Money/investments/pensions etc. Help a numpty please

Mostly TLDR, but if you are risk adverse leave the trading well alone. Managed funds are only good while they’re good. You have to have the nouse to realise when it’s going wrong and bail. Too many people get caught out due to complacency. Trading, even if managed elsewhere needs close attention. Only need to look at Neil Woodford and big companies like Carillion to know how bad it can get.
Cash Isas pay approx 4%, savings accounts like Chase offer 3% plus rewards and 5% on roundups. Shop around, take advantage of opening offers. Don’t be afraid to move money within protected accounts.

and yes, they should teach this stuff in schools.

and don’t forget, trading can be akin to betting. Folk may well tell you they’re up 200% on a random AIM share, but rest assured there’ll be big losses elsewhere they won’t be so keen to divulge!

Yes spread your money around the teaser savings accounts, NatWest pays 5%, open accounts at building socs and keep moving your money around.  Just leave min bal so u get notified when rates are competitive again.

Sadly u have to make your money work, the best rates move around a lot.

The staff at local branches know me by name.....

Save half your age as % in a pension. If you are a 40% tax payer, this will always be the most tax efficient saving you can make. Choose low cost conservative funds (this is often run on an age-dependent basis). Put some in a low cost FTSE tracker like Nutmeg on a monthly basis. <span style="font-size: 0.8rem;">ISAs allow tax-free growth, but cash isn’t growing so you should not hold much. </span><span style="font-size: 0.8rem;">Buy another property for rental income and be a decent landlord.</span>

Avoid short-term speculation. Of for fun, buy shares in things you are impressed by. If you buy an apple phone and like it, buy some (one) share. Chances are others like the same and the company is going to grow (Tesla 🤣). But mostly, low cost tracker funds run by responsible companies.
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And don’t hold more than £80k in any savings account.
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IANAFA

63 pence sounds good, I lost £17k of pension in the last 2 years.

Vanguard LS 60. Is the answer for you. Low fees, low risk, worldwide exposure. Move it into even safer investment nearer retirement.

How old are you?

When do you want to retire?

Dp you want to buy your kids a house?

Why isn't your wife helping you with the technical jargon?

You aren’t far off of my profile, here’s what i do

a) I use the safest form of gambling & tax free rewards by putting our emergency/life savings money into Premium Bonds.

b) I get the best % ISA (tax free savings) I can and contribute lump sums to it if available.  You can’t add more than 20k per annum

c) I also opened an ISA with Lifestrategy Funds in Vanguard and regularly invest monthly amounts. They are cheap but long term auto investments in stocks and shares  - read about “pound share investing” and leave them alone.

d) I transferred 1 of 2 pensions to a Vanguard pension and pay a monthly amount into that as per c).  Mainly because it’s cheap.

i would say I work in Sales and live on my basic salary, so it’s earned commission that constitutes b) if available.

Variation on a theme here. I am also extremely gambling averse.

a) Emergency fund and family spending money in a joint current account that pays cashback on things like mortgage payments, phone bills, utilities and that sort of thing.

b) Vanguard stocks and shares ISA with a standing order to invest monthly in the LifeStrategy 60 fund. Set it and forget it. The time in the market adage is true, the trick is to not need it until such a time comes that, even if there is a temporary dip in the market at that point in time, you're still up overall.

c) You didn't ask about monthly spending money but it's a part of how we budget so I'll mention anyway. Discretionary spend is transferred to a Monzo account at the start of each month, and that's the budget.

d) Not quite half my age but contributing something like 15% into my pension.

How old am I - 48

When do I want to retire. Is this a trick question? ASAP!

Do I want to buy my kids a house - no kids.

Why isn't my wife helping me with the technical jargon. a) she says she's not a financial advisor; b) all this shit stresses me out no end, which stresses her out - so "too much responsibility".

Save half your age as % in a pension.

If this is a good rule of thumb (and I'm not saying it isn't) - why have I never heard it before? Pre or post tax? What actually counts as a "good" pension? The only pension "advice" I've had was when I set up my old work one in the late 90s where the question was "cautious, medium or risky?" and I obviously went cautious, because why wouldn't you?? I'm chucking "saving for retirement" cash into this as it builds up, but no idea if this is a good thing or not. Currently after 25 years the "pot" is low £90k, annuity annual payout ~£4k. Which is ******* pointless.

Not a higher rate tax payer.

And don’t hold more than £80k in any savings account.

Chance would be a fine thing. I don't think any of my £5k cash Isas have made it to £6k yet (at least 1 is between 15 & 20 years old). Based on that, I'm not sure what the point of them is?

Vanguard getting multiple mentions. What are they doing that others aren't? If they're doing it right, why isn't everyone else doing the same? What's the catch?

Premium Bonds - seems to be pot luck what return you get? My dads had some for decades. Never won a single thing. My other half has won several times in the last year. Why/how??

As for the chopping and changing ISAs accounts etc, is that really the best way? I know for a fact I'll struggle with it, as I just can't comprehend what I'm actually buying each time, and actually keeping my eye on the ball won't happen as the whole thing both bores and terrifies me.

63 pence sounds good, I lost £17k of pension in the last 2 years.

Truss cost me £14k during her lettuce long tenure.

It all sounds so familiar tbh.

If it's ticking over and not doing a del boy your after then nationwide do a 4% one year bond thingy you cannot touch it for that time but you probably won't anyway if your like me.

Other banks are doing the same type of accounts, managed funds need a keen eye on them and a bit of good luck.

