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Disclaimer: What follows is based on my personal views and experiences, and may not apply to everyone’s circumstances. Your financial situation, risk appetite, and life stage may be very different from mine. Please don’t take offence if something here doesn’t match your approach. Use it only as a perspective, not a prescription.
I received a letter from a reader a few days ago. He was someone around my age and wrote:
I’m in my mid-40s, my kids are growing up, my parents are ageing, and I’m suddenly feeling this urgency about my finances. I’ve been investing, but I don’t know if I’m doing enough or if I’m doing it right. There’s no social security here, and if I mess up, there’s no safety net. What should I do?
I read it twice because it could have easily been me writing that letter. I am middle-aged myself, and lately I’ve been thinking a lot about these same questions about money, security, and the strange cocktail of restlessness and responsibility that creeps up on you in this phase of life.
Some call it a mid-life crisis, but it’s less about buying your next shiny SUV and more about staring at your financial spreadsheet at midnight wondering if the numbers will hold up when you’re 70.
You see, middle age changes how you think about money. In your 20s, there’s time to recover from mistakes. In your 30s, you’re building. But somewhere in your 40s or early 50s, you start to feel the walls close in.
You have more responsibilities, which may include your kids’ college fees on the horizon, parents who may need care, and no guarantee that your own health or income will hold steady.
You also have less time to bounce back from a blunder. Add to that the Indian reality of no universal social security and the fact that most of us live in nuclear families, and the truth hits you that if you fall, there are fewer people to catch you.
That’s when you realise investing at this stage isn’t just about growing money but about not losing the ability to sleep at night.
It’s about prioritising resilience over everything else. And that includes sufficient cash buffers, insurance, proper asset allocation, and ruthless simplicity. Basically, I see this stage as about prioritising defence before offence.
Insurance: So, the first thing I looked at was whether my family would be okay if I weren’t around. That means boring but essential things like term insurance, enough to cover 15–20 years of annual expenses plus any outstanding loans minus liquid assets. Notice that I’m not talking about income here, but expenses. Income can drop but expenses are what your family must actually fund. Also, keep the tenure to at least your planned retirement age. Avoid riders you don’t understand and avoid mixing insurance with investment.
On health insurance, take a family floater with a large top-up or super top-up. Middle age is when medical probabilities start to bend upwards. Get a personal policy even if your employer provides one. If parents depend on you, try to secure their health cover separately so large claims don’t blow up your family floater.
Emergency fund: The next shift in my thinking over the years has been about liquidity. In my late 20s and 30s, I was all for returns. Now, I focus a lot more on liquidity. And so, I want an emergency fund of at least 8-12 months’ expenses, parked in places I can access quickly, like savings account, bank FDs and liquid funds. This fund is not for “opportunity” to invest in a market crash, but for the “oh no!” of life. Treat it that way. When you’re younger, you can ride things out. But in middle age, you may not get that luxury.
Portfolio allocation: When it comes to the portfolio itself, I no longer obsess over finding the “perfect” allocation, because there isn’t one. I’ve found comfort in a mix I can live with through euphoria and despair, which includes around 70–80% equities (mix of high quality stocks and low-cost index/flexicap funds), 15–20% high-quality debt (no credit risk), and 5% gold. The exact allocation matters less than my ability to stick with it, especially when markets are doing their best to test my nerves.
If I invest through mutual funds, I keep it to two or three well-chosen ones. If I buy individual stocks, I limit how much I put into any single company and remind myself constantly that I must judge my results over 10-15 years, not over the next few months.
Real estate: We Indians love real estate, don’t we? But treat your primary home as a consumption asset and buy only if it fits your life and after you can still meet savings targets. Don’t expect double-digit “returns” from it. For a second property, do the math like an investor: net rental yield (after all costs) vs. debt fund/bond yields, plus illiquidity, maintenance costs, and concentration risk. Most of us middle-aged investors are already heavy in real estate (house + ancestral), so avoid piling on out of habit, or just because your “friendly” real estate broker promises you stellar return because “the nearby airport is coming up soon.”
How much is enough?: Then, look at your retirement corpus, which should again be a function of what you spend and not what you earn. A conservative way to think about it in India is to target 35–40x your annual expense at the point of retirement (net of liabilities, in today’s rupees, then inflate sensibly).
So, if your family spends ₹1.5 lakh a month today (₹18 lakh a year), you’re looking at roughly ₹6.5-7.5 crore in today’s money, before adjusting for inflation to your retirement date. That sounds large until you remember you might live 30+ years post-retirement, through Indian-style inflation and healthcare spikes.
