Is it too late to start investing and expecting a decent return?

savememoneyplease

Hi guys

I am 46 and have just lost a chunk of money in a divorce. I have a basic pension but i've only put into it for a couple of years and now have no savings.

While I build my money back up, is it worth putting some into investments as well? Just something simple like Vanguard? Or is that something you should start in your 20s?

eskbanker

If you're looking to build up funding for retirement then pensions are highly likely to be the most appropriate vehicle, but having an emergency fund is also recommended.  Difficult to be any more specific from what you've posted though....

dunstonh

 Just something simple like Vanguard?

Vanguard have simple options and complex options.  Just putting it with Vanguard doesn't mean it will be simple.

Or is that something you should start in your 20s?

You have the rest of your life ahead of you.  You have 22 years to build up a retirement fund.  Plenty of time.

400ixl

If you are looking to invest some for retirement then first place to look would be if your company pension is salary sacrifice and look at putting that investment there. You will then get the tax and NI benefit.

If not salary sacrifice then still look at what your company pension does offer (do they increase their contribution if you do for example), but look also at Sipp pensions from private providers as well.

Alongside that if you have no savings then you should be looking at building that side as well in the short term. Probably starting with as high an interest rate you can get on an easy access account. Once you have reached enough to cover your living costs for the period it would take for accessing money in a higher interest notice account then switch to investing into that.

Once you then have a balance of emergency funds you can look more again into what you contribute to your pension and other investments such as stocks and shares which can be aimed at growth but still accessible in an emergency.

Is somewhere to buy in the longer term plan as well, as obviously that also changes needs and strategies.

Bostonerimus1

You are thinking about saving for retirement earlier than many people. So you should definitely do all the sensible personal finance things ie;

do a budget and see where you can save some money, frugality lets you save and invest more;
pay off any high interest debt like credit cards;
save 6 months cash as an emergency fund;
put as much as you can into your company pension plan;
if you have some spare cash to invest use an ISA.

Vanguard is a good company to invest with, but there are many other platforms with more choice and many more funds to chose from. However, I advocate keeping things simple and you will be fine with Vanguard. I'd start by looking at one of the many good multi-asset funds available that give you a diverse set of investments in one fund wrapper....things like Vanguard's Life Strategy series.

MEM62

savememoneyplease said:

While I build my money back up, is it worth putting some into investments as well? Just something simple like Vanguard? Or is that something you should start in your 20s?

Just my opinion.

Clear debt
Build an emergency fund.  (The amount will be dependent on your circumstances and judgement)  
Pay into a pension  (There is not better vehicle for your retirement provision - fund it as generously as you can) 
Build some investments outside of your pension.  (Personally, most of mine is in Vanguard LS100)   

Hoenir

Investing for the longer term will generate you a better return than simply putting cash on deposit. Whether the return can be considered as decent is subjective. I wouldn't plan on it making you wealthy in retirement. Merely comfortable. As investment returns cannot be guaranteed. The "decent" return is the reward for the risk taken. Along the way it may well feel as if your are riding a rollercoaster. Plug away saving every month and let compounding perform the heavy lifting for you. 

NithyaH

Hoenir said:

Investing for the longer term will generate you a better return than simply putting cash on deposit. Whether the return can be considered as decent is subjective. I wouldn't plan on it making you wealthy in retirement. Merely comfortable. As investment returns cannot be guaranteed. The "decent" return is the reward for the risk taken. Along the way it may well feel as if your are riding a rollercoaster. Plug away saving every month and let compounding perform the heavy lifting for you. 

I think this is right.  We may not get the returns enjoyed over the last couple of decades.  Still, 2-5% above inflation over 30-odd years should be enough for most to be comfortable, if not wealthy.

Reg_Smeeton

You have the rest of your life ahead of you.  You have 22 years to build up a retirement fund.  Plenty of time.

I wish I’d had the common sense to have started investing 22 years ago, the ride would have been wild but the returns would have been fantastic, eventually. Go for it OP!

droopsnoot

I'm sure I read that investing is like planting trees - the best time was 100 years ago, but the next best time is now. Or something like that. If we're going to analyse that statement fully (as I'm sure someone will) strictly speaking the next best time would have been 99 years ago, then 98 and so on. But the point is that the sooner you start investing, the more chance you have of making gains.

Albermarle

NithyaH said:

Hoenir said:

Investing for the longer term will generate you a better return than simply putting cash on deposit. Whether the return can be considered as decent is subjective. I wouldn't plan on it making you wealthy in retirement. Merely comfortable. As investment returns cannot be guaranteed. The "decent" return is the reward for the risk taken. Along the way it may well feel as if your are riding a rollercoaster. Plug away saving every month and let compounding perform the heavy lifting for you. 

I think this is right.  We may not get the returns enjoyed over the last couple of decades.  Still, 2-5% above inflation over 30-odd years should be enough for most to be comfortable, if not wealthy.

The growth rate is less important than how much you actually put in.
A growth rate of 5% above inflation is not going to make you rich if you only add £50 a month.
Conversely you should be OK if you add a £1000 a month, you should have a nice big pot after 30 years even if the growth was a bit aneamic.