One of my nutmeg stock and shares isas has only just recovered after the liz truss game of hide and seek

Vanguard getting multiple mentions. What are they doing that others aren’t? If they’re doing it right, why isn’t everyone else doing the same? What’s the catch?

Low fees and index funds (as opposed to actively managed funds) that don't rely on some overpaid fund manager picking the right stocks, are relatively diversified (so therefore supposedly lower risk) and pretty idiot proof to put money in. Plus their ownership structure if you believe their own marketing. I'm sure there are other reasons but those are mine.

I know for a fact I’ll struggle with it, as I just can’t comprehend what I’m actually buying each time, and actually keeping my eye on the ball won’t happen as the whole thing both bores and terrifies me

In which case you're best paying some money and speaking to a regulated IFA, rather than some random people on the internet.

some good advise above £80k max, shop around for interest rates, reduce income tax by paying more into a workplace pension.

Have you considered a SIP (self invested pension,, age 57 to withdraw, government top it up 25%, 65-80 days after money goes in )

I buy £150 of stocks / investment trusts a month and get £37.50 government top up, hence stock prices may go down but they need to fall 25% to make me out of pocket.. this may help solve your downside risk worries..

small amounts and often, for the win..

always best to speak to an expert financial advisor, although the trust he recommended me has tanked :0)

Im a wee bit older at 53, but aiming for a 58 to 60 retirement.  But i have stashed away alot.

Knowing your a div, and never going to earn a decent wage meant starting early, so at 18 starting 1 and another at 20 plus contract out of serps gets you  long term growth.

Vanguard low cost  low risk no frills investments.

You need a spread though because of the way pension can be drawn down its not the absolute con it used to be where you had to live to 96 to get your money back.

Don't want to be the first person to say it, but you need a  IFA. Or make your misses go, at least she will understand fiscal drift, rate of return, tax implications, bonds, guilts, yeilds, pe ratios, crystallisation

I am a complete amateur but to address a few of your points:

You say you're not gambling but I'm afraid you don't have a choice - you're playing whether you want to or not and all you're doing with any money that isn't working for you is reducing it's value through inflation.

Find out what your pension is doing and most importantly what the management fees are. A percent or two here or there makes a massive difference.

Fundsmith I believe offer 'actively managed' Investments which means they're looking to invest in companies they believe will do well and give a good return. The chap who runs the outfit has his own money on the line too so presumably believes in what he's doing.

Vanguard's life strategy funds referenced above are 'passive'. Their aim is to invest broadly so that their performance tracks the markets and risk is spread. They're unlikely to go wild but also unlikely to lose the farm. Markets trend upwards so the theory goes that so will the passive funds. They take very low fees and vanguard have become massive. I have ISAs with them in life strategy.

The saying goes that the best time to invest was 10 years ago and the second best time is now. You'll have to put your big boy pants on. 😉

There are alternatives to Vanguard lifestrategy funds that do exactly the same thing, but Vanguard did it first. It's probably easiest to just go with them if you do try a multi-asset fund.

(And if I were you. I would start drip feeding some money into one via a stocks and shares ISA)

This blog is a fantastic resource and - no offence to anyone here - is probably a better place to do some research:

Passive investing Archives - Monevator

As many have said Vanguard are a good option, although their Lifestrategy and Target Retirement funds haven’t performed that well in the last couple of years as they had quite a bit of reliance on bonds, which have bombed recently. That said my Lifestrategy 80% equity ISA is still up 11% or so in 3 years, which would be better than a fixed interest ISA over that time.
I changed recently to Interactive Investor which is a very low cost platform which has access to pretty much the whole investment market. You can actually pay less fees on a Vanguard pension through II provided it’s worth more than £80k as they have a fixed account fee of £9.99 per month rather than Vanguard which charges 0.2%, with a cap of £375 per year. So my pension fees with Vanguard direct would be £375 per year, with II it’s £119.88 per year.
On balance I think financial advisors have taken more from me than they have given, and it doesn’t take much research on find performance to choose a portfolio yourself. Since changing to II, my choice of funds has been a mix of HSBC, Vanguard, Fidelity, Legal and General, Schroder and Royal London world equity and US funds and so far this has significantly outperformed my prior Vanguard Target Retirement Fund.

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There are alternatives to Vanguard lifestrategy funds that do exactly the same thing, but Vanguard did it first. It’s probably easiest to jujst go with them if you do try a multi-asset fund.

(And if I were you. I would start drip feeding some money into one via a stocks and shares ISA)

This blog is a fantastic resource and – no offence to anyone here – is probably a better place to do some research:

Passive investing Archives – Monevator

This is exactly what I did, including reading that blog. In fact that's as far as I've ever got!

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We've just spoken to a financial advisor - I would recommend you do the same. They know how to make your money work harder.

When do I want to retire. Is this a trick question? ASAP?

I think you are unrealistic here.   You need to add it up.  With 25% tax into consideration, how much per annum do you need to live at the level of lifestyle you want until you're not alive any more?

Lets assume £20k per year.  Your 48 with an average life expectancy of 84.  If you retire today thats 36 years you need to fund, or about £1m in a pension.  Do you have that in pensions & savings?.     You need to work this out urgently, because that's your savings goal to work backward from.

Plus the £700 a week for the care home that doesn't stink of pee, and leaves you rotting in a chair for 9hrs a day in front of bargain in the attic on the idiot box.

20k a year on a £1m pension pot? Where are those numbers from as that looks pretty poor to me.

