Karen worried she’d never retire. Then she learned to invest in her 60s and built a six-figure portfolio in just four years – proving it’s never too late to start building wealth

After turning 50, there was one was one question looming in Karen’s mind: ‘Will I ever have enough money to retire?’

The busy mum from Sydney had always been diligent managing her finances and mortgage through spreadsheets. But after paying ‘non-negotiable’ bills, groceries, petrol and private school fees, there was little left over for savings.

‘For years I thought my husband and I would need to work forever to make an income. I was fairly pragmatic about it and felt like there wasn’t a lot I could do to change things,’ Karen, who is now 70, told FEMAIL. 

‘I tried not to stress too much over the fact I might have to work full-time until I’m 90.’

A few years later, the dire situation started to ease. Her children grew up and moved out, leaving Karen and her husband with more money to ‘play with’ – so they decided to start thinking seriously about retirement. 

She had dabbled in the stock market as a young woman in the 1980s when she invested about $3,000 in three to four companies, but didn’t quite understand what she was investing in, or why, so failed to make any significant returns.

After finally paying off the mortgage on the family home, Karen decided to take investment for seriously during the pandemic and enrolled in a Mastering Money course with SkilledSmart all about managing finances and investing wisely.

Four years later, she is comfortably retired with an impressive investment portfolio worth $200,000 with CommSec, in addition to $500,000 in superannuation.

Growing up, Karen lacked what we now call financial literacy and had ‘no idea’ how to start investing, so had to learn for herself. 

It wasn’t until she was well into her 60s that she started reading books and magazines on investments, which pointed her in the right direction. There was an element of ‘trial and error’ at first but, over time, her confidence grew.

Today, she is seeing income flow in from her various Aussie share market investments, which has left her feeling ‘more positive and reassured about the future’.

She uses CommSec and has found it to be one of the best options with the cheapest brokerage fees. 

‘Back in the day, I used to work with an actual stock broker which is what was the common practice back before online brokers,’ Karen said.

After just four years, she is comfortably retired with an impressive investment portfolio worth $200,000, in addition to $500,000 worth of superannuation 

What does Karen invest in?

Karen’s portfolio consists mostly of Australian shares spanning across seven to nine industries, with a bigger focus on the financial sector and consumer industry.

She invests in both ETFs (exchange traded funds, or a ‘basket’ of multiple companies) as well as direct shares.

‘I don’t have a strict allocation that I adhere to, but I do pay attention to the balance between the different industries, so if the portfolio starts skewing heavily towards one sector, I might try to balance it out,’ Karen said. 

‘For example, right now my financial sector investments are a much larger percentage of the portfolio than is perhaps ideal, so I may consider investing in other sectors to start to balance that a little by buying into other sectors more.’

In terms of how often she invests, the retiree doesn’t try to ‘buy on the dip’ or ‘time the market’ but instead focuses on time spent in the market. 

She only makes a handful of transactions every year – estimating around half a dozen – and makes her decision based on what income the share can provide.

‘On the odd occasion if I feel there is a need for it, I might sell,’ Karen said. 

‘I tend not to time the market, I look at the overall package, what’s more important is buying a good-quality investment.’

Karen said she is always paying attention to the amount she has in each sector and tries to avoid having her portfolio skew in one particular direction. However, she adds this isn’t a ‘strict rule’ and more of a ‘guiding principle’. 

‘I do like to focus on one industry at a time and determine which specific investments I’d like to make in that industry. In recent years, I have taken more of an interest in investments that provide a good dividend,’ she explained. 

‘Although that’s certainly not the deciding factor, it’s something I do think I value more now, given my stage of life where having that additional income stream is useful.’ 

Real estate is often seen as the golden ticket to a financially secure retirement for baby boomers, but Karen has taken a different part. Instead of buying an investment property, she has focused on the share market (stock image)

Karen once owned an investment property in her 20s but sold it soon after getting married, then bought a family home with her husband. 

Since then she has not reinvested in real estate again, simply because of the capital required, which she didn’t have. 

‘Real estate takes a lot more money upfront, whereas you can buy shares with much smaller amounts of money, making it more accessible. It’s also simpler than real estate investing, so I found it easier to stick to share-market investing,’ she said. 

She has never considered investing in cryptocurrency, which is popular among younger investors, due to how complex and confusing it can be.  

How does Karen manage risk?  

Karen said the most important aspect when it comes to investing and managing risk is to continue learning and educating yourself. 

‘Over time, you improve. You aren’t making guesses, you’re making informed decisions, and you get better each time. I don’t think you’re ever too old to learn something new. That helps you build the skills and knowledge to make better decisions, which helps you minimise and avoid mistakes,’ she said. 

Karen also ensures she diversifies her portfolio by ‘not having all her eggs in one basket’ – a popular strategy. This minimises the risk if a sector decreases in value or, in the worst-case scenario, if a company shuts down for good. 

Another way she manages risk is by looking beyond her investments and focusing on the rest of her finances and her cash flow management.

‘Over the years, I’ve tried to be diligent with tracking expenses. We did have debts at one point which I made a priority to pay off. This meant I could keep my investments invested and growing without having to sell urgently or for an emergency,’ she said. 

Her only regret is not starting sooner. ‘If I had understood when I was 20 what I now know about investing, I would have been in a much better position today,’ Karen said

Her only regret is not starting sooner. 

‘If I had understood when I was 20 what I now know about investing, I would have been in a much better position today,’ Karen said. 

‘But it’s never too late to learn. I’m grateful I took the leap, even later in life, because it has given me a sense of security and peace of mind.’

KAREN’S THREE GOLDEN MONEY RULES

1. Start as soon as you can

Karen’s main piece of advice to others is simply to make a start, regardless of your age – but the sooner you begin, the better off you’ll be.  

‘I wish I had started years earlier but I had no guidance. No one in my family knew about it,’ she said.

‘I came to it all later in life. The sooner you start, the better, and over time you become more disciplined with your money.’

2. Take an active interest – don’t leave it to your husband

Karen hopes women are inspired to take the lead with their finances rather than letting their husbands do all the work.  

‘I think a lot of women in particular think it’s too difficult, but it’s important to take an interest,’ she said.

‘Even if your partner is the one managing the finances now, you never know what might happen to your partner or what the future might hold. It does take some time, and willingness to learn. 

‘It might feel like a slow and gradual process, but over time you do build confidence. You can do it at any age; it’s never too late to learn. I hope my story inspires others to see that.’

3. Expose yourself to financial content

When investing, it is important to keep up to date with financial news and how businesses are tracking to help make a decision on where to allocate your funds.

Doing so will also help you understand different terminology.  

‘Over time you start to piece together the different financial terms and concepts, and it starts to shape your thinking,’ Karen said. 

‘Then it becomes easier to make better decisions because you’re less easily influenced by all the noise, you have more confidence and clarity in your own decision-making and knowledge.’