From leaving too much in cash to forgetting old pensions, these common habits can hold back your long-term finances.
Your 40s can feel like the decade when every financial demand arrives at once. There might be a mortgage to pay, children who seem to cost more every year, parents who need support and a career that no longer follows a predictable path.
Investing can easily slide down the list of priorities, especially when you feel like you should have started years ago. But you don’t need a flawless strategy or a huge lump sum to get going. A few sensible changes now can still make a valuable difference over the next 15 or 20 years.
This article is adapted from our free Good Guide to Fearless Finances at 40, created in partnership with Liontrust. The full guide covers pensions, sustainable investing and a practical action plan for building your future finances.
1. Keeping too much long-term money in cash
Cash has an important job. It covers emergencies, gives you breathing space and protects you from having to sell investments at a bad time.
The problem starts when money that’s intended for retirement or another long-term goal stays in cash for years simply because investing feels daunting. Inflation reduces what that money can actually buy, so a balance that looks unchanged may well be losing ground.
A helpful way to think about it is to give each pot of money a clear purpose. Keep your emergency fund and anything you expect to spend within the next few years somewhere safe and accessible. Money you’re unlikely to need for at least five years is likely to have a better chance to grow if it’s invested.
That doesn’t mean moving every spare pound into the stock market. It means checking that habit, rather than intention, has not decided where your long-term savings live.
2. Panic-selling when markets fall
Watching the value of your investments drop is uncomfortable, however experienced you are. It’s even harder when every headline seems to predict disaster.
Selling after markets have already fallen can turn a temporary drop into a solidified loss. It might also mean missing the recovery, which often begins before the news starts to feel reassuring again.
The best time to think about this is well before markets become choppy. Choose investments that suit your appetite for risk and make sure your money is spread across different companies, industries and parts of the world.
It also helps to stop checking your balance constantly. Investment apps make it very easy to watch every movement, but that can make normal ups and downs feel far more dramatic. For many long-term investors, one proper review each year is more useful than reacting to every wobble.
3. Waiting for the perfect time to start investing
There’s always a convincing reason to delay. Markets look too expensive, the news is unsettling, work is frantic or your finances don’t feel organised enough yet.
The perfect moment rarely appears.
You should have some emergency savings, be free from expensive debt and feel able to leave the money invested for at least five years. Once those basics are in place, waiting for complete certainty can mean losing valuable time.
Starting small is fine. A regular monthly contribution can feel far more manageable than investing a large lump sum, and setting it up automatically removes the pressure to decide when to invest each month.
You don’t need to predict what markets will do next. You need a plan you can live with and enough patience to give it time.
4. Forgetting old workplace pensions
A few job changes can leave you with pension pots scattered across several providers. They may be out of sight, but they could still make up a large part of your future wealth.
Start by working out what you have, where it’s held, what it’s invested in and how much you are paying in charges. It’s also worth checking whether the level of risk still suits you and whether the investments reflect your values.
The government’s Pension Tracing Service can help you find contact details for schemes you’ve lost track of.
Bringing several pensions together can sometimes make them easier to manage, but don’t transfer them automatically. Some older schemes include valuable guarantees, protected benefits or exit charges that could be lost.
Your current workplace pension deserves a look too. Check whether your employer will pay in more if you increase your own contribution. Missing the full employer match can mean turning down part of your overall pay.
Give your money a little more attention
Investing in your 40s isn’t about making up for lost time with risky decisions. It’s about getting clearer on what you have, what you want and what your money needs to do next.
Review your cash, track down your pensions, choose a regular amount you can afford and put one annual check-in in the diary. Then give your investments space to do their job while you get on with everything else life is throwing at you.
FAQS
Is 40 too late to start investing?
No. You may still have 15 or 20 years before retirement, and even small regular contributions have time to grow. Make sure you have emergency savings, deal with expensive debt first and choose investments that suit your circumstances.
How often should I check my investments?
For many long-term investors, checking once or twice a year is enough. Review whether your goals, contributions or appetite for risk have changed rather than reacting to every market movement.
Should I combine my old pensions?
Combining pensions can make them easier to manage, but check for valuable guarantees, protected benefits and transfer charges first. Consider regulated financial advice where you are unsure.
Download the full guide
Our free Good Guide to Fearless Finances at 40 includes practical help with pensions, sustainable investing, choosing where to invest and creating a simple midlife action plan.
This article provides general information and is not financial advice. Investments can fall as well as rise, and you may get back less than you invest. Tax treatment depends on your circumstances and may change.