Premium Bonds – seems to be pot luck what return you get? My dads had some for decades. Never won a single thing. My other half has won several times in the last year. Why/how??

They are a lottery. You might win you might not. Average rate of return is 3.15% but you might get nothing.

But forgot to say you will not loose on Premium Bonds. You will always get back what you put in. (Obviously excluding the losses in inflation). So they are safe way to store up to 50k and have easy access. But they don’t necessarily make a good investment.

"According to figures from Brewin Dolphin, one of the UK’s leading wealth managers, a pension pot of £1m could provide a gross annual income of around £40,000 (4%) per year. Based on a projected growth rate of 5% a year, you would need to put aside £880 each month for 35 years to build up a pot of £1m for retirement."

However £1M sounds like you are nowhere near that. I'd put as much into your work pension as you can, since you get the employer contributions and you can make tax free withdrawals at the end.

2022 was a crap year for investments so it sounds like you actually didnt do too badly in terms of performance. Personally I'd suggest that your investments seem OK, tick the money in and forget it for a few years. You probably will not be looking to retire before 55yrs?.

Your 48 with an average life expectancy of 84.  If you retire today thats 36 years you need to fund

Not quite true - if average life expectancy is 84 then there's a 50% chance you'll be dead at 84. Put another way, there's a 50% chance you'll run out of money if you spend as if to use up your pot by 84. The exception to this, of course, is if you buy an annuity - which is the most risk-averse way of going about these things, although interest rates at the point in time you buy the annuity will determine the monthly pay from it for the rest of your life. So the risk portion there is all about being able to wait until annuity rates are high (you'd be a lot better off buying an annuity now than if you'd done so a couple of years ago, for example).

The one good thing about an annuity is that the company providing it *can* assume you'll die at 84, because they have a large enough pool of customers that they all die, on average, at 84.

I can't pretend to be well experienced or knowledgeable on investments.  I remember the useful advice, being risk adverse with your money is actually itself a risky proposition, (eg: low risk 0.5% high street ISA while we have inflation verses higher risk stocks/shares at -3% to +10% to closer match inflation but with a risk).  Personally I have my emergency fund in a fast access account (poor interest) and long term family savings split across two Index funds which I'm led to believe is the lower end of 'high risk' investing (Vanguard USA Index fund and EU minus UK fund).  Currently those funds are at 7% return for the last year, (varied between -2% to +8%).  I contribute a moderate amount to my pension (ie: only to make use of the income tax saving) and have it set to medium high risk.  I'm confident I can work part time in retirement to supplement my income, I know of others doing similar, eg: work the winters and take a break in the spring/summer.

As for loans, I have my mortgage on a really long term (30yrs) but the loan amount is a lot below the maximum a bank will stich people up for/loan. I have no other loans but at times I have taken out a loan for a car, where the interest payments were less than the maintenance cost of the heap it was replacing, (i.e: financially sensible).

Vanguard getting multiple mentions. What are they doing that others aren’t? If they’re doing it right, why isn’t everyone else doing the same? What’s the catch?

They have good marketing, recently won a 'Which' award, they offer lower fees and direct/better return approach than high street banks.  They are other similar providers but I don't believe the high street banks are the best place if you want higher returns.

how much per annum do you need to live at the level of lifestyle you want until you’re not alive any more?

Wage starts with a 4. Take tax/NI and call it £30k. Take the £6k a year I'm currently saving for retirement off (but not the "big ticket items" saving for stuff like cars etc), and so we're looking at low-mid 20s.

or about £1m in a pension.

I'd LMFAO if it wasn't so tragic. I've been at it 25 years and I have less than a tenth of that.

Realistically - I'd be looking at 60-65 to retire.

My company pension has always been 4%, because that's the max the company legally has to match. Maybe, naively, but I assumed the government had chosen 8% as a reasonable level of savings to provide a worthwhile pension?? If I put more into it, the co. won't match is my understanding.

There's so many words in the posts ^^ that I can read and are familiar, but my brain just slides over whilst starting to panick. It really is a blind spot.

As for IFAs. I simply Do. Not. Trust. Them. No one is truly independent and they're all doing it to make a living (this latter I don't have a problem with). But ultimately, they're just guessing. No one in their right mind could have predicted Trussonomics happening and plan for it; 5 years ago very few would have guessed Ukraine would happen and plan for it. So they're not guessing with my money. Gambling again - and I simply cannot cope with the idea. Surely, SURELY there has to be a way that isn't about sticking it all on black??

Surely, SURELY there has to be a way that isn’t about sticking it all on black??

If you have the funds and can handle the hassle, you buy property.  I spoke with a few IFA's a couple years ago and I really didn't like them, but they gave me a few ideas and along side some research, I decided on the index fund route.

I obviously went cautious, because why wouldn’t you??

Given what you say about yourself, I can see that would be obvious. You ask why not, and the downside of caution is low growth, as you've found out. Based on the way share-based investments have performed over the years, the value can go up and down but over 5 - 10 years it goes up. That's why pension advisers suggest lower risk investments as you get nearer to retirement - if the market dips you hang on until it goes up again, but if you're retiring next year that's difficult. History isn't an infallible guide to the future, so there's no guarantee that will always happen, but if the world gets to the point where it doesn't, the value of your savings is probably the least of your worries.

If you want absolutely no risk, you put your money in a bank, and you pick a bank with the best possible reputation, but they're selling security, not income, so they don't need to offer much interest.

