investing in 2023

dannybbb

ive always been suspicious of investing but realise that its really the only way to retain value in your savings

ive made enquiries in the past but the fees always seem really high and the returns low. With interest rates rising do you think its best to stick with good savings rates?

im self employed,  48 with no pension but significant cash savings. All i really wanted to do was preserve the value of my hard saved cash - even before runaway inflation it seemed difficult to make 3 or 4 % after fees without riskier investments.

i know  its not the best  way to save for retirement  but at my age i worry i wont be able to have enough time in the market, also that things have been pretty volitile in recent years.

i just wondered if anyone more financially savvy than myself has any opinions about where to put your money in 2023?

masonic

The fees have not been much of a barrier for at least a decade. You'd be looking at a small fraction of a percent per year for popular low-cost investment options, and anything from zero to half a percent for a provider charge. You can of course pay more, but there is a wealth of evidence suggesting the vast majority of those that do don't get a better outcome.

Investing wouldn't be appropriate unless you can commit the money for more than a decade in most cases, but the longer the better. If you were planning to retire at say 60 or above, then staying fully in cash would generally be considered unwise, especially if inflation remains 'sticky' as it seems to be currently.

As for what to invest in, it is your choice and not something to be dictated by others on the internet (nobody here can give financial advice). You could either do some background reading and choose your own investment options, or you could opt for one of the providers that will choose an appropriate portfolio for you based on questions it asks you about your risk tolerance if you don't want the responsibility (see for example https://www.moneysavingexpert.com/savings/stocks-shares-isas/#doitforme ).

It would seem sensible to prioritise investing into a pension, since you don't have one, and it won't be all that long before you'd be able to access a personal pension.

DiamondLil

For what it's worth, I started investing when interest rates were, to the best of my memory, around 13% (yes, I'm very old). I started off drip feeding by standing order £25.00 per month. Today, I'm very glad that I did. I never earned enough to have a decent pension, despite joining the schemes.

However, my drip feeding went into a PEP as soon as these plans were introduced (forerunner of the ISA) and to this day I live on tax free income.

In my opinion, and I'm no expert, 48 is young enough to have many years of investing and growth.

dannybbb

thanks for this. I wouldnt expect to be told what to do but its helpful to discuss with. those more financially minded

i could put some in a pension for sure, i think the last time i tried i was pressurised , saying they only dealt with 200k investments and then pressurised for a quick decision which reinforced my feeling  that it wasnt the right way forward, also  looked more like 3% fees all told with similar projected returns

i dont intend to retire fully but in the next year will be scaling back so i guess i have left it too late other than  to put some in a pension.

Albermarle

dannybbb said:

thanks for this. I wouldnt expect to be told what to do but its helpful to discuss with. those more financially minded

i could put some in a pension for sure, i think the last time i tried i was pressurised , saying they only dealt with 200k investments and then pressurised for a quick decision which reinforced my feeling  that it wasnt the right way forward, also  looked more like 3% fees all told with similar projected returns

i dont intend to retire fully but in the next year will be scaling back so i guess i have left it too late other than  to put some in a pension.

It sounds like you were talking to some kind of wealth management company.

It is very easy just to open your own pension on the internet and start adding to it in small amounts, although of course ideally not too small !
The trickier bit is picking what to invest in within the pension, but some providers make it relatively easy.
To get started you might want to look at these.
Personal Pension | Vanguard UK Investor (vanguardinvestor.co.uk)
Open a Private Pension | Boring Money 'Best Buy Pension' | Nutmeg - Nutmeg
Personal Pension | Private Pension | Legal & General (legalandgeneral.com)

They all explain the basics of pensions on their websites.

The advantage of saving in a pension is that you will get tax relief on the contributions, up to certain limits.

Nebulous2

A pension doesn't have to be invested, it can be kept in cash, and the big advantage is the tax relief. That gets better with higher tax rates.... 

Beddie

Open a pension, Vanguard are pretty cheap:

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

Start straight away with a regular monthly amount, that way your fears about dropping in a large sum might be allayed.

You can put in as much as your annual net earnings, as you probably already know, up to £60k per year.

If you really are not one for investing, you can choose their money market fund and get about 4%. But, at your age, a global tracker or a Lifestrategy fund would probably be better, long term. You have got a good few years to go!

Your money is at risk and will go up and down in value, so you need to be prepared for that. If you don't want that, the solution is easy - cash ISAs and savings accounts, with fixed rates for much of it.

Good luck with whatever you decide to do.

Albermarle

You can put in as much as your annual net gross earnings, as you probably already know, up to £60k per year

OP- for clarity -For example 

If you earn £40K in this tax year, you can add £32K and tax relief of £8K will be added.

It does not matter how much tax you actually pay, the tax relief is based on your gross pay.

Prism

dannybbb said:

i know  its not the best  way to save for retirement  but at my age i worry i wont be able to have enough time in the market, also that things have been pretty volitile in recent years.

I am a little older than you and planning for another 40 years of investing so I wouldn't say you are too old nor would have enough time in the market. Investing doesn't stop when you hit a certain age and retire - it might change a little but carries on through retirement.

Sarahspangles

Investment is a bit overwhelming at first as there is so much new jargon.

I've got an AJ Bell SIPP but I assume other providers are similar.  When I find a fund I'm interested in I can input the amount I am considering investing and it will tell me the fees for purchase, what the fund management charges will be and what the platform will charge for looking after it all for me. For the first two £10,000 chunks I invested the total costs were 0.65% and 1.1%. There are other platforms with even lower fees and although they offer a smaller choice of funds maybe that's less overwhelming at first.

I definitely felt better once I'd got the first couple of chunks invested in funds. Then could see in the 'analysis' tab that what I'd ended up with by having those funds in my portfolio gave me a little stake in a lot of companies that I knew had been around for a long time, and knew quite a lot about.  Plus a few that are newer and presumably a bit more risky! And then as it's a SIPP the taxman adds £2000 for every £8000 I pay in and combining those I can buy a few more.

You can play What If? using Trustnet, by 'pretending' you bought chunks of trusts on some date in the past and then seeing what would have happened over 1, 3, 5, and 10 years.  The answer is typically that they'd have risen and fallen but still beaten inflation. So long as you can be objective about it it's interesting rather than scary.

dannybbb

@sarahspangles thanks for that, did you take any advice or just self manage. Given my financial greenness I worry about picking funds.

my income is likely to take a significant drop next year so im probably best place to get a pension sorted this tax year to take advantage of any relief.