Jasmine Birtles
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The 40-Year-Old’s Guide to Catching Up on Investing
Ruby Layram
14th Aug 2025
If you’ve hit your 40s and realised you’re not exactly Warren Buffett yet, don’t panic! You’re not alone, and you’re definitely not too late. In fact, starting now can still set you up for a comfortable retirement… if you play it smart.
The trick? Work with what you’ve got, invest consistently, and avoid the temptation to “swing for the fences” with risky bets.
Here’s your step-by-step guide to catching up on investing when you’ve got more candles on the cake than cash in the markets.
1. Face the Numbers (No Hiding)
Before you start building, you need to know what you’re working with:
- Check your pensions: workplace, personal, and any old ones you’ve forgotten about (you can track them down via the Pension Tracing Service).
- Find your shortfall: work out roughly what you’ll need in retirement (a common rule: 2/3 of your current income) and compare with your current savings.
- Know your monthly “investment budget”: the more you can put away now, the less you’ll need to gamble later.
This is your chance to be realistic. Spend time getting to know your finances in as much detail as possible!
If I Were Starting in My 40s, I Would Use Tori!
If I were starting my investing journey in my 40s, I would use the Tori AI investing bot. Why? Because it does all of the leg work for you!
Tori is a new AI investing companion that has been launched by eToro- one of the UK’s most popular investment platforms.
You can ask the AI pretty much anything investing related and it will use live data and market insight to answer for you!
Want to know which ETFs are doing well right now? Ask Tori! Have a question about your portfolio split? Ask Tori!
It’s like having a financial advisor in your pocket 24/7 (although Tori is NOT a financial advisor and you can still speak to eToro’s team of human-experts if you need to.)
To start using Tori, simply sign up to eToro for free today.
2. Make Time Work for You (Even If You’ve Got Less of It)
When you start in your 40s, you’ve got 20–25 years before a typical retirement age. That’s enough for compound interest to still do its magic, but you can’t afford long gaps.
- Automate monthly investing so you don’t skip months.
- Increase contributions annually (even 1–2% more each year makes a big difference).
- Use windfalls (bonuses, tax refunds) to top up your portfolio rather than splurging on shiny gadgets.
3. Portfolio Splits That Make Sense In Your Forties
If you’re investing in your forties, you need growth, but you also need to manage risk.
Here are three example portfolio splits depending on your risk comfort:
Balanced Growth (good for most 40-somethings)
- 60% Global Equities (broad global ETFs like Vanguard FTSE All-World)
- 30% Bonds (UK gilts, corporate bonds, or bond ETFs)
- 10% Alternatives (gold, REITs, infrastructure funds)
Higher Growth (if you can stomach the swings)
- 80% Global Equities
- 10% Bonds
- 10% Alternatives
Cautious Growth (if you’re a bit more risk-averse)
- 50% Global Equities
- 40% Bonds
- 10% Alternatives
4. Don’t Forget the Tax Wrappers
If you’re playing catch-up, every pound counts! So shelter your investments from unnecessary tax.
Here is a complete guide on tax efficient investing that you may find useful. But if you’re looking for a quick overview, here a 3 tax-efficient investment options.
- Stocks & Shares ISA: tax-free growth, £20k annual limit.
- Pension Contributions: get that sweet tax relief. If you’re a higher-rate taxpayer, this is especially valuable.
- Lifetime ISA: if you’re under 40, consider for retirement, but after that, focus on ISAs and pensions.
5. Avoid the “Get Rich Quick” Trap
When you feel behind, it’s tempting to chase hot tips, hype-fueled stocks, or the latest crypto trends. But high risk doesn’t always mean high reward; it often means high regret.
Instead:
- Stick with low-cost index funds or diversified ETFs.
- Only put speculative money (like crypto or single stocks) into 5–10% of your portfolio- unless you can afford to take more risk!
6. Make It Boring (and Win Anyway)
If your portfolio feels thrilling, you’re probably doing it wrong. The best investors know that predictable beats exciting over the long haul. You want something that works in the background, quietly compounding away while you get on with your life.
Here’s how to keep it gloriously dull (and effective):
Rebalance only once a year
Markets move, which means your portfolio’s percentages will drift.
If you started with 60% stocks and 40% bonds, a bull market could push you to 70/30 without you realising. Rebalancing puts things back in line, so you don’t accidentally take on more risk than you planned.
It forces you to sell high and buy low, the opposite of what most panicked investors do.
Keep fees low
Fees are like termites. Tiny and quiet, but if you ignore them for years, they eat through your wealth.
A 1% annual fee doesn’t sound like much, but over 20 years it can cost you tens of thousands.
Look for funds and ETFs with expense ratios under 0.25%, and yes, that 0.75% difference really does matter.
Ignore the noise
There will always be headlines screaming “Market Crash!” or “Buy This Before It’s Too Late!”
The truth? Most of them are trying to sell ads, not help you build wealth.
If you check your investments daily and panic-sell at every wobble, you’ll sabotage your own returns. Instead, check in quarterly or even yearly, and trust the plan you set at the start.
Final Thoughts
Starting at 40 doesn’t mean you’ve missed the boat. It just means you’ve got to paddle a bit harder. Build a globally diversified, low-cost portfolio, make the most of tax wrappers, and invest regularly without trying to outsmart the market.
In 20 years, you’ll thank your 40-something self.
Are you interested in learning more about investing? Why not sign up to the MoneyMagpie bi-weekly Investing Newsletter? It’s free and you can unsubscribe at any time if you find it isn’t for you.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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