Good tidings! I come with good news. We, as a nation, are living longer. Cue the party, ring the bells of every tower! Its official. Young people now are twice as likely to reach the age of 100 than our dearly loved Grandparents. In fact, statistically 1 in 10 men and 1 in 4 women will reach the big 1-0-0. So great! More birthday parties right? Yes, and that’s not all.
Firstly, the Queen’s telegram budget will need to be seriously upped.
Secondly, us long lifers need to budget for it. Reason behind this? We don’t see ourselves boarding the 7.39 to London Bridge at the age of 99, do you?
According to Blackrock, 25-34 year olds currently expect to fully retire at the age of 62. with 4/10 hoping to start taking it easy from the age of 57. For the average young person, to retire on a wage of £27,000 a year, you’d need your piggy bank to contain the mere sum of…. £540,000.
That’s okay! We’ll just sell our two up two down when the clock strikes retirement won’t we? Oh, wait. We’ve had some other cheery news this week on the UK Housing Market that has reinforced something we already knew – buying a house on your own is impossible. Well, bloody hard at least. I’m 26 and like most others I know, am beginning to realise that those house keys aren’t going to cut themselves! And it’s nowonder. In the 1980’s it would cost an average of £30,000 to buy your own home. Now, the average cost is a whopping £150,000.
This provides us with a rather nasty conundrum. In the days of 100% mortgages and banks that gave interest rates worth having, your home was your back-up plan. There in the bricks and mortar laid your cash, ready for you as and when you needed it. So now what?
Okay, so house is a no go. Let’s put some money away for a rainy day! Blackrock found that 70% of young people put their savings into Cash ISAs. The idea being your money is safe and will be where you left it. A Cash ISA is essentially a savings account that earns you tax free interest annually. Okay, sign me up! Let’s say we put away £500 a month into a Cash ISA that give us back 1.5% a year (I’ve been generous here – 1.3% is more likely your best bet). To get the pot of £540,000 that our older selves need to live comfortably it’ll take us….(drum roll please)….just over 57 years. Well! That’s our ‘taking it easy at 54’ plan out of the window. I can retire at the ripe old age of 83.
This brings us nicely onto today’s Breaking News on the record low interest rates. Good news if you need a loan! Bad news if you want to save. This new lower interest rate means the money you would have gained up until yesterday by keeping your money in a Savings Account has gone down – even more.
There has to be another way.
This is where investing comes in. For too long the world of investing has been treated as the big bad world of Fat Bankers and Rogues with a very much closed door to the everyday man. Currently, there are a wave of fresh new FinTechs wanting to change this perception and bring finance back to the people. Of course, with investing there are risks. It’s not a dead cert and it takes some thinking about. However, the potential gain over a long term period is a hell of a lot more than any Cash ISA. Investing in many ways should become a hobby. It takes a basic knowledge, some market monitoring and knowing when it’s time to buy or sell. It’s a much smarter way to make your money work for you.
Unfortunately, we’re of the generation that witnessed the 2008 crash and so have a distinct lack of confidence in this area. Here at Dabbl, we want to quash that fear and bring investing back to life. Investing’s only for rich people though isn’t it? On the contrary! It’s not how much you invest that is important, it’s how soon you start. Investing works best over a long term period, and so the sooner you start – the better.
The Telegraph conducted some research on how £1000 would have fared over a 30 year time period within the Stock Market between 1980 and 2010. They found that £1000 invested in 1981, would have become £85,000 if invested in Unilever, £37,000 if invested in BP and £73,000 if invested in Rio Tinto. They found that for the majority of the past century, anyone investing for a period of 30 years would have seen a reward of between 4 and 8% a year.
Cash ISA who?
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