By Jack Probart – CEO/Certified Financial Planner
Updated 11 July 2025
“Wealth Beyond Returns”
Avoiding common investment mistakes after age 40 is essential to preserve wealth, fund retirement, and protect your legacy. Learn the 7 pitfalls and how to avoid them.
Why Age 40 Is a Financial Turning Point
Once you pass 40, your financial focus starts shifting. You have likely built some assets, started a family, or are eyeing retirement. However, even seasoned investors make critical missteps that can jeopardise long-term financial stability. These seven mistakes are common – but avoidable.
1. Delaying Retirement Planning
Many South Africans leave retirement planning too late, assuming they can “catch up” later. But without a structured income plan and consistent contributions, you risk underfunding your retirement. Relying solely on property sales or a business exit is risky – and often insufficient.
2. Ignoring Risk Adjustment
Maintaining a portfolio that is too aggressive as you approach retirement can expose you to volatility that your timeline cannot afford. It is vital to rebalance your investments regularly and align them with your reduced risk appetite as you age.
3. Underestimating Longevity and Inflation
Your retirement could last 30+ years. Underestimating how long you will live – and how much inflation will eat into your income – is a recipe for running out of money. Keep in mind that actual inflation for retirees (medical care, food, utilities) may be higher than CPI averages.
4. Overconcentration vs. Overdiversification
Putting all your eggs in one basket – like your house, company shares, or one fund – increases your exposure to single-asset risk. But owning too many similar investments across the same sector or asset class can dilute returns and introduce hidden correlations. Smart diversification is key.
5. Neglecting Tax Efficiency
At this stage, smart tax planning can significantly boost your after-tax returns. Consider:
- Tax-Free Investment Accounts (TFIs)
- Endowment wrappers
- Retirement annuities
- Trust structures
Strategic withdrawals and portfolio structuring can help you keep more of what you earn.
6. Emotional or Reactionary Decisions
Whether it is panic-selling during a market drop or jumping on the latest “hot tip” at the braai, emotional decisions are costly. Stick to your long-term strategy, stay diversified, and avoid impulse-driven changes.
7. No Estate or Succession Plan
A lack of a will or trust can cause major issues for your heirs – from delayed asset transfer to family disputes or unnecessary taxes. Estate planning ensures that your wealth is transferred efficiently, according to your wishes.
Conclusion: Preserve, Plan and Protect
After 40, it is less about chasing the next big return – and more about:
- Protecting your wealth
- Planning with intention
- Avoiding avoidable mistakes
By staying disciplined and proactive, you can secure lasting financial independence and peace of mind for yourself and your loved ones.
