Bonds At Your Stage of Life

Your Stage of Life - In the Middle: Investing in Your 30s and 40s

  • Investment Goal Capital Growth
    (your most likely primary financial goal for your principal at this point)
  • Investment Horizon Long (20—30+ years)
    (how long until you need to access your money)
  • Risk Tolerance Moderate
    (how much risk you feel comfortable taking)

The middle years—mid-30s to late 40s—are crucial to accumulating and wisely investing toward your retirement and long-term financial goals.

If you’re between 35 and 55, you are probably earning enough to live more comfortably now than when you were younger, but are increasingly concerned about funding your retirement and paying for other family needs. While you still have time in your investment horizon to be able to recover from a market downturn, you don’t want to have your portfolio so heavily loaded in high-risk investments that you could lose the bulk of your money if the stock market or your individual shares decline significantly.

Because your investment horizon is somewhat shorter than when you were first starting out in your twenties, you should rebalance your portfolio to make sure that you have allocated your assets appropriately. Financial advisers usually recommend that at this point in your investment life it would be prudent to shift your investments to focus more on medium-risk and low-risk instruments, while still maintaining a healthy, but smaller, percentage of investments in higher-risk instruments. Remember that the key is spreading, or allocating, your assets across investments of varying degrees of risk to blend the risk you’re taking and to maximize your interest-earning potential.

  • Zero Coupon bonds for specific goals. Zero coupon bonds are sold at a steep discount from their face value. When the bond matures, the face value reflects both the principal and the interest accumulated.
  • Tax-advantaged bond investing. Depending on the country in which you live, there may be tax advantages to certain types of bond investing. Consult your financial advisor or tax advisor.

As always, it’s a good idea to consult a financial advisor before making any investment decisions.

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