Saw this comment on a monevator article

adpad

The article was about how the young are rich.

"If you can save £5,000 by age 25 and invest it for average returns in the stock market, you’ll have £225,000 in your retirement pot by the time you’re 65, regardless of what you save during the rest of your life."

Surely this is exaggerated? And surely it would take a lot of work to end up with results like that?

I currently have about £5000 that I would like to put away for when I'm older (like a pension), and I'm 25, so I am currently looking for ideas as to what I can do with it.

I'm thinking of potentially getting a financial adviser. Worth the money?

ColdIron

You could achieve it with 10% growth pa, seems unlikely

Archi_Bald

Also, £225,000 in 40 years time doesn't have the purchasing power of £225,000 today.

However, this shouldn't stop you from starting to invest for your older days. Keep a bit of cash in an emergency fund before you start locking money away for decades.

Drp8713

I just put it through HL's pension calculator and with 0.5% charges and a slightly ambitious 8% growth rate it was only suggesting a pot of £30k but i think the calc adjusts for inflation

I wonder if they had the decimal point in the wrong place.

it is not worth paying for an IFA to manage a £5k pot, in fact you might not find one who is interested. You should do a bit of reading and find a multi asset fund / diversified ETF / Global Investment Trust that suits your attitude to risk

Imnoexpert_2

Some thoughts - not to put you off pensions....

40 years ago petrol was 50p a gallon and I paid 10p for a pint.

My 30k pension pot gets me an annuity which pays only my golf club subs now.

My father died in his sixties and never collected a penny of pension.

The expensive holidays I had in my twenties I see now were some of the highlights of my life. Glad I didn't miss them by putting the money in a pension.

Your call.

Glen_Clark

adpad wrote: »

"If you can save £5,000 by age 25 and invest it for average returns in the stock market, you’ll have £225,000 in your retirement pot by the time you’re 65, regardless of what you save during the rest of your life."

If they had said you might have £225,000 (ignoring inflation) that would be fair enough.
But only someone who makes rash unsupported promises could say you will have.
So don't trust them with your money!!!

guymo

ColdIron wrote: »

You could achieve it with 10% growth pa, seems unlikely

The article says "average returns in the stock market", which one might imagine to mean historical annualised returns. The S&P 500 has returned very close to 10% for the last century, which would deliver what is claimed in the article. There isn't such long term data for UK markets as far as I know.

Lots of caveats of course, most important being that future circumstances are highly unlikely to look like the last century. Most commentators that I've read suggest much lower returns in the future, so definitely don't use the £225k figure in your planning!

kidmugsy

Imnoexpert wrote: »

40 years ago ... I paid 10p for a pint.

Two bob for a pint in '74? You were drinking cheaply. What was your secret?

ColdIron

Yes, I agree with the 50p for petrol and I recall 50p for 20 B&H but a bottle of Courage was 20p so I think a pint would be about 35p

Imnoexpert_2

For all those curious about the source of my cheap beer in 1974 I have to confess that this was the student union bar which ran regular '10p nights'. The cost is all I do remember about these evenings. You can imagine that these were not particularly pleasant or sophisticated events and in those days there were no compulsory 'drink aware' warnings.

:beer:

brendon

The value of money does (or has) roughly halve every 10 years. If we are talking about £225,000 in 40 years time, then we are really talking about £14,062.50 in today's money. Roughly speaking. (And there are people who think money in the mattress is safer than a bank!)