Surely, SURELY there has to be a way that isn’t about sticking it all on black??

As mentioned above check out Vanguard.  Instead of finding the needle in the haystack you buy the haystack so it's very much a set it and forget it strategy

This isn't rocket science if you put in some research as suggested by @Finbar above.

…so I’ve no understanding of how to change this. I’m utterly averse to any form of financial risk. The phrase “the value of your investments may fall as well as rise” strikes panic into me.

Time to put your big boy pants on

Gambling again – and I simply cannot cope with the idea. Surely, SURELY there has to be a way that isn’t about sticking it all on black??

There's no miracle safe investments guaranteeing a huge rate of return being kept secret from you.

If you don't like any of the ideas posted in this thread - and I reckon most sensible stuff is covered - you might as well stick your cash under the mattress.

I watch the 'meaningful money' YouTube channel every so often.

I'm in a similar position to you though, no real definitive plan other than saving as much as possible and hoping for a sizeable premium bonds win!

Realistically – I’d be looking at 60-65 to retire.

You keep using that word but I'd encourage you to be doing some of the maths people are suggesting and ask if it really is realistic.   Because at that age there is no state Pension coming from the government, you are entirely reliant on what you have saved / grown and it will be taxed also, so you'll only have about 75% available to spend.

FWIW I wanted to retire at 60 on £30k a year, but I recently found that I'd misjudged it and I have only £23k a year available.   That gap might happen if the stock market or my house increases a lot of value over the next 9 years.  FYI, I have about a £250k gap to plug.

And if they’re so sure of themselves, why not offer a guaranteed return for simpletons like me? I give them £5k for 15 years, they give me £10k back. If they only make £9k – their problem. If they make £12k, they keep the extra. Self insurance if you like.

They do, and have done for ever - and now they're back in favour, an annuity.

My company pension has always been 4%, because that’s the max the company legally has to match. Maybe, naively, but I assumed the government had chosen 8% as a reasonable level of savings to provide a worthwhile pension?? If I put more into it, the co. won’t match is my understanding.

IMO it was picked as a percentage where the vast majority of folk wouldn't opt out and business would accept.  4% from the company, 3% from you, 1% from the taxman.  Worthwhile?  Nope and I reckon any folk with only an Auto-Enrolment Pension & State Pensionwill be applying for pension benefits, rent assistance etc.

If you're looking at having 'only' £100k in your pot and current live on £20k pa then you'll find it hard to retire before your State Pension kicks in.

find an IFA - do what he says.

or carry on doing what you're doing and watch your money fall victim to inflation

I’m utterly averse to any form of financial risk. The phrase “the value of your investments may fall as well as rise” strikes panic into me.

Then you are going to lose money.  Simple as that.  Unless you are prepared to take some risk then all you can do is leave money in the bank which will devalue over time (due to inflation)

Anything involving stocks and shares seems no different to going to a casino and sticking my life savings on black, or rolling a dice*

There is risk there for sure, however there are ways to mitigate that risk so that it is a lot less like a casino.  Before commiting to anything I would recommend learning a bit about finance (education rather than specific advice) and good place to start might be a podcast like "Money Clinic".  there is a huge back catalog to listen to.

In terms of saving half one's age as pension,. Does that amount include what your employer contributes too? If it does and you're able to pay over the half age amount - is it a no brainer? Thanks

Just to clarify with some basic maths, a £1m pension pot would provide £40,000 per year income with NO LOSS OF CAPITAL based on 4% growth - so you could in theory live forever on 40k per year and still have your £1m left.

Not a realistic aspiration for most people.

mrsheen pay as much as you can as early as you can. Advice most of us would give ourselves if we did it all again!

@mrsheen

Yes. I'm 48 and pay in 15% company pays in 10% so total 25% (this is DC scheme).

I lost £17k of pension in the last 2 years.

£400k here, just from SMT.....

based on 4% growth

Not many are getting that and its not for certain as we know, especially when inflation is taken into account.  Most peoples pensions will have contracted over the last few years.  And for clarity my maths was woking backwards from having £1m cash to spend, no growth etc.

As for vanguard and why their global trackers are good; with their trackers say you pay in £100 a month - vanguard that those 10,000 pennies and spread them across every single company listed on every stock exchange in the world.
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Some companies will do crap - carrilion or RBS in 2008 etc but that’s offset by also investing in the likes of Tesla when they were starting out before their value went stratospheric. It’s as low risk as possible to be with investing as you don’t have to pick your horse in the race. Over the last handful of year, their returns have averaged over 10% I think!   </span>

As for research, there is a brilliant podcast - meaningful money. In this Pete, an IFA (you’re not paying him so he’s not working in his interests), talks in depth about all aspects of money management for normal adults. The podcasts are broken down into seasons and each season looking at a different aspect of adulting in quite a lot of understandable depth. Well worth a listen & he’s not trying to sell you anything. Listen to a few over some dog walks and let it form the questions in your head to research.

If you lost 400k then you have too much money.

As said before, there are products that guarantee a return. Annuities and savings accounts, if you want more return you need to take risk (otherwise you are effectively paying someone to shoulder the risk).

Investments aren’t a straight gamble. On the roulette wheel there is no way for the pot to get bigger, but investments allow companies to do things (like build factories, develop new products) that should make more money in the long run. They won’t always pan out, but they do on average (otherwise we’d still be in mud huts as we couldn’t develop advanced economies). So, there is an element of gambling but over the long term the dice is loaded in your favour.

technicalities aside, as you probably know this already, you need to either grow up and make some decisions against your instincts or try and find someone that you can help you get to the bottom of the issues so you can.

