is just a number. It’s never too late or too early to start building wealth.

No matter how old you are, it will take work and discipline to get on the path to financial freedom. And although a lot of factors can come into play – where you live, where you work, who you’re with, whether your parents went to college, for example  – the journey begins with adopting a growth mindset when it comes to your net worth, no matter what the number you’re starting with is.

To begin with, you can set up systems in place that’ll allow your wealth to grow with you. This includes creating a budget, paying off debt urgently, and possibly consolidating your accounts. Next, think of ways to ‘grow the pie’, to use a term from macroeconomics. Finally, consider the different ways you can invest and build a plan unique to your situation.

Doing so will give you the flexibility to go for your dream career, pursue passion projects, live your ideal lifestyle, and build generational wealth for your family. Although it takes work and discipline, the long-term rewards of solid financial planning are worth the effort.

Here’s how you can start your wealth journey at any age.

Consolidate your financial picture, pay off debt and make a budget

You don’t have to be a high earner to be in a good financial spot. As long as you spend within your means and invest in your future, you are giving yourself the freedom of financial safety.

A 2015 report from the American Institute of CPAs (AICPA) reveals that 51 percent of Americans are putting off decisions about everything from higher education to buying a home to retirement. Having a plan in place for when it’s time to make those big life decisions requires you to have a clear picture of your finances at any time.

Start by logging into all your bank and financial accounts. If applicable, don’t forget accounts for your pensions, student loans, credit cards, mortgage, car loans, stock options, and micro-investing.

Use a notebook, Excel or budgeting tool to note balances for all the accounts. Calculate your net worth (all the assets you might own minus all the different types of debt you might have). Your net worth is a good starting point for deciding what to focus on when creating your wealth strategy.

Making a budget goes hand in hand with this step. By analyzing spending for the past year, come up with a realistic, attainable budget that works for you and allows you to save as much as possible. Using conventional wisdom, remember to ‘pay yourself first’ by saving as high of a percentage of your income as you can (aim for 15-25%). If your income is variable or uncertain, your first goal should be to have an emergency fund with around 3 months of expenses funded.

Secondly, make a schedule to get out of high-interest rate debt as fast as you can. Over a longer time period, your aim should be to pay off debt completely. A 2015 USA Today article indicates that 21 percent of those over 75 have mortgage debt. Even more concerning, those aged 55-64 have an average mortgage debt of $110,000. The more you have to spend in loan payments and interest, the less cash flow you have to start investing.

Grow your income

Another step to starting your wealth journey is to think about ways you can get more income to save and invest. Even if all you are capable of taking on at this time is a few hours a month spent tutoring or dog walking, leverage that time and invest it into your future.

As of 2017, more than one-third of the whole workforce in the United States was made up of freelance workers. It’s projected that by 2027, more than half of the workforce will be made up of participants in the gig economy. And if you think you’ve missed your opportunity to enter this new territory, the freelance payment platform Hyperwallet just found in new research that 12 percent of 2,000 female gig workers it surveyed were ages 51-70.

What if you are seriously committed to growing your income? The current social media focus on young entrepreneurs is inspiring, but unfortunately lends itself to confirmation bias. We see lots of young entrepreneurs, so we assume most entrepreneurs are young.

This HBR study shows that the average age of a successful startup founder is 45. In fact, among the top 0.1% of startups based on growth in their first five years, the founders started their companies, on average, when they were 45 years old.

While age is not an indicator of success – you can be successful no matter how old you are – age should also not be a barrier to you starting your own business or branching out into multiple streams of income. 

Choose the right investment strategy for yourself

So you decided to pay yourself first and are now committed to saving a percentage of your income periodically. What do you actually do with the money?

When you decide to start investing, the thousands of options online may be overwhelming at first. The truth is investing isn’t intimidating or scary, and the sooner you get started the sooner you can start reaping benefits.

Depending on your age, there are a few different investment strategies that might work for you.

Target date funds: If you truly want a hands-off approach to your investments, target date funds might be the answer you are looking for. Target date funds are dynamic, age-based funds. These funds lock in the year you say you’ll retire, pick riskier investments for when you’re young and safer ones when you’re about to retire, and provide a payout in your retirement.

However, keep in mind that you’ll be paying for the convenience of outsourcing your investments with higher fees. This chart from the SEC shows that even a 1% fee on a 100,000 investment could add up to about $40,000 in fees over 20 years. You will also have little to no control over the assets in the fund.

Age rule for stocks/bonds: This is an industry rule based on napkin math that somehow seems to work in most situations over the long term.

The traditional rule is that you should subtract your age from 100 – and that’s the percentage of your portfolio that you should keep in stock or stock-like investments.

While you should put some more thought into your wealth building strategy, this rule could point you in the right direction of risk/return tradeoffs for your age. The rationale behind this rule is to invest in riskier asset classes with a higher potential return when you are younger as this gives you time to bear market volatility and witness benefits of compounding returns. As you get older, you should shift to assets that are less volatile and provide steady income.

Diversify across assets: The investment market is full of untested, trendy “opportunities” for making quick money and it may be tempting at times to invest in them.. However, the truth is that the bulk of your wealth should be a lot more safer and pragmatic.

Your portfolio can be diversified in terms of securities, industries, asset classes, geography, and currencies, to name a few. Unfortunately, most other investments such as private equity, commercial property, and venture capital, are unavailable to the average investor. Consider utilizing low cost opportunities such as P2P lending, alternative investment platforms like DiversyFund, CDs or Money Market funds to diversify your investments.

Choosing the right strategy for your age is imperative. 42% of Millennials invest conservatively, according to a 2018 Fidelity survey and hold 25% of their investments in cash, compared to 19% of investors overall. In this case, erring on the side of caution may actually be a bad idea. Millennials may be putting their retirement security at risk by shying away from investing now.

You might not get your investment strategy to be perfect when you start but starting with something is better than holding all your assets in cash or your home. Don’t forget, building wealth is a journey and you will learn along the way.


When starting out, don’t compare your journey to anyone else’s. If you’re reluctant to start your wealth journey now because it’s too late, think about being in the same spot a few years from now, with fewer options.

No matter how far you get – and you will get far if you commit to the journey – you will be in a better place than if you never start at all.

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