How To Act Your (Investor) Age

Whilst we are all aware of the age differences between the generations, we might not have thought about how our age bears any relation to our investments. However, the number of years you have left to invest can help you make the right decisions about how much and where to put your money.

20s and 30s

The financial habits you form during these years will determine whether you have a secure retirement, or will have to work later in life. Investing at an early age, rather than keeping all your spare cash in a bank or building society account that pays low rates of interest, can be a good long-term strategy. Assuming greater risk can in return offer the prospect of a bigger return. You have plenty of time ahead of you to ride out the inevitable peaks and troughs in the stock market and to recoup any temporary losses you might make.

However, if one of your financial aims is saving money for a short-term project like a house deposit, to reach this goal you may want to opt for less risky investments.

40s and 50s

These are likely to be your peak earnings years, and it makes sense to build up your pension and investments, and make sure you have plans in place for your retirement. These can also be the years when there are greater calls on your cash, such as raising a family or taking care of elderly relatives. It’s important not to overlook your own needs whilst looking after others, and having a regular financial review can ensure you keep your investments on track. Remember, you only have so many working years left to provide for your future.

60s and Over

Not so long ago, many people would stop work and stop investing in their 60s. Today, more people than ever are working on past what would once have been considered normal retirement age. So, you may want to keep investing, gradually focusing more on income-producing stocks and shares as you wind down to retirement. Plus, you may
be more concerned than you were in your younger days about protecting your wealth from the vagaries of the stock market. In short, you may want to adopt a lower risk profile.

Whatever your age, getting good advice can help you make the right investment choices for your future.

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation, are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. The value of investments can go down as well as up and you may not get back the full amount you invested.

The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.

What’s A University Degree Worth?

Each year, more and more students and their families think seriously about the financial outlay involved in taking a degree course. With several universities outlining their plans to increase their tuition fees to £9,250 a year, further education can be a considerable financial burden.

Data from the Department for Education shows that graduates aged 21 to 30 earn on average £6,000 more than nongraduates, with the median pay in 2016 for graduates being £25,000 and for non-graduates £19,000.

A recent survey1 by a major insurer suggests that going to university could provide a substantial boost to your pension fund by the time you reach retirement. An average degree could add £43,800 to your pension fund, whilst a first-class degree could boost your pot by £57,000. A post-graduate degree could push the figure to £72,000.

The figures assume that the individual is enrolled into a workplace scheme at age 22, and they and their employer make minimum contributions until they reach 68.

So, while it may take a typical graduate at least 11 years to pay off their university debt, the benefits can accrue in later life.

1 Aviva, 2017