Each stage of life calls for a different strategy. It’s not just your risk profile that matters – factors such as the stability of your income, your family responsibilities, the goals you set yourself, and the time you have to achieve them also play an important role. All of them influence how you decide to save and invest.

“Investing when you are just starting your career, with long time horizons ahead, is not the same as investing when approaching retirement and needing to protect the wealth you have accumulated,” explains Veredas Zarco from the Business Development team at Mapfre Gestión Patrimonial. Beyond your stage of life, it is crucial in any case to have an emergency fund that allows you to face unexpected events and invest without pressure, as well as to regularly review your strategy to adapt it to each phase of life. Read this article to learn how.

When we are young

Time is the greatest ally of young people. With a much longer investment horizon, they are better placed to benefit from the power of compound interest (the returns that build up over time by reinvesting the gains generated year after year), while also being able to take on greater exposure to growth assets such as equities, which, although more volatile in the short term, have historically delivered stronger returns.

Likewise, youth is an ideal stage to develop solid financial habits such as automating savings through periodic contributions, allocating a fixed percentage of one’s salary, building an emergency fund, and avoiding unnecessary indebtedness. A good starting point is aiming to save at least 10% of what you earn.

“The combination of consistency, diversification, and long investment horizons tends to be a very powerful formula for this time in life,” adds Veredas Zarco.

When starting a family

This is when our financial situation tends to become more complex. “At this stage, it is important to balance growth and protection,” recommends Veredas Zarco. Having an emergency fund is essential at this stage. It is also advisable to review your insurance cover and ensure that your family’s financial security is always protected.

How should you invest at this stage? The ideal is to maintain a balance: combine some exposure to growth assets with more stable products that provide security and control. It is also a good time to plan for future needs such as buying a home, funding education, or taking career breaks, setting medium- and long-term goals with a realistic and flexible outlook.

Middle age

Planning takes center stage in this third stage. This is a phase when there is still time ahead until retirement, but it also starts to be important to protect part of the accumulated equity. The ideal strategy can be found in balance: maintaining growth-oriented investments while adopting a moderate profile that limits risk, avoiding excessive fluctuations.

“The key to reaching the final stage of your career with peace of mind is achieving the right combination of organization, foresight, and balance in saving and investing,” emphasizes Veredas Zarco. During this stage, it is essential to review your retirement plans, increasing your contributions if necessary to ensure you remain on track to meet your long-term financial goals.

Head of family with children in college

When children start university, it can place additional pressure on the family finances, making it essential to have solutions that preserve capital while making it easier to meet regular payments. At this stage, the most appropriate approach is to focus on low- to moderate-risk investments, while maintaining a diversified portfolio that can continue to deliver growth, albeit in a more measured way.

“Apart from covering university expenses, it is important not to overlook your own long-term goals,” clarifies Veredas Zarco. Supporting children’s education is a priority, but one must try not to compromise plans for retirement.

When we retire

In retirement, the priority is clear: stability and quality of life. This stage should focus on preserving your wealth, managing it prudently, and, where possible, generating an income to supplement your pension and maintain your standard of living. For this reason, lower-volatility products and diversified strategies become increasingly important, helping to reduce the impact of inflation.

Tax planning is also essential. It should not be overlooked, as a sound tax strategy can make a significant difference. It is important to plan how to draw down products such as pension plans in the most tax-efficient way, while also reviewing the tax treatment of any income and other financial products you rely on during this stage.

Always seek expert advice

No matter what stage of life you’re in, it’s wise to have a trusted financial professional by your side that can guide you and help you make the most of your investments. At Mapfre, we have a team of financial experts, Mapfre Gestión Patrimonial, who help investors find the options that best suit their objectives and needs.