Stock and Bond Investing in Your 50s

Stock & Bond Investing in Your 50s

If your 40s were all about creating income, then your 50s are about maintaining your portfolio while building generational wealth.

Your income should be creating more income in your 50s. This means you should have enough income from dividends to reinvest 30%.

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If this is not the case, please go back and read the earlier articles in the Stock & Bond Investing at Any Age Series (20s, 30s, 40s).

  1. Retirement Planning in Your 50s (Amazon)
  2. Real Estate Investing in Your 50s (pdf)
  3. Staying Debt-Free in Your 50s (pdf)
  4. Dividend Investing in Your 50s (Amazon)
  5. Bond Investing in Your 50s (pdf)

Maintaining your portfolio. We should become more defensive in our 50s. Of course, we will still want to keep a growth element at this age, but we have to look at the bigger picture.

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We must assume that we will need to help our children at some point. This could be assisting them with a home down payment, college, or retirement.

Here are the elements we must take into account in our 50s: growth (30%), income (40%), cash (20%), and speculation (10%).

Growth (30%). Growing our portfolio is always a priority. The minute we stop developing our portfolio is when it starts losing money versus inflation.

We can grow our bonds with Series “I”  and “EE” Bonds. I prefer Series “I” Bonds; however, “EE” bonds are an excellent place to invest once you max out your “I” Bonds. 

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Index funds will play a massive role in our 50s, allowing us to capture the stock market’s growth. My four favorite index funds are QQQ, DIA, SPY, and VTI.

We can also buy 5, 10, 20, and 30-year Treasuries as part of our bond growth strategy. The key to buying bonds for growth is to purchase them with high-interest rates.

Set a line in the sand, say 5%, and only purchase above this level. When interest rates hit 2-3%, your bonds will grow in value.

Bond growth investing is tricky, so ensure you do your due diligence. I am a buy-and-hold bond investor because you can’t lose money if you hold to maturity.

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Income (40%). The world runs on income. Luckily, our bond growth strategy will pay us handsomely while we wait for them to grow.

But bond income will not be enough to beat inflation; you need high-yielding investments. Luckily, you started an income-investing portfolio in your 20s, right?

If not, the next best time to start income investing is today. The great part about income investing is that, eventually, it will pay for itself. 

Every month you’ll receive revenue from the six types of income investing, and you can reinvest to keep growing your cash flow.

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If taxes are a concern, you can leverage municipal bond funds to cut out federal taxes (and perhaps state taxes).

Cash (20%). As I said earlier, we will need to keep more cash on hand in our 50s. We now have multiple adults under our umbrella. 

There are many ways to stash cash in a high-interest-rate environment. Currently, high-yield savings accounts yield 3.6%.

Certificates of Deposits yield 5%. These are good times for savers but remember; these rates don’t beat 7% inflation. 

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Don’t forget about leverage. If you don’t want to keep a huge cash pile, you can use leverage against your brokerage account.

For example, M1 Finance (affiliate) allows you to leverage 40% of your portfolio. So if I had $100,000 in my M1 Finance account, I could borrow $40,000 against it without doing loan paperwork.

Leverage is an excellent way to stay invested in the markets but also have cash in a time of need. However, if interest rates are high, the cost of borrowing is higher.

Speculation (10%). I am not a huge fan of speculation, but it is necessary to get out-sized returns. However, we must remember that speculation is not gambling.

Speculation is taking an educated guess at a future outcome and sticking with it. A good example is people who purchased Tesla stock in 2013.

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Only speculate with money you can afford to lose entirely. This mindset will keep you from using the stock market as a casino.

For example, I bought Amazon and Google stock, hoping they would become future dividend-payers. I also purchased Sofi Technologies (SOFI) stocks because I believe they have a strong future. 

Most of your speculation picks will not turn out well, but it only takes one to change your life. Don’t get greedy; just purchase what you can afford to lose.

Putting it all together. Your 50s are a balancing act between living your dream life, getting your children started, and creating generational wealth.

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If you over-focus on one thing, you could hurt the other—that’s why it’s a balancing act. Be straightforward with your expectations in each category.

For example, you may want to help pay for a child’s wedding. Instead of them forcing an expensive wedding on you, tell them you can contribute $20,000.

You may want to go on a nice vacation with your spouse; you can tell them the budget is $10,000.

Small City. Passive Income. Great Retirement.

Budgeting creates better experiences than overspending for the sake of overspending. 

Conclusion. Congratulations on handling your 50s with style and grace. I am 42 and preparing for the craziness of my 50s—it will be tough to have so much happening at once.

But that is why we take life seriously. It may be “boring” to plan and talk numbers, but everyone loves the results of our actions.

Don’t let the media throw you off your grind with words like “spontaneous” and “live for the moment.” Planning and executing are still the best ways to achieve everything you want in life. Good Luck!

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing


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One response to “Stock & Bond Investing in Your 50s”

  1. […] are different but complementary because we need stocks and bonds to become great investors. I leverage both types of stocks to obtain high yields and reinvest in […]

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