From the shallow end to diving in deep – how long and steady can win the investment race

I spoke to HL client and Financially Fearless community member, Alison R, about her investment journey. As we explored the past, she shared the secrets of her success that will help her to secure her future. Here’s her story.

It started with a SIPP 

“My investing journey started in my early twenties when Mum helped me open up a personal pension. She always instilled in me the importance of building financial independence and resilience.

Before I started, I thought there were only two types of investors. City traders, with their red braces and brick mobile phones shouting ”buy/sell”. Or older, wealthy people investing in steady ’blue chip' companies which paid dividends.

It wasn’t until my late twenties that I took an active interest in investing. Around the time I did start, the industry was very male focused. But the industry was also opening up. It wasn’t so dry and formal anymore and resources were more fun and accessible.”

Eyes on the future

”Because I’ve always been keen on maths and economics, it gave me a good foundation for understanding the basics. But I’ve always been focused on the future. It may sound cheesy but investing in myself then and now, is a gift to my future self.

I always pictured a happy and enjoyable retirement. And I knew that to get there, I needed to set aside regular amounts of money each month to invest.”

4 things I’d tell my younger self

“Start now. The sooner you start, the less you need to invest. It all comes back to compound growth really. When you reinvest your dividends, you start to earn interest on the interest you’ve made. I read an article which gave two case studies of women. They both invested the same amount, but because one woman started earlier, she had more years to allow her investments to grow.

Looking back now, it’s probably more powerful than I ever realised, and it really helped me to take the plunge.

Invest small but regularly. Nobody can predict exactly the best time to buy and sell. So, I found it difficult to know when to invest a large amount. I began investing a regular, smaller amount each month to average out any market ups and downs. I still stand by this rule. It also allowed me to start small, test the waters a bit and build my confidence.

Use funds to spread risk and diversify. I don’t want to watch my investments constantly, so I invest in a variety of funds or trackers, which are bundles of individual investments. This way, I spread risk and diversify my investments and I’m not reliant on one company doing well or badly.

Make use of tax relief. With a Self-Invested Personal Pension (SIPP), for example, the government can give you tax relief on your contributions if you meet the criteria. So, you’re actually investing more money than you put in yourself. Psychologically it gives you an extra safety buffer. If the market does dip a bit, then your funds could still be worth more than they would if the tax relief wasn’t there.”

Words of wisdom 

“With investing, the hardest part is starting. It can feel like jumping into the unknown.

I’m a swimmer, so I think of investing in the same way as learning to swim. With any new skill, you don’t just suddenly know how to do it. You start with the basics – in the shallows, and maybe with armbands. It’s not without its risks, but if you take the right precautions, the more your confidence grows.

The stock market may seem intangible and it may sometimes feel a bit like a dark art. But where your money goes is tangible. It goes into companies that produce everyday products.

It’s all based on real life and making that link really helped me start and continue to invest.

It’s a long road, and there will be some ups and downs along the way. Sometimes you just have to sit there and wait out any falls. Don’t panic. Don’t take your money out in a dip because you might miss the rebound. And if there is a fall, it doesn’t have to be a negative. Unit prices also drop, meaning you can get more for less and so may benefit more when the market recovers.

It can be painful, but you’ve got to just keep the faith.” 

Alison’s story is inspirational, but it shouldn’t be used as personal advice. Investments rise as well as fall in value, so you could get back less than you invest. It’s important that you understand whether it’s right for you. If you’re not sure, ask us about financial advice.

Remember, you usually won’t be able to access a pension until the age of 55 (rising to 57 in 2028). Tax rules can change, and the benefits depend on your individual circumstances.

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