Aside from a rainy day fund, or savings for big ticket purchases,

Prioritise pension contributions via payroll for maximum tax / ni breaks, just so long as you can cope with your money being locked up until 55 (shortly 57)

If you want to retire earlier than 55/57 you need to think about how to bridge the gap with savings  outside of pensions.

Pension in a fund(s) or trackers of moderate risk with low costs. Move to less risk as pension draws closer.

<span style="font-size: 0.8rem;">Teleport back in time and start doing all that sooner. It's 'time in the market' that counts.</span>

Save half your age as % in a pension.

If this is a good rule of thumb (and I’m not saying it isn’t) – why have I never heard it before?

No, its just some number plucked out of thin air as a soundbite for stupid people to latch onto. Like 5 fruit and veg a day. There's no reasoning behind the number 5, or the age/2×% except that it's bound to be more than the unhealthy/ financially illiterate/ uninterested/ stretched are currently doing. So it gives them a target that is at least in the right direction.

If you lost 400k then you have too much money.

Er no.

If you lost 400k then you had too much money.

FTFY 😉

dont be too upset by the willy waving going on in this thread .  You do not need £1m to retire on . Ask Ton , or TJ who both get by on less than £300 a week.

£400   a week would be prefectly adequate ,ok so life not going to be a succession of exotic holidays but hey , your retired . Time to sit back and do some gardening , bit of golf , go fishing , long walks up big hills. And you only need £400 a week to state pension kicks in , then you only need £150 a week. But in fact you  may need less , as we age you cannot do as much so dont need so much money.  You might have to manage your expectaions and live within your means but its perfectly doable.

You will need a slush fund too. Cash at hand for emergency reasons . £10k roughly .

BUT . You have to do something . Now . This month . Your combined income should allow 4 figure monthly investment . Its all a gamble, Fund managers just guess , for every gain there is a loss somewhere . There are no crystal balls ,or Deloreans or Tardis that actualy work so its all gambling in one form or another .

You are lucky enough to recognise your predicament before its too late to do anything about it , and earn enough to be able to do something about it . Unlike the millions of renters caught in the poverty trap who exist payday to payday and save nothing , who gleefully buy the latest Iphone and put their fingers in their ears when anyone talks pensions / investments.

With interest rates creeping up Buy2Let  is becoming less attractive  and you really need a sizable deposit and time to manage it yourself for maximum return .

Im lucky , I started saving into pension at a young age. If I can keep working and not drawdown I shall . My targets are 4  companies ( Vanguard , Equitable, Scottish Mutual , Scottish widows ) split between 10 sectors with sizable amounts  , then 3 x ' small pot pensions at sub £9k to take in full L&G , Standard Life and Nest . Which are all work pensions which I can trickle into when my other 4 get near to / over  target.

You need to decide/plan what you want to do financially and at what age then go and talk to someone who can help you achieve your goals. The more risk you take the greater the potential rewards AND losses. There will be ups and downs. My pension fund is in highish risk and has delivered on average 13% pa over the last 10yrs. BUT last year it lost 15%, lost 8% during first 6month of covid etc. You need to decide if you are comfortable with seeing these losses, and if you are not (as you say you are not) then the returns may be lower. Interestingly I got my pension statement today and I was surprised to see even the low risk funds offered by the pension provider lost just as much last year, so low risk can still lead to losses.

for me, I aim to go part time at 55 when I can access a small, old works pension which will carry me to 60+ when I can access my main pension pot. I will retire once this hits €X. It will give me a lump sum of €Y that will cover any big bills and the rest will be invested in a drawdown pension. I reckon it should last me about 25yrs+ before it runs out. I don’t want to be 90+ and sitting on a wedge of cash (I will have the house if I need more money) as they say ‘no point being the richest corpse in the graveyard’. If there are economic downturns then I can top up my drawdown from the lump sum, if I have a good year, I can take an extra holiday or something (some years will be better than others). That’s the plan anyway. I have also observed (my parents and grand parents) go through 3 stages in retirement. 1st stage (10yrs) is expensive, fancy holidays, doing up house, going out and about lots. The second phase (10yrs) is not as expensive as you slow down more, a few more health issues etc, and the third stage is cheaper again as you do very little of great expense when you are 90. So it’s worth baring in mind that you may not need as much money at 85 as you do at 65 when doing your sums.

You are lucky enough to recognise your predicament before its too late to do anything about it , and earn enough to be able to do something about it . Unlike the millions of renters caught in the poverty trap who exist payday to payday and save nothing , who gleefully buy the latest Iphone and put their fingers in their ears when anyone talks pensions / investments.

Absolutely this.

Huge swathes of the population simply do not have the ability to (1) actually think about what they want out of life, (2) understand the options available to them which <span style="text-decoration: underline;">could </span>attain that, and then (3) to <span style="text-decoration: underline;">decide</span> what to do, including (4) consideration of the potential negative consequences of that decision.

That, op, is what you have to face into.

<span style="font-size: 0.8rem;">Many many people just drift along without a plan or a clue, being parted from their money by iPhones on klarna. It isn't any surprise at all that they do not get what they may have wanted (if they had bothered to  think about it at all).</span>

Find an IFA – do what he says.

i did that. He recommended investing in property in Prague. Turned out to be a scam and I lost the lot. Now I mainly use Vanguard LS as recommended above. A helpful YouTube channel is James Shack https://youtube.com/@JamesShack

TLDR OP. shorter would have been more helpful.

