15 Smart Investments to Make Before You're 40 (or as Soon as Possible)

Many, if not most, Americans are way behind in saving for retirement, and some are making some ill-advised financial moves -- perhaps, for example, leasing their car when it would make more sense to buy a new or used one. Acting on any of the following 15 suggestions can put them on a better path. Even those who take pride in their money management habits are probably neglecting one or more financial things they should do.

See which of these smart investments are ones that you'd do well to act on now. A financially secure retirement might depend on them.

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Let's start with debt, because if you're being charged a steep interest rate (and many credit cards charge 20% or much more), you're going to have a lot of trouble getting ahead financially. Make paying off that debt a priority -- and don't let yourself get discouraged along the way. It may not be easy, but paying off a lot of debt can be done, and it's very worthwhile.

ALSO READ: The Smartest Stocks to Buy With $1,000 Right Now

Do you have an emergency fund? If your household were to suffer a job loss or a major health or automotive expense, would you be OK or in trouble? Would you have to charge thousands on a high-interest credit card, or sell some stocks when they and the market are down? Be prepared -- by having enough money available to cover all your mandatory expenses for at least three months, if not more. That includes not just food and housing, but also taxes, insurance, transportation, utilities, phone service, and more.

If you don't have an IRA (or several), you should probably set up one, perhaps at a good brokerage. Contributing to a traditional IRA will give you an up-front tax break, while doing so to a Roth IRA can permit tax-free withdrawals in retirement. For 2021, the IRA contribution limit is $6,000, plus an additional $1,000 for those 50 or older.

Don't neglect your workplace's 401(k) plan, if it offers one, as that can be a powerful wealth-building tool -- especially if your employer chips in matching funds to your account. That's free money and should not be passed up. For 2021, the annual contribution limit for 401(k)s is $19,500, plus an additional $6,500 for those 50 and older. You might have been advised to sock away 10% of your income, but with so many people having not saved enough, 15% or more may be a more appropriate target.

ALSO READ: 3 Things to Do if You're in Your 40s With No Retirement Savings

If you're serious about saving and investing for your future, you'll likely want to participate in a 401(k) plan if you can and maybe also open an IRA or two -- and in addition to that, it can be effective to have a regular, taxable investing account at a good brokerage. (You can open IRA accounts at brokerages, too.) When choosing a brokerage, compare some contenders, considering factors such as fees charged, trading commissions charged, mutual funds offered, and whether you want brick-and-mortar locations to be able to visit, or if a brokerage with an online-only format is enough.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

The stock market is likely to deliver the best results over the long run, if you're looking to build wealth for retirement -- as most of us need to do. Dividend-paying stocks are particularly good, as they can generate regular fairly reliable income while their stock prices, ideally, also appreciate over time.

Not all of us have the time, skills, or interest to study the universe of stocks and carefully select ones in which to invest. Fortunately, we can simply opt to invest in the broad stock market via low-cost index funds. An index fund that tracks the S&P 500, for example, will quickly have you invested in 500 of America's biggest companies, which together represent about 80% of the overall U.S. stock market's total value.

ALSO READ: 5 Reasons S&P 500 Index Funds Are Perfect for New Investors

No matter what your age, you should be investing in your health. If you're not a fan of exercise and you love junk food, you may not be that interested in investing in health, but consider the benefits: If you're healthier, you will be likely to live longer and enjoy life more. You'll also be likely to have to spend less on healthcare over the course of your life, saving a lot of money.

You don't have to become a triathlete and a vegan, either. Try just going for a walk every day or so, and eating more nutritious foods and less junk food.

Investing in your career can also pay off handsomely. This can include pursuing an advanced degree or one or more professional certifications or designations that can help you secure higher salaries or better-paying jobs. Investing in a good professional wardrobe can pay off, too, making others see you as a more serious professional. It can be effective to identify one or two people willing to be a mentor to you, too.

Another excellent kind of investment is investing in your kids. You might set up 529 plans or other special accounts to help you save for their future educational expenses, to start. Even more important can be teaching them to be smart about money and able to make savvy financial decisions throughout their lives. If you can get them interested in investing while they're young, they may become multimillionaires able to retire early.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Insurance may seem like a boring topic, and it can seem like a dumb thing to pay for, since you may go years without using it, but it's critical. When you buy insurance, you're buying protection -- from a variety of financial losses. Be sure that you've protected yourself and your loved ones against the loss of your home, your cars, your belongings, and your life. Protect your health with good health insurance plans, and consider other kinds of insurance as well, such as umbrella insurance, disability insurance, long-term care insurance, pet insurance, and so on.

ALSO READ: 5 Strategies for 40-Somethings Who Are Way Behind on Retirement Savings

There are a bunch of smart financial moves you might make every year or two that can really pay off, helping you save money or earn more. For example, call around to a bunch of insurers and see if any can offer you a lower premium for the same coverage you have on your home insurance policy, car insurance policy, or other policy. You might increase your deductibles, too. If you've racked up a lot of credit card debt (that you really should pay off as soon as possible), try calling your card companies to ask for a lower interest rate.

Buying a home is another move that can be well worth making before you turn 40 -- or at any age, really. It's often best to not think of your home as an investment, though, because over the long run, real estate has not been a great wealth builder, except in some places at some times. Instead, think of it as a place to live that can play an important role in your life, offering some security and rootedness in your community. If you're planning to buy a home, read up on it first, as there are many money-saving moves you might make. For some folks, it can make sense to be a long-term renter. That can give you maximum flexibility and might cost you less, allowing you to invest more money in retirement accounts.

Another smart money move worth making at least a few times in your life is that of consulting a financial planner or financial advisor. Have a financially savvy professional review your finances and evaluate how well you're doing trying to reach your goals. He or she can make recommendations and, ultimately, give you some peace of mind. It can be worth consulting a tax pro, too, if your financial life is complicated, with several different accounts, stock options, multiple jobs (perhaps in multiple states), your own business, and so on.

ALSO READ: Retirement Savers in Their 40s Have This Median Balance. How Do You Compare?

If you want to save, earn, and amass as much money as possible in your life, plan to keep reading and learning throughout the years. The more you do so, the more good ideas and valuable tips you'll run across.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Whether you're approaching age 40 or whether you're 26 or 53, there are probably some actions you can take to strengthen your financial condition and set yourself up for a more financially secure future. See which of the actions above will pay off most handsomely for you.

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