How to Create an Investment Portfolio When Your Children Leave Home

Finally the kids have left home, and you are able to make some long-needed improvements to that empty nest, take a romantic vacation, go back to school or save for retirement. Smart midlife investing will help you meet your goals.

Instructions

Difficulty: Challenging

Things You’ll Need:

• Financial Calculator
• Brokerage Accounts
• Personal Financial Software

1. Set a goal. If you want to retire at age 65, calculate how much money you'll have (Social Security, pension, 401(k) proceeds, etc.) and how much you'll need.
2. Invest all the money you can in tax-deductible retirement plans such as 401(k) or Keogh plans and Individual Retirement Accounts.
3. Start your own small business to bring in additional income. Not only will you bring in more money, but you also might be eligible to start a Keogh plan (retirement plan for self-employed people).
4. Diversify. You might be tempted to invest all your money in high-risk stocks. Resist that temptation.
5. Consider selling your home, now that the kids are gone, and getting a smaller place.
6. Allocate assets wisely. You might want to put 25 percent in blue-chip stocks, 25 percent in small-cap stocks, 10 percent in international stocks, 10 percent in tax-exempt bonds, and the rest in checking, savings and money-market accounts.
7. Examine your spending. Prioritize the vacations, CDs, concerts, boats and steak dinners you want. Limiting those today will help you pay your bills tomorrow.

Tips & Warnings

• Experts say you'll need about 70 percent of your preretirement income to live on in retirement.