Want To Start Investing in Your 40s, 50s or 60s? Ramit Sethi Shares Exactly What You Need to Do

If you think it's too late to start investing, millionaire author and host of Netflix's How To Get Rich, Ramit Sethi, believes otherwise.

In a recent episode of his YouTube podcast, Sethi emphasised that even if you're in your 30s, 40s, or 50s and haven't yet begun investing, you can still retire wealthy. He advocates for a tailored approach for those who are starting late in the wealth-building journey.

Face the Numbers: The First Step to Financial Control

Many avoid their finances, convinced it's too late to make a difference. Sethi warns that this mindset can be detrimental. The first step is to confront your financial situation for clarity.

'The worst investment strategy is waiting for the perfect time,' he states.

Facing your finances can be intimidating, but it's essential for taking control. Once you assess your numbers, you'll often find you're in a better position than expected.

Begin by listing your assets — everything you own — then your outstanding debts. Subtract your debts from your assets to determine your net worth. If the figure is negative, don't panic; it's simply the starting point, Sethi explains.

Track Spending and Create a Realistic Budget

Many believe they lack enough money to invest. However, a candid review of spending often reveals money slipping away on subscriptions, dining out, or impulsive purchases.

Sethi recommends reviewing the past three months' expenses, categorising them into essentials, non-essentials, and 'hidden leaks' — such as unnecessary subscriptions or impulse buys. This helps identify areas where expenses can be reduced.

The goal is to craft a spending plan that frees up funds for investments. According to Sethi, this might be the only way to grow wealth without sacrificing your quality of life, especially when starting late.

He suggests that fixed costs should ideally be around 50–60% of your take-home pay, with at least 10% directed towards investments. Savings should be 5–10%, while guilt-free spending can be 20–35%. This balance allows for enjoying life's pleasures while prioritising wealth-building.

Small Adjustments, Big Long-term Gains

Sethi believes that minor tweaks can significantly boost long-term savings. For example, negotiating cheaper plans with your internet, cable, or phone provider can save hundreds annually. He also recommends negotiating the interest rate on credit card debt or seeking a pay rise.

Taking on a side hustle or freelance work can generate additional income for investments. Automating contributions is crucial, as consistent investing over time compounds wealth. Equally important is identifying and reducing unnecessary spending to prevent cash leaks.

Maximise Free Money and Tax-Advantaged Accounts

Sethi urges individuals to make the most of employer-matching schemes. If your employer offers a 401(k) match, ensure you contribute enough to receive the full benefit — it's essentially free money. 'If you have a paycheque, you have an opportunity to build real wealth, especially with tax-advantaged accounts,' the author says.

Looking ahead, in 2025, those over 50 can contribute up to £23,458 ($31,000) annually to their 401(k)s, including an additional £5,675 ($7,500) catch-up contribution. Traditional and Roth IRA accounts allow up to £6,053 ($8,000) per year, with a catch-up contribution of £756 ($1,000).

Sethi recommends increasing your investments by at least 1% annually. Windfalls such as bonuses or tax refunds should also be channelled into your savings.

Simple, Low-Maintenance Investment Options

He also highlights target-date funds as an easy, low-maintenance way to grow wealth. These funds automatically adjust and diversify your investments based on your planned retirement date. As you age, they shift to more conservative assets, reducing risk without requiring active management.

'As you grow older, investments become more conservative. It does it for you,' he explains.

Sethi reassures those starting late that it is never too late to build wealth. Small daily adjustments, disciplined saving, and strategic investing can set you on the path to financial security, regardless of when you begin.