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No matter how late you might be to the party, some things can still be worth doing. But is that true of something like owning shares, where many people believe the real value creation comes from a very long-term approach? Could it make sense to start investing in your forties, fifties, sixties, or even beyond?
Could have, should have…
Of course, as a believer in long-term investing myself, I do think it is better when people can start investing at a younger age. But, as with a multitude of other hypotheticals in life, we do not always do the right thing at the right moment.
It can still be well worth investing later on, though.
Say someone tucks away £1k a month and compounds it at 5% annually. After 20 years, it ought to be worth around £406k.
That is true whether that 20-year period starts at 40, 50, or 60. So while an older investor lacks the potentially longer timeframe of someone in their 20s or 30s, they can still build significant wealth by choosing to start investing.
Silver hairs — and silver linings
Plus, I reckon older investors have some potential advantages over younger ones or even their younger selves.
For starters, they may well have more spare cash.
One reason some people do not start investing when they want to is simply that the costs of raising a family eat up every spare penny.
On top of that, all smart investors learn from experience.
That is not just experience in the stock market, but can be life experience more generally. That is something that gets richer with age!
Getting into the game
But while it may make sense for someone to decide to start investing, it can also feel a bit intimidating.
I reckon it need not be. Someone can help themselves by getting to grips with some key ideas about how the market works in practice, such as different ways that shares are valued and how to build a portfolio.
Before you start investing, you also need a method to do so. It can be worth spending some time comparing different options for share-dealing accounts and Stocks and Shares ISAs.
Decade of dividend growth
Another question is what shares to put into that portfolio.
One share I think merits consideration is City of London Investment Trust (LSE: CTY).
Like some people, it has got better with age – and it is certainly old, having been established in 1861.
It has gone up 56% in the past five years (close to the 58% gain in the FTSE 100 index during that time). Plus, it has grown its dividend every year since England last won the World Cup.
Hopefully that dividend streak will continue even if England do it again this summer! At a 3.9% yield, the trust is more lucrative than the FTSE 100 with its current yield of 3.1%.
Dividends are never guaranteed, but one reason City of London has grown its payouts annually for decades – and also why its recent performance is close to that of the flagship blue-chip index – is its focus on blue-chip British companies, with holdings like HSBC and Shell.
That means that it could suffer badly if the UK economy does weakly. But I like the focus on large, successful companies.
