Here's how you can plan your investment, if you are turning 40

Most of us generally do not bother about savings and investment in early part of our career, but when we mature, by 40s, we realise the need to manage our finances.
 
By this time, we are almost in the middle of our working life.
 
Bank Bazaar says, "By 40s, you also have a clarity about your financial objectives and responsibilities. You still have 20-25 years to work, save and invest if you started working in the early 20s and plan to retire at 60."
 
Let’s take a look at some smart moves to plan investments when stepping into the 40s, according to BankBazaar.
 
Time To Assess Retirement Corpus Target
 
Most of us have drawn a retirement plan along with the inflation rate, however, by the time we reach the 40s, the inflation rate would change considerably.
 
Suppose, your objective was to build a corpus of Rs 50 lakh considering an average inflation of 5% p.a. However, this average inflation actually changed to around 7% and it brought down the money value by an extra 2% over the expected inflation rate.
 
This means that you should target a bigger retirement corpus by making appropriate changes in the investment portfolio.
 
Work Towards Loan Closure
 
One must try to maintain a low debt profile when they are reaching the age of 40, because the risk appetite usually starts diminishing as you inch closer to retirement.
 
If you have higher debt level at 40s, this can put pressure on your long-term goal.
 
Also, if interest on your borrowing increases consistently, then you may even find it difficult to repay your loan which may lead to debt trap.
 
The Bank Bazaar report, therefore, says that you must should start building a corpus to close all your long-term loans early. You should make a dedicated investment plan to clear the loan amount.
 
Invest As Per Your Family Needs
 
As responsibilities increase with maturity of age, you should always consider the needs of family members first while planning the investment.
 
Along with it, there would be many other expenses like children's higher study, daily life expenses and many more.
 
Still, it is always better to first chalk down these expenses and accordingly invest in an intrument which gives you desirable returns on specific time period.
 
Investment Portfolio as per Risk Capacity
 
Once you reach at 40s, your risk capacity may not be exactly like the ones in the age group of 20s and 30s.
 
You might want to ignore high risk factors at the age of 40s, but in case you are sure on bearing higher risk then you need to increase investment size.
 
Considering the expected age of your retirement, you can check how much return you would need as per existing investment pattern to get your goal within remaining years.
 
Invest for getting Regular Cash Flow
 
Always look for investment options which can generate regular cash flow after your retirement.
 
There are many investment options like the government's National Pension Scheme (NPS) and annuities to generate a regular cash flow.
 
Also, before selecting the investment instrument, make an estimation of cash flow that would be required regularly after your retirement and accordingly, you can select the appropriate investment product.
 
Investment options
 
A wide range of investment options are available in India.
 
According to Motilal Oswal, if an investor belongs to late 40s up until 70s of their age and are also seasoned investors, then investing in stocks is a good idea.
 
It further said that decades of exposure to the financial market helps you gauge the right type of equities, shares or stocks, you need to invest your money in.
 
One can also choose mutual funds scheme at 40s but with higher investment and risk.
 
The advantage of investing in mutual funds is that you can appoint fund managers to select funds, track performance, make appropriate asset allocations and cash-in profits for you.
 
Apart from this, there are many government schemes like Kisan Vikas Patra, Senior Citizen Saving Scheme, Sukanya Samriddhi Account and Atal Pension Yojana which can be considered for your retirement plan.