Here’s How My Investment Strategy Changed as I Got Older

This article was created in partnership with Citi. The views and opinions expressed are Beansprout's objective and professional opinions.

Many think investing is a destination, not a journey – find a golden opportunity with good returns, put your money in, and hope for the best. 

If only things are that simple. My own investment journey taught me that the process of building wealth is ever-evolving. Our lives change and grow and so do our investments. 

What used to be a sufficient investment option no longer worked as my financial goals, risk appetite, and broader life circumstances shifted. 

Below I share how my investment approach changed as I got older. The key lesson to take away from this is: investing is less about finding the perfect spot to park your money, and more about adapting as you go. 

My Early to Mid 20s: Building a Solid Financial Foundation

As a fresh graduate, I wasn’t remotely interested in my finances. Like other graduates, I was more focused on kickstarting my career and enjoying my independence. 

When I got my paychecks, I indulged my every whim. Clothes, gadgets, nights out, you name it and I’ve probably recklessly swiped my credit card on it. Though I diligently paid off my credit card, I found myself waiting anxiously for my next paycheck as my bank balance dwindled to double digits.

Wanting to stop feeling anxious every time I saw my bank balance, I decided to start taking my finances seriously and build up my savings. 

I started by reading whatever I could about budgeting, saving, and investing. Through my reading, I learned how to take control of my expenses with a budget. 

Then, I set my sights on building short-term savings. With a budget and some discipline, I saved up enough for emergencies and short-term goals like travel. 

But stashing my hard-earned money wasn’t enough, I needed to make sure that my savings didn’t stagnate, or worse, decline in value. 

To help keep up with inflation, I put my short-term savings in a high-yield savings account. Though the interest rates on these accounts were modest, my money was secure and liquid, which is ideal for short-term goals. 

Side note: This is also around the time I learnt how to maximise my credit cards to get every bang for every buck I spent. 

My Late 20s: Learning The Ropes of Investing

They say that you “grow up” in your late 20s, and I certainly did grow up. 

At this stage, I had enough savings for my short-term needs. But I knew just saving wasn’t going to cut it to build wealth for the future. 

This meant that I had to shift my mindset from just saving money to growing it through investing. 

It was around this time that I started learning about the stock market. 

Initially, it was daunting. But the idea of investing became less intimidating as I educated myself further on stocks, bonds, ETFs, and other investments. 

I started small, with just $500 a month invested in ETFs. 

As I got more comfortable and confident with investing, I increased my contributions bit by bit and also started diversifying my investments across other asset classes, including Treasury bills and bonds, and tried investing in individual stocks. 

One thing I share with others who are looking to start investing – you can only learn so much about investing from books. The real lessons happen when you put your money into action. 

No amount of reading can fully prepare you for market volatility and the emotional rollercoaster that comes with it. Through firsthand experience in the stock market, I also came to understand how diversification helps mitigate risk. 

By spreading my investments across different assets, industries, and regions, I reduce the impact of any single investment’s poor performance on my overall portfolio. 

My Early 30s: Investing with Goals in Mind

My confidence in investing grew as time went on but I had to rethink my investing strategy in my 30s. Because investing isn’t just about chasing returns, it has to align with your life goals. 

Thinking about my life goals led me to adopt a goals-based investing strategy to build up my investment portfolio. 

I worked out the financial goals I wanted to achieve, how much I would need to save and invest, and for how long. It looked something like this:

Mapping out each goal to a corresponding target amount and a timeframe showed me clearly what I could focus my efforts on. 

In addition, having goals enabled me to plan and tailor my investment allocations to suit the respective goals’ time horizons. That’s because how much time it takes to get to your goal amount could determine the balance between risk and returns in your investments. 

For example, the money for my home downpayment is allocated to less risky and volatile assets because of the shorter time horizon. 

On the other hand, I can afford to invest in riskier assets like equities for my retirement goal because I won’t need that money anytime soon and I could benefit from the power of compounding over the long term. 

Mid-30s and 40s: Balancing Present Commitments and Future Financial Planning 

The most pivotal life moments – from weddings and homeownership to parenthood and caring for our ageing parents – tend to happen in our 30s and 40s. 

Living through one life event after another in my 30s, it was all too easy to lose sight of my long-term financial plans because I was too focused on present-day commitments. 

To counteract this, I established systems to ensure that I stay on track towards my goals. The most basic step is automating my investments. I set up a direct debit to ensure that I am consistently contributing to my investments every month. This approach is also known as dollar-cost averaging. 

Beyond automation, I also assessed my finances periodically. Every six months to a year, my partner and I sit down to do a review, we reflect on our goals, discuss our evolving life circumstances, and decide how to tweak our plans to reflect the changes in our lives. 

Some of our life goals have changed over the years.

For instance, we once wanted a private condo but the purchase became less appealing as we got older, prompting us to reevaluate our housing aspirations. 

Similarly, changes in childcare arrangements (will one of us take time off work to take care of the kids?) and how we plan to finance our kids’ education also prompted adjustments to our plans. 

At the end of the day, this exercise is a chance for us to make deliberate choices that position us for the best outcome in our future. 

As our focus shifts towards comprehensive wealth planning and managing the increased financial commitments in our lives, we have to make sure that our investment portfolios reflect the changes in our plans. 

General investing principles for our 50s

While I have yet to hit my 50s, the general principle at this stage in life typically is to shift our focus to retirement planning. 

Looking ahead to my 50s and beyond, my strategy will involve transitioning my investment portfolio to have a heavier allocation of assets that provide a stable and consistent return. This may mean gradually shifting from equities and other growth assets to more fixed-income assets to provide more financial security as I approach retirement age. 

What would Beansprout do?

Reflecting on my investment journey so far, here are a few key principles that anyone can apply to their investment approach: 

1. Start investing early to harness the power of compounding
2. Develop a clear investment strategy and leverage available resources, whether online tools or professional advisors. Some resource hubs you can tap on include Life and Money by Citi, which has a wide range of educational articles for saving, growing, protecting and enjoying your money.
3. Diversify investments to mitigate risk and safeguard against market volatility
4. Be proactive in financial planning, regularly reassessing goals and adjusting strategies as needed. 

Investing is anything but static – it's a dynamic process that will continually evolve alongside our lives, mirroring our shifting priorities and life stages. 

To keep learning at every stage of your investing journey, get more expert insights and tips on Citi Life and Money.