Save half your age as % in a pension

is a good heuristic. Better is to put as much as you can afford into your pensions up to the annual and lifetime limits. Such payments come out of your gross income. They are tax free!

if you fall into the 60% tax valley then consider going over the annual allowance as the penalty tax rate is lower. The lifetime allowance is a question best discussed with a professional advisor

Check the free information from folks like chase de Vere, hargreaves lansdown, and vanguard. Money saving expert too.

seek professional financial advice.

investment of any kind carries risk. But over the long term those tax savings and general growth are a pretty powerful force that will help your retirement security.

Consider getting a copy of Alvin Hall’s Your money or your life.

he had a bbc TV series back in the day.  A lot of it dwelled on avoiding spending and being sensible. My memory of the book is that it addressed many common money concerns/interests. It probably included pensions.

Folks have mentioned Vanguard. Certainly a reasonable low cost pension investment option. But take financial advice before considering any changes to your pension planning.

I think you should do one of two things;

(1) - Seek professional help from an independent advisor. Ideally based on a recommendation. Use them to do a review of your position and a forecast of where you are and where you want to go. Finally, take action, don't let procrastination take hold.

(2) - Educate yourself using something like the Meaningful Money Podcast/TV series. Personally I would start with his Millennial Money series (don't let the title put you off if you are not a Millennial, he explains the Millennial bit at the start). Set yourself goals after each bit that is relevant to you/your life and once again take action, don't let procrastination take hold.

What you shouldn't do is nothing. This can be because you don't want to get started, or because you hear lots of conflicting opinions. This is where sticking to a single source of info can be good and why I recommend the Meaningful Money podcast as he has been doing to podcast for over 10 years and is still publishing fresh stuff today, so the chances are he will have covered all the topics you need.

For the record, I did (1) when I lost my job/career. It cost me 3% of my 'pot', but it settled my head. I then did (2) and realised I could have done the first bit myself.

Not read every reply but came on here to recommend a decent IFA though also noticed that you don’t trust any of them.

On paper I’m in a reasonably similar position, 48, no kids, no debt except a mortgage and save what I can. I too am useless at trying to figure out how best to invest so have now got an IFA doing it for me, using what I’m happy with relative to my risk appetite. But he also ensures me and my other half maximise our tax free savings allowances and takes the pain away of doing the thinking. Granted the last 12 months haven’t been great but he’s given very healthy returns in prior years (17% IIRC in one year) so in the long run it will/should be fine.

I think you’re local to Sheffield OP so happy to share details if you change your mind on IFA’s.

From personal experience I’d say ‘IFA’s’ are rarely ever really independent. Better these days since direct commission has been mage illegal but in the past the system was totally geared towards them recommending you whatever earned them the most money. I have had terrible products advised me from IFA’s in the past, including a pension from Lincoln National with such high fund charges that when I stopped paying into it and made the mistake of not immediately transferring it somewhere else, in a matter of about 3 years converted itself to zero value by growing less than the charges.
A decent one May well give you good tax advice that you could easily work out yourself, and is then going to make no more than an educated guess about investments, which you could also work out yourself.
I’d really recommend Interactive Investor - you can create an account with them without investing anything and then look at some different funds and easily see performance over short medium and long term as compared to the overall market that they are in. Doesn’t take a huge amount of research to see which investments perform consistently well, plus there are other resources like Morningstar and This is Money that can give more insight.

"In terms of saving half one’s age as pension,. Does that amount include what your employer contributes too? If it does and you’re able to pay over the half age amount – is it a no brainer? Thanks"

It does include employer contributions, but paying more in early is not a bad thing. There is a reason why I drive a 12 year old car. I put as much as possible into AVCs on top of a final salary pension. My plan was to take the 25% tax free lump sum as a means of paying down the mortgage. This is a popular strategy until the government remove the tax free lump sum (it's been mooted recently).

On the subject of necessary income, don't forget that if you retire early and have made the appropriate NI contributions (I have one year to go), then you'll get a rise with the £9k state pension when you qualify. More if you have a spouse wit their contributions.

Vanguard LS 60. Is the answer for you

Down 8% since Sept. 21. Hopefully it will come back.

If you’re going LifeStrategy the 80% Equity has consistently performed much better. In fact if you look at performance, the 100% equity version looks like the best one.

As suggested by one of my ex IFA friends, I looked at this YouTube channel - it's more on the investment side than savings as such, but I found it very very useful.   Pensioncraft.

https://www.youtube.com/channel/UC9OIwUcx-Uss7xj7s1P5XGw

Other than some of the above, I'm not sure what else to suggest -- no silver bullet that's for sure.
Start saving early - with some cash in the bank then risks can be managed.

I have seen various IFAs but not felt particularly comfortable with any - their confidence in the spiel is disconcerting. 3 years ago we saw one, and it was all "market tumbles are a very rare event".   Um, er no ..

just had a tax update from HL, hadn't realised cap gains and dividend allowances were dropping so much,

Article | Hargreaves Lansdown (hl.co.uk)

Dividend => allowance being cut from £2k to £1k from April 2023, then £500 from April 2024

Capital Gains Tax (CGT) => annual exemption dropping from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024

Time for me to sell stock and shift into my tax efficient Stock & Shares ISA before April.

LifeStrategy the 80% Equity has consistently performed much better. In fact if you look at performance, the 100% equity version looks like the best one.

