How best to save for my retirement?

by assilem23 31 August 2010 |

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I am 31 years old. For the last decade I have been poor (£2500 p.a. income) as I have been a student, so N.I. contributions have been small. I am employed in a shop that doesn't offer a pension plan. I earn at present £8840 p.a., despite having a BA, MA and soon a PhD (I can't find a decent job, but keep trying trying trying, but that's a whole other problem) and so have opened a Stakeholder Pension with Scottish Widow. I admit I did it without much research - I just know I need to think about my future, as my father didn't and only receives £60.00ish a week. Like him I haven't much money to play around with, but am paying £125 into the pot each month (starting Oct 2010), but a few glances around this site has confused me. Should I be putting money into other mediums as well? ISAs? My knowledge of finance is shoddy. I pay little rent (55 p.w.), have no car, don't take holidays (my last holiday was a year ago, and only because the flight was free; the time before that was in 2002) and have no expensive hobbies so I do have more money than some in similar situations. What would be my best choices? I just know I need to save for my future in the best possible way.

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JoeEasedale posted
No one can tell you what is best. The crystal ball has not been invented yet. What is sure is that only one investment can be worst. So if you invest in several different ways, you hedge your bets against the one only you invested in being worst.
Pensions, tax efficient but clost a lot in fees and you cannot get the money back. From 2012 you will have to be enrollinto your employers scheme, which they will have to start. This might form one part of your strategy.
ISA's.
Cash isa. Tax free - rates won't stay low forever, a good place for another part.
Stocks and shares isa. A low cost tracker fund maybe as another part, keeps capital gfains tax free.
Gold. The ultimate safe haven. I would rec physical gold held in british coin, which means sovereigns or britannias, as these are not only vat free but are also cgt free as well.
Thats 5 different types of investment. Pension, cash isa, stock isa,gold.
You decide on the proportion to assign to each and buy say once a year when you judge the price is right, where you can't invest on the drip per month.
Read up about investing as well. Building up a fund can give you serious amounts of money that you will want to be competent to look after as it grows.
One tip. If you get a phone call out of the blue from anyone you never heard of, offering to sell you a marvellous investment - run as fast as you can, they are out to con you.
Posted on 31 August 2010 | Love 1 love Report
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MikeGG1 posted
A pension scheme is a very inflexible form of investment. At the moment you can't take anything out of one until you are 55 and it will probably be 60 before you get there.
It is better just to set up an investment fund for now and switch to a Pension scheme in maybe 15 - 20 years time.
Before then you could have several lifestyle changes. Perhaps the investment fund might be able to provide you with a house deposit if that becomes appropriate. That wouldn't be possible with a Pension scheme.
With the size of fund you are inveting in, I wouldn't recommend any commodity investments (including gold) For the time being that is. Eventually that could be about 10% of the fund.
Mike
Posted on 01 September 2010 | Love 0 loves Report
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petematthew posted
Mike has identified the biggest downside of pensions: they are locked up until age 55, and you may well have some life changes before that, as he says. They are they only investment where you get free money from the government in the form of tax relief, so that is worth bearing in mind. Stakeholder pensions do not 'cost a lot in fees' so don't dismiss them for that reason.
I would have a pension and an ISA and split your money between the two. Given your age you can take a reasonably aggressive view with the underlying investment.
HTH
Pete
http://meaningfulmoney.tv
Posted on 02 September 2010 | Love 0 loves Report

How best to save for my retirement?

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