Two levers can help you make this possible:
- Grow surplus (earn more and spend wiser), and
- Invest that surplus with a plan you can actually follow for decades.
Sequence matters: One thing the mid-life crisis teaches you is that your dreams and your realities don’t always match. In your 30s, you imagine retiring early, travelling the world, and maybe writing that book that will become a bestseller. In your 40s or 50s, you realise you also have to fund your children’s education, maybe help ageing parents, and still make sure you won’t be financially dependent on anyone. That’s when you see the importance of having separate, ring-fenced plans for major goals.
Sequence-of-returns risk (bad market early in retirement) is real. To blunt it, use a bucket approach as you approach retirement:
- Bucket 1 (Years 0–3): expenses for the next 2–3 years in cash/ultra-short-term funds etc.
- Bucket 2 (Years 4–7): high-quality debt (FDs/G-Secs) aligned to those years.
- Bucket 3 (Years 8+): equities/growth assets to refill buckets in good years.
Invert, always invert: Retirement is non-negotiable. Your children can get an education loan, but you won’t get a retirement loan. So, keep these goals apart, give them their own asset mixes, and gradually de-risk them as the dates approach.
I’ve also learned that what you don’t do matters as much as what you do. And so, here’s my general avoid list:
- Leverage to invest. A home loan is enough leverage (I don’t have any). Don’t add margin loans or personal loans to buy assets.
- Mixing insurance and investment. Traditional policies/ULIPs rarely beat simple term plan + invest-the-rest.
- Chasing yield. If someone is paying you a lot more than everyone else, you are the product.
- Credit risk on the debt side for a small kicker. Rarely worth it.
- High-cost investments (unnecessary PMS or AIF for most) that add complexity without superior after-tax, after-fee results.
- Concentration in exotic alternatives. REITs/InvITs can fit as income exposure, but size them modestly and understand taxation. Avoid F&O “income” strategies.
- Lifestyle creep, which is like the quiet killer of compounding.
- Guaranteeing loans for friends or relatives. A “no” today is cheaper than a decade of regret.
Documentation: Create a simple, physical plus digital folder that includes your insurance policy copies, account list, nominations, passwords, property papers, and a basic will. Add one page titled, “If I’m not around, start here.” Middle age is the time to make this easy for the people you love.
Upskill yourself: You may have heard of people losing their jobs in their 40s and 50s. And now with AI breathing around our throat, this fear is close to home for most of us. Upskilling is probably the only option to keep yourself relevant. A 10–20% jump in income or the ability to consult on the side compounds faster than squeezing 2% extra on debt funds.
Health: Take care of your health because your life depends on it. One hospitalisation can erase years of SIPs, and a chronic condition can reduce earning power. Sleep, strength training, regular walking, and eating good food are risk management in disguise.
The mental side of investing in middle age is perhaps the trickiest. The market’s ups and downs are one thing, but the swings in your own emotions are another. This is the age when fear of missing out collides with fear of losing it all. You’ve seen friends get rich quick, but you’ve also seen people your age go broke faster than they thought possible.
It’s tempting to make big moves, like shifting everything to equity in a bull run, or to cash in a crash, but I’ve realised that discipline beats drama every time.
If there’s one guiding principle I hold onto now, it’s margin of safety. It’s in my savings rate, in my return expectations, in my debt levels, and in the promises I make to myself.
I assume my expenses will be higher than I think, my returns lower, and my life more volatile than the Excel sheet suggests.
I don’t see this as pessimism, but like a safety harness. Because at this stage of life, I don’t see investing as competition to outsmart the market but as a commitment to stay in the game no matter what.
And staying in the game means making peace with the fact that the biggest win in middle age is not the multi-bagger stock you picked, but the fact that you built a life that can’t be sunk by one bad year.
P.S. At this stage of life, I’ve also realised that trying to do everything yourself can be an expensive illusion. There’s no shame in seeking help, whether it’s from a trusted financial advisor or even a friend who has walked the path before you. Understanding your own limits is a form of wisdom. Middle age is not the time to test how smart you are with money, but the time to be honest about what you know, and what you don’t, so you can get the right guidance and avoid costly missteps.
Two Books. One Purpose. A Better Life.
“Discover the extraordinary within.”
—Manish Chokhani, Director, Enam Holdings
“This is a masterpiece.”
—Morgan Housel, Author, Psychology of Money