Lifestrategy 80% Equity down 2.5% Nov '21 to now.

Lifestrategy 100% Equity down 1.4% Dec '21 to now. (Has been much lower).

The money would have been better off under the bed (per OP's point!)

Lifestrategy 80% Equity down 2.5% Nov ’21 to now.

Too short a timescale for drawing any meaningful comparison re pensions where the money will be invested (or stuck under the bed) for decades.

Eg my first pension contribution started in my 20s and there is a 3% change I'll live to 100....

The money would have been better off under the bed (per OP’s point!

Well done. 🙄 Now go look at returns from 5 years, or start.

Edit: furthermore if it drops a bit while I'm still contributing it's fine because it means I get more for my money.

Lifestrategy 100% Equity down 1.4% Dec ’21 to now. (Has been much lower).

The money would have been better off under the bed (per OP’s point!)

So you chose December '21 as this was the highest the fund had ever been to make your point?  Let's choose another date in 2021, say January '21.  Up 19% since then. March '20?  Up 64%.

We all know what the 60/80/100 stands for in the Lifestrategy funds, right? Proportion of equities versus bonds.

The higher the proportion of bonds, tradfi wisdom will tell you, the less volatile the fund will be - so less downside, but less upside too.

However, for a good few years, bonds have been - and continue to be - a tremendously unfashionable investment. Layer on the rising interest rates since 2021 and bond prices have fallen further. Plus Lifestrategy funds are overweight the UK, and we're still paying the extra moron premium on UK govt bonds.

These last few posts precisely underline my problem.

"Vanguard is safe". "Vanguard is down"

"LifeStrategy the 80% Equity has consistently performed much better. In fact if you look at performance, the 100% equity version looks like the best one."  "Lifestrategy 80% Equity down 2.5% Nov ’21 to now. Lifestrategy 100% Equity down 1.4% Dec ’21 to now. (Has been much lower)."

"Dividend => allowance being cut from £2k to £1k from April 2023, then £500 from April 2024.Capital Gains Tax (CGT) => annual exemption dropping from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024Time for me to sell stock and shift into my tax efficient Stock & Shares ISA before April."

What the hell does that ^^mean. I can read the words, but it might as well be greek for all my ability to comprehend it..

No one has a *ing clue. Yet everyone seems to be happy just to guess. How the actual bleeding * do you actually manage to do that??? Every single penny I own, I have WORKED for. Countless hours, days, weeks, months of stress, sometimes actual life-threatening levels of hazard, which I choose to deal with to get the money. I cannot cope with having done all that just to lose it by the roll of a dice. Yet if I don't risk it, apparently I'm still ****ed. How and why did anybody ever let it all get like this??

I happened to start a Vanguard Lifestrategy 60/80 combo (now all in 80) in December 2019, so it didn’t have very long growing before the turbulent last 2 years or so. It is currently up just over 10% overall - yes it was a lot higher than this at one point but overall given the high level of turbulence in both equities and bonds over this period, I don’t think this is at all bad really.

Yet everyone seems to be happy just to guess.

Its not a guess, its volatility caused by current events yet an ever increasing upward slope over the long term,  Case in hand, my average unit price for me buying Lifestrategy 100 is £2.81.   The current unit price is £3,01.    Ive made money, 20p a unit of which I hold thousands.

Roll back 12 months I made a loss, because the unit price fell, the sensible thing was to buy some more on the cheap, then wait until they go back uo as above.   However, predicting this is very hard which is why people talk about "time in the market" rather than "timing the market" as a generic strategy.   Put money in, wait, it grows.

Being a passive Investor as above is significantly less like gambling than you seem to think op. Being an active investor might be considered more like gambling because you're trying to pick the winners while they win and get out before they start losing.

Short answer to your situation, smash as much money on to pensions as you can afford to do without until you retire because you'll get an immediate 20% boost at least through tax saving then put the rest in to a life strategy isa from vanguard.

@kryton57 and @Del just entirely summed up my investment strategy and thoughts on all this.

Yes some people do try to beat the market, but they are fools. On average, nobody beats the market.

<span style="font-size: 0.8rem;">Play the long game and aim to track the market. make full use of tax breaks. Hope the market continues to go up as per long term historic trends.</span>

Keep a sensible amount of cash just incase it does all go tits up or you need to spend it shortish term on something big

That's about it.

that's a strategy to get as much money in my pension as soon as possible with a reasonable amount of risk. if you want something different then you might need to do something else

As mentioned, put what you can into a pension to get the 20% tax boost (or more if you are higher rate tax payer). And if you are risk adverse then look at it this way, you would need to loose more than 20% ito be in an actual loss. A bit simplistic but may help with the mindset of losing money when investing.

Economics 101 .

Pension companies buy shares in other companies . Lots of shares across lots of companies, worldwide.

The value of those shares is dictated by many things . Company zxc sells a share in its business to me , for £1 . I buy it because I guess in the future it will generate profits which will filter down to me , and other people will want to buy a tiny percentage of  zxc as they would like some of those profits as well. This generates demand , which drives up the price of zxc on the stock exchange . Now zxc has invented a battery , which lasts twice as long as any other battery , so the entire world wants that battery . The company stand to make millions of proft , and as I own  a tiny percentage of zxc , I will get some of that profit. If you want in, you can buy my share , but as its now as a very profitable company that share is going to cost you £10.

