I recently graduated with my master\u2019s degree and am seeking full-time employment at age 53. I want to know what is the best way to invest some of my earnings when I begin receiving a paycheck. I expect to have an annual salary of between $80,000 and $90,000.\u00a0<\/p>\n
For religious reasons, I cannot invest to earn interest, but business-related ventures such as stocks are acceptable. I am planning to set aside up to $1,000 per month for investment purposes, so that I can build some retirement funds. What are my options?<\/p>\n
First-Time Investor<\/p>\n
Read: <\/strong>My wife and I bought a beautiful lakeside home for $700,000. It\u2019s now worth $1.2 million. Do we sell now to avoid capital gains?<\/p>\n <\/p>\n Congratulations on your master\u2019s degree. You have already made the best investment you can make \u2014 one in yourself, your education and your future. It takes patience, guts and stamina to go back to college in your 50s, and you should be very proud. You were one of about 505,000 students in college ages 50 and over, representing less than 4% of the student population.<\/p>\n Given your faith, CDs and high-yield savings accounts are ruled out. A letter writer recently asked me where he should start looking to invest his $50,000 life savings, and I pointed him in the \u201cmake interest off your cash\u201d direction, particularly given the recent rise in interest rates. That won\u2019t work for you, but the good news is that you do have many options.<\/p>\n There are investment vehicles for you. In fact, the Accounting and Auditing Organization for Islamic Financial Institutions sets guidelines for investing in accordance with the Sharia religious code, including rules around companies that derive a percentage of their profits from tobacco and alcohol products. And, yes, it also regards interest as unjust and exploitative.<\/p>\n Saturna Capital has mutual funds that follow Islamic principles. The Amana Income Fund AMANX, which focuses on current income and the preservation of capital, has had an average annual five-year return of 8.8% for investor shares, slightly lower than the 9.9% average return for the S&P 500 Similarly, the Knights of Columbus assets are managed by Knights of Columbus Asset Advisors in accordance with Catholic moral principles, which are distilled to six main tenets: \u201cprotecting human life, promoting human dignity, reducing arms production, pursuing economic justice, protecting the environment [and] encouraging corporate responsibility.\u201d<\/p>\n Related: <\/strong>How do I know if my ESG investments are doing any good?<\/p>\n Of course, investing along religious principles \u2014 similar to ESG investment, which takes environmental, social, and corporate-governance factors into account when deciding what to do with your money \u2014 is fraught with complications, contradictions and problems with transparency. Regulators are cracking down on vehicles that \u201cgreenwash\u201d their ESG credentials.\u00a0<\/p>\n A major report by the Organization for Economic Cooperation and Development, an intergovernmental organization with 38 member nations, found that ESG ratings vary strongly depending on the provider, as they commonly use different measures, indicators, metrics, data and qualitative judgments to make decisions about funds and companies.\u00a0<\/p>\n \u201cMoreover, returns have shown mixed results over the past decade, raising questions as to the true extent to which ESG drives performance,\u201d the OECD said. \u201cThis lack of comparability of ESG metrics, ratings, and investing approaches makes it difficult for investors to draw the line between managing material ESG risks within their investment mandates.\u201d<\/p>\n You have many funds to choose from. If you\u2019re Catholic, you could look into the Global X S&P 500 Catholic Values ETF Don\u2019t miss: <\/strong>Is it ethical to distribute cash from my pre-marital investment accounts to my kids \u2014 without telling my second wife?<\/p>\n It\u2019s not too late to start investing at 53. With the advice of a financial adviser, your risk profile may need regular adjusting, based on your age and tolerance. But you may work into your 70s and may live into your 80s or 90s, and you will want to find myriad ways to build your wealth throughout your retirement. Cash-hoarding typically gets outdone by inflation.\u00a0<\/p>\n You may find a job with a 401(k) and an employer match, meaning your employer will contribute an additional sum toward your retirement based on the amount you are contributing every month. You may also consider an IRA. Both account types have \u201ccatch-up\u201d contributions for people who are over 50. Annual IRA contribution limits for 2023 are $6,500 for people under 50, but $7,500 for those 50 and older.<\/p>\n You can also use pretax dollars for health savings accounts, which are used to offset the burden of high-deductible healthcare plans. With the latter, you pay a lower premium, but you will be saddled with higher out-of-pocket expenses for medical services should you require them. You can contribute up to $4,150 to an HSA for 2024, up from $3,850 this year.<\/p>\n As for right now? Pay off your credit cards. Don\u2019t let high-interest debt trap you. Warren Buffett said one of the best investments he ever made was buying his Omaha, Neb., home for $31,500 in 1958. It\u2019s worth $1.4 million today. He has said he may have put that money to better use if he had rented instead, but owning your own home will solidify your financial position in retirement.<\/p>\n Investing $1,000 a month may be ambitious. But thinking in the medium to long term \u2014 and knowing this is a marathon rather than a sprint, even at 53 \u2014\u00a0is half the battle. With compounding, or making money off your principal and the increase in value of your initial investment, you could have more than $120,000 in 10 years, and over $600,000 in 30 years.<\/p>\n Bravo on this new chapter. Take it one day, one week and one month at a time, and enjoy your life.<\/p>\n You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as\u00a0<\/em><\/strong>Twitter.<\/em><\/strong><\/a><\/p>\n Check out\u00a0<\/em><\/strong>the Moneyist private Facebook<\/em><\/strong>\u00a0group, where we look for answers to life\u2019s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.<\/em><\/strong><\/p>\n The Moneyist regrets he cannot reply to questions individually.<\/em><\/strong><\/p>\n Previous columns by Quentin Fottrell:<\/strong><\/p>\n \u2018I\u2019m tired of feeling like I am in hell\u2019: My boss tears into me almost daily. He says I\u2019m worthless. What can I do?<\/p>\n \u2018I do not trust many people due to unfortunate life experiences\u2019: I\u2019m leaving all my estate to charity. Should I make a will or a trust?<\/p>\n I earn $210,000 and I\u2019m 59. My wife and I want to move to Hawaii. Is it too late to get a mortgage?<\/p>\n<\/p><\/div>\nDear First-Time,<\/h2>\n
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\n over the same period with dividends reinvested. I suggest this as a guidepost rather than a recommendation.<\/p>\n
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\n ; the LKCM Aquinas Catholic Equity Fund AQEIX; or Ave Maria, which offers mutual funds for growth AVEGX, value AVEMX and bonds<\/strong> AVEFX. You can read more here. Investing based on religious, moral or ethical principles doesn\u2019t guarantee a satisfactory return.<\/p>\n