Saving v Investing for older people

jimjames

RG2015 said:

Investments are for the longer term, 5 years plus, but at what age does this become too great a risk?

Health and life expectancy are clearly issues here, but have advancing years affected your financial decisions?

There is also the element that many investments pay far greater income than savings accounts and have very long track records of doing so even though nothing is guaranteed. If you are prepared to lock your money up in a 5 year fixed term savings account without looking at it then it probably matters little whether the capital value of an investment fluctuates either. Both assume you have sufficient accessible cash for day to day spending.

Daliah

Albermarle said:

labp04 said:

Rollinghome said:

Thanks for the thread. . . . .  The best they can do is to try to calculate their risk versus reward and make a plan that's appropriate for them.

And can I add something about whilst being confident that their rainy-day money is adequate (2-3 years income seems to be a regularly recommended amount) and that they only invest money they "can afford to lose".  

This 'afford to lose' doesn't not really make any sense in relation to mainstream investing for the longer term,
It is better to say only invest money that you will not need for a few years, or for many years if it is a pension,  and stick to mainstream diversified investments .

Only if you are investing in very high risk areas, like individual company shares, bitcoin etc does the 'afford to lose' really come into play.

under etc, we should name the likes of Woodford and other at times fashionable investment icons, and/or their proponents

Daliah

The one new, and genuinely unexpected factor for me is the galloping inflation we now have entered. I now find it hard to sensibly budget for my day-to-day needs. Will my gas & electricity costs double / treble / quadruple by the end of next year? Will the prices stay on that plateau or ever come down again? What about the resulting increases in food, transport, clothing, building materials (my house still wants to be maintained even if it no longer has a mortgage), insurances, window cleaner, car wash, white goods repair / replacement, hairdresser, physio, gym and other membership fees? All this before I even think about the non-essentials such as holidays and nail extensions. How much do I now need to budget for the cash I need to pay for the essentials? I have so far not been too fazed by all of those costs, but I think I have entered fuel poverty status, or am about to, so cash needed for day to day living has become massively more important than it used to be.

Millyonare

Think some older folks this winter will have to sell assets and de-retire to pay the bills. For example, sell a car, empty an ISA pot, go back to work part-time for John Lewis, etc. Selling, not investing.

Apodemus

Millyonare said:

Think some older folks this winter will have to sell assets and de-retire to pay the bills. For example, sell a car, empty an ISA pot, go back to work part-time for John Lewis, etc. Selling, not investing.

Yep!  It's going to play havoc in the FIRE community! 

RG2015

Daliah said:

The one new, and genuinely unexpected factor for me is the galloping inflation we now have entered. I now find it hard to sensibly budget for my day-to-day needs. Will my gas & electricity costs double / treble / quadruple by the end of next year? Will the prices stay on that plateau or ever come down again? What about the resulting increases in food, transport, clothing, building materials (my house still wants to be maintained even if it no longer has a mortgage), insurances, window cleaner, car wash, white goods repair / replacement, hairdresser, physio, gym and other membership fees? All this before I even think about the non-essentials such as holidays and nail extensions. How much do I now need to budget for the cash I need to pay for the essentials? I have so far not been too fazed by all of those costs, but I think I have entered fuel poverty status, or am about to, so cash needed for day to day living has become massively more important than it used to be.

Dictionary definition rather than government one.

fuel poverty

noun

BRITISH

1. the condition of being unable to afford to keep one's home adequately heated.

   "around 1.4 to 2 million households in England are in fuel poverty"
   
   

Daliah

I should have said, I use fuel poverty to mean having to (not choosing to) spend more than 10% of my net income on domestic fuel.

Norman_Castle

Is there a good time to start investing? Obviously no one knows the future but are there patterns?

RG2015

Daliah said:

I should have said, I use fuel poverty to mean having to (not choosing to) spend more than 10% of my net income on domestic fuel.

Okay, thanks.

I guess my beef is more with the modern use of the term poverty in its various guises (fuel, child, household) as a quantitative measure. Even the dictionary definition I used is a qualified one (fuel poverty).

And before anyone responds with justification for this, I do understand the intention behind the adaptation of the term to measure societal needs.

For me the term poverty conjures up childhood memories of charity appeals with images of emaciated people in far off countries.

I also understand the dichotomy of investment concerns versus cost of living fears, but this is an investment board.

redpete

RG2015 said:

Health and life expectancy are clearly issues here, but have advancing years affected your financial decisions?

Writing as one of the 'older people' (mid-60s in my case), some of the new considerations for financial decisions include:

• Imminent retirement means replacing salary with income from savings, investments, pensions (DB, DC and state).  Important to consider all of those sources together rather than, for example, concentrating solely on pension provision.
• Investment timescales won't change much for some time.  I'm planning on a 20yr+ timeframe so plenty of opportunity for market drops and recoveries.
• Taking LTA into account when managing pension draw-down and income.
• Tax-efficient planning taking into account interest, income and capital gains.
• At what stage might I lose interest and/or capacity to manage our own affairs, and so when might I engage an IFA for active management.