HL client study - ‘Why I finally started investing at 39’
HL client Mrs Fryer explains her journey into the investing world and what helped get her on the right track.
One of HL’s expert financial advisers, Samantha Gibson, recently spoke with HL client Mrs Fryer about what led her to make the most of her finances. Mrs Fryer is 39, a practice nurse for the NHS and lives in the North of England.
This article isn’t personal advice. If you're not sure what course of action is right for you then seek financial advice.
Weathering the investment storms
Mrs Fryer was worried she hadn’t invested early enough, and about what that would mean for her future.
This isn’t uncommon. Samantha said she has found that lots of her clients, particularly women, put off investing in the stock market as they weren’t educated on saving and investing at a younger age.
Mrs Fryer said one of the main reasons she didn’t feel confident stepping into the investing world was the worry her investments “would be worth less than the money invested”.
Samantha agrees lots of new clients say it’s the “fear of the unknown” that stops them from taking charge and investing in the first place and “there’s often a lot of noise around investing which can lead to misconceptions”.
It’s important to remember that unlike cash, investments go up and down in value so investors can get back less than they put in originally.
Here are four ways to help boost your confidence if you’re looking to start your investment journey:
- Have an emergency savings pot. The pandemic served as a stark reminder to keep some money in cash that you can easily access for emergencies. The amount people should hold in cash will be different for all of us. But in general, it’s a good idea to hold around 3-6 months’ worth of essential expenditure as cash to cover emergencies. If you’re retired, then you should hold more – we think 1-3 years’ essential expenditure is sensible.
- Start small. With HL, you can start investing with as little as a £100 lump sum or start a direct debit from £25 a month.
- Think long term. Mrs Fryer said “investing is long term. I’m not so worried about the next year or two, especially with the effects of Covid”. We know staying invested improves your chance of investing success. We think you should hold your investments for at least 5-10 years.
- Don’t put all your eggs in one basket. Diversification is an essential tool for any investor. Spreading your money smartly between different investment types, sectors and geographies helps reduce the risks of investing. One bad performer shouldn’t be the end of the world as your other investments should help pick up the slack.
It’s better to start early
Retirement might seem like a long way off for you, but ignoring your pension can do more harm than good. The sooner you start saving for your retirement, the greater the benefits you might see when it comes to accessing your pension. Even the smaller amounts can make a big difference over time, thanks to the wonders of compounding.
Please remember a pension is designed to help you save for retirement so you can usually only access the money from age 55 (rising to 57 in 2028).
In fact, Mrs Fryer wishes someone had told her to think about retirement sooner.
Retirement was something Mrs Fryer had on her mind. Even though she’s only 39, she said “I worry my husband and I might not have enough money to live a comfortable lifestyle at retirement age”. Mrs Fryer believes she’s in a good position as she’s been contributing to her workplace pension “for a while”, but her husband hasn’t.
What about the State Pension?
Although the State Pension can offer an income in later life, there are some caveats.
To qualify for the full amount of the new State Pension, you’ll need at least 35 qualifying years on your National Insurance record. This can prove a difficult task for anyone who chooses to take a career break for things like childcare.
And, to receive the minimum amount you’ll need at least 10 qualifying years.
The good news is you might be able to fill any gaps in your National Insurance record by making voluntary contributions. This can only normally be done for gaps from the last six years.
Yet, even with a full National Insurance record, the current amount you can expect from the State Pension is just £179.60 a week. That doesn’t quite sound like the world cruises we often hear people talk about taking in their retirement. Planning as early as possible can be one of the most fruitful ways to earn the retirement you want and deserve.
Mrs Fryer said one of the main reasons she was planning ahead for her retirement was after watching her mum retire on very little as “she hadn’t planned properly”. Mrs Fryer went on to say ''I intend to take financial advice when I have built up a greater pot of money''. She believes that if her mum “had received financial advice, she probably wouldn’t have made the mistakes she did and would’ve been in a better financial position now”.
Does Mrs Fryer’s story resonate with you? Are you worried about your financial future?
If the answer’s yes, financial advice could really benefit you.
Advice could be the answer
Samantha said it’s common to see clients putting off taking financial advice until they really need help – things like divorce settlements or losing a spouse who always sorted the finances. And although this is perfectly normal, taking a proactive approach and planning ahead can help put you in the best position to deal with any unexpected events.
Speaking to one of our highly experienced, professional financial advisers like Samantha can help you feel more comfortable by knowing you’re in safe hands.
Our financial advice doesn’t have a one-size-fits-all approach. Our advisers have experience working with a variety of clients with different personal circumstances. They pride themselves on only recommending advice if it will benefit you and your finances in the long term.
If you’d like to find out more information about our services, the first step would be to speak to our advisory helpdesk. They won’t be able to provide you with personal advice, but they’ll be able to take the first steps to decide if financial advice could be right for you.
They’ll talk to you about the cost of advice and answer any questions you might have. If you’re happy to proceed, they’ll put you in touch with a financial adviser who will contact you for an initial consultation within two working days.