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Help! I’m too old to invest!

old age retirement

My parents are very ill. It’s not a disease that would be recognised by any medical professional, but it’s a sickness nonetheless.

I call it the ‘I’m too old to invest’ syndrome, and it’s the bigger brother of ‘investing is not for me’. You see, my parents are in their mid-50s, still paying off their house, with one child still at home. They each earn slightly above the median wage, but after credit cards and loans are paid, (not to mention coffee and shopping) there’s precious little leftover.

We had a discussion over Christmas. “You’re both tired of working,” I said, “you need to get organised and save more money so you can retire sooner/wealthier“.

After the obligatory chuckles at their disorganised son telling them to get organised, they brought out the defences:

You kids cost us a fortune!” Yes, kids are expensive, but when I point out that one child is gone and they’re still not spending any less, they move on to the next defence.

Shares are too risky anyway. Just look at Slater & Gordon Limited (ASX: SGH) or Dick Smith Holdings Ltd (ASX: DSH). I heard Woolworths Limited (ASX: WOW) are going broke.”

After I explain that there’s much more to each company’s story than that – also, Woolies isn’t going broke – I point out that there are loads of quality companies on the ASX they could own. But they’re not done yet:

Your father spends it all on bike riding and coffee.”

“Your mother spends it all on shopping.”

It’s like peeling an onion. Finally, we get through to the final layer, my favourite: “We’re doing OK mate. Not like those poor folks at Queensland Nickel who lost their jobs, or Johnny down the road who had to sell the shirt off his back to buy food for his dog” (I made that last one up).

Then, PLOP! Down go their heads into the sand.

I can sense a few readers nodding their heads now. This is either you, used to be you, or you know someone just like my parents.

The crazy thing is, in their mid-50s and healthy, my parents still have a good quarter century ahead of them, given the average life expectancy for men and women is 80 years or more.

I wrote an article just last week showing how investors can turn $10,000 or $25,000 into a million bucks in 47 years with no additions to their starting funds.

Starting from scratch, it would be very difficult for my parents to make a million dollars now. However, $10,000 might turn into $20,000-$40,000 in 15 years (before inflation), which is soon enough for them to make use of it and a heck of a lot better than just having $10,000 at that time. Also, if they don’t sell it, it’ll pay dividends which will support them in retirement.

By the time the final child moves out for good in a few years, my parents should have their house paid off. With fewer expenses, they can really start to build up a war chest for their retirement.

Given that I write for The Motley Fool – which boasts a market-beating scorecard in all four of its established services – I’m going to encourage them towards shares. Companies like Coca-Cola Amatil Ltd (ASX: CCL) and Retail Food Group Limited (ASX: RFG) are cheap (minimising pricing risk), offer attractive, franked dividends and some growth potential, and would be perfect for my parents.

Better yet, shares can be liquidated instantly if big expenses come up, unlike some other asset classes like property. Of course, they have other options, like term deposits or making extra contributions into super. Doing nothing, however, is just crazy.

Whatever they end up investing in, the key thing is to get them started and get them some quality advice. Even in your 50s or early 60s, you have around 20 years ahead of you, on average.

You’re (almost) never too old to invest.

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Motley Fool contributor Sean O'Neill owns shares of Coca-Cola Amatil Limited and Retail Food Group Limited. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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