Grow your money for the future

If you’re saving for the longer term and you’ve already got a savings pot, consider investing.

Over time, equities have almost always outperformed cash. Of course, with this comes added risk, and your attitude to risk will dictate what areas you are happy to invest in. Ask yourself how much money (if any) you’re happy to lose, how long you can do without the money, and if you already have sufficient savings in case of an emergency.

“If you can’t afford to see a fall in the value of your savings, or if you don’t want to experience the rollercoaster of volatile markets, you should stick to deposit-based savings,” warns Perkins.

To find out what investment would suit you best, seek advice from a professional adviser. A well-diversified portfolio, investing in different kinds of assets, is also important as this spreads the risk.

Perkins says one of the most crucial factors when investing in the stockmarkets is timing: “Ideally, you want to go in at the bottom of a cycle and come out at the top, but of course there’s no way of knowing for certain which stage we are at.”

The best way to take advantage of the ups and downs of the market is by drip-feeding money into your chosen investments. This means when the market is down, you get more for your money and you don’t stand to miss out on any great opportunities.

For example, George Brown has £10,000 to invest. He buys 3,076 shares at 65p per share in April; 3,390 shares at 59p per share in May; 3,333 shares at 60p in June; 2,941 shares at 68p per share in July; and 3,508 shares at 57p per share in August. This gives him a total of 16,248 shares. After five years the share price has gone up to 83p, which means that his capital is now worth £13,485.

In contrast, Fred Smith invests £10,000 in January 2010 and buys 15,400 shares at 65p a share. In five years’ time, his capital is worth £12,782 – nearly 5.5% less than that of George Brown.

Watch Moneywise TV's guide to investing for the first time

Planning ahead

The sooner you start saving for your retirement, the less you will have to put into your pension on a monthly basis. So if you don’t start paying into your pension until you’re 40, you’ll need to put aside a third of your salary every month until you’re 65 to ensure a comfortable retirement.

Most of us are guilty of grossly underestimating how much we need to live on and how we will fund ourselves in retirement. Research from AXA reveals that 64% of us plan to use the state pension to support our retirement, but given that in 2009-2010 the maximum you’ll get each week is £95.25, this will be insufficient on its own.

Relying on your home to fund your pension is also overly optimistic, as property values can go down as well as up.

Find out more about starting and growing a pension

If you haven’t already, take advantage of your employer’s pension scheme. Companies often make additional contributions to their workers’ pensions and employees also have the option to pay additional contributions and bump up their pension pots.

Personal pensions and self-invested personal pensions are other individual options to think about. But whatever pension products you plump for, you should review their performance regularly. And bear in mind that although pensions are incredibly tax-efficient, there are other ways to save for your retirement, such as ISAs.

Make sure you write a will. And if you already have one, you should review it. According to, 28 million Britons are currently without a will, and of those who do have one, a third haven’t updated it in five years.

“Writing a will doesn’t have to be bewildering,” says Karen Barrett, chief executive of “It costs as little as £100 for legal advice on how to draw one up and independent financial advice on how to allocate your assets.”

Read Moneywise's top tips on writing a will

Lastly, don’t forget to plan for the people you will leave behind. Inheritance tax is due on any estate valued above the current threshold of £325,000.

Taxpayers have to pay 40% of the amount above £325,000 in tax. However, married couples can carry over their late spouse’s band, doubling the overall threshold.


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Great post, you have offered some great tips. thank you