Pension companie look to buy shares in the stock market that they think will generate income from profits ( this is known as a dividend ) and a rising share price as a result ( this is growth ). As a new small company zxc has alot of growth potential.

Pension companies spend millions of ££ on shares , can get a seat on the board as they own a hefty % so get a say in the running of the co.

Other things that will effect share price ,weather , who is in control , if another company want to buy zxc so continualy  buy shares , government position and legislation . It is complex. Ok hope that is understandable,

So by buying shares in say 100 companies you hope you have picked wisely and the majority of them will perform well , and make a go up in value and generate a dividend.

The top share loading in each fund is available online . EG Japan might be Toyota, Fujitsu heavy, Nikon , Nissan , NTT ,Sony.  .

The fund manager / team at say Vanguard  will look at the market constantly and adjust their position ( holding shares ) accordingly . This also can be done by computer .

Then there are tracker funds . They simply mimic a share index . Lets pick the Footsie, the London stock exchange top 100 ( most valuable ) companies . That fund will  buy shares pro  rata in those companies and will never outperform the market but will track its progress. So if  all the companies shares drop after an event ( BRexshit - Lettuce Truss ) then your tracker fud will fall also . If the market rallies then your tracker fund will go up in value . The trick in trading shares in big volume is buying and selling at the right time .

The governemt encourage you to buy a PPP  ( Personal Pension Plan ) with a tax incentive . They give the tax you have paid by earning the money back  to the pension company who will  invest it wisely for you as well. This is how the rich get richer, but lets not go there . Instant 20% gain , for every £100 you give eg. scottish widows  the government will give Scotttish widows £20  as well to buy shares in zxc.

To add to what @singletrackmind said:

Pensions don't just have to be invested in stocks and shares, but most are, because this is what has proven over time to generate the best returns.

Active funds are generally more expensive than trackers because they require active management (trades, people working). These costs will eat into your growth and can make a massive difference over the long term (due to compounding)

Furthermore, how do you know which active fund will do well or not? You don't. It's a guess. Past performance is not any in indicator of future performance.

Also, overall, as per my point above ON AVERAGE nobody beats the market. Sure, some active funds will do better and some will do worse. But how do you pick which is which?

In my view, I would rather be Mr average in passive trackers, than gamble on some active funds which could do better, or could do worse, and also have to pay higher fees in the process, which is bound to push your overall chances of success into 'below average'

You can invest in active, or passive funds via your tax efficient pension. Also individual stocks, cash, whatever.

So you chose December ’21 as this was the highest the fund had ever been to make your point?

No, that was when I bought into it which is why I know the figures. Currently 1.4% down on this one, but worse on other funds. It's a fact that I would be thousands richer today if I'd stuffed the money under the bed (however, I didn't know that at the time!).

Now go look at returns from 5 years, or start.

Yes, the long term trend was upwards, and I (very much) hope that the trend recovers and that I can move into profit. (But you know that thing about past performance being no guarantee, etc... e.g. if Putin decides to nuke Ukraine, then I think the trend will be firmly downwards!)

From the opening post, I took that the OP didn't want to see the numerical value of his money decreasing. If it goes into some sort of equity / bonds / etc. based fund (Vanguard or otherwise), the numbers will, indeed go up and down - more down than up recently, and hence is not the panacea for his concerns that some appear to be presenting it as.

ETA: It only makes sense if one has faith that the upward trends will continue.

These last few posts precisely underline my problem.

“Vanguard is safe”. “Vanguard is down”

“LifeStrategy the 80% Equity has consistently performed much better. In fact if you look at performance, the 100% equity version looks like the best one.”  “Lifestrategy 80% Equity down 2.5% Nov ’21 to now. Lifestrategy 100% Equity down 1.4% Dec ’21 to now. (Has been much lower).”

<span style="font-size: 0.8rem;"> It was explained above. Someone chose a particularly unfavourable period to look at the numbers, so they could make a point. If you choose virtually any other time periods it looks different.  If you look at the weather details for 26 June last year you will see that Glasgow was far hotter than Madrid and Istanbul had more rain than Bergen.  This doesn't in the slightest impact the fact that if you want a sunny summer holiday you're better off in Spain than Glesga, likewise don't go to stanbul for a kayaking holiday.  If you're worried about the fact that Bergen isn't always wetter then fine, stay in Leicestershire, but I can guarantee you'll be worse off in the long run.</span>

“Dividend => allowance being cut from £2k to £1k from April 2023, then £500 from April 2024.Capital Gains Tax (CGT) => annual exemption dropping from £12,300 to £6,000 from April 2023, and then to £3,000 from April 2024Time for me to sell stock and shift into my tax efficient Stock & Shares ISA before April.”

What the hell does that ^^mean. I can read the words, but it might as well be greek for all my ability to comprehend it..

Sorry  I refuse to believe that you don't know what a dividend is...are you really saying that is the case?

Ok, CGT. Fair enough. You get taxed on the increase in value of certain assets when you sell them. The threshold at which you start to become liable for this tax is dropping lots ( hurray, finally a decent move by the tories( though not really as £11k isn’t going to affect the big hitters, but its a start]) whatsisname is joking that he will need to sell some of his assets now, whilst the threshold is still high.

No one has a ****ing clue.

Er no. Some people do.

WHAt THE **** IS WITH THIS NEW TEXT EDITOR?

WHO DECIDED TO MOVE from ONE THAT MAINLY WORKED  TO ONE THAT IS ****ING SHIT. ARE YOU PEOPLE INSANE?