Ryan Windsor Column: Advice in saving, investments and retirement
- Credit: Eastern Daily Press © 2015
Savings, pensions and retirement, these are pretty complex and stressful matters, but they will often define the difference between living and surviving in the long-term.
Your financial management will ultimately define the quality of your life, and even more so in later years.
Many people go through life living in the moment, not thinking about the future and how they will cope, and end up struggling financially.
They tend to forget or ignore that most of us will have a reduced income due to retiring, while their expenditure for children and grandchildren might still be increasing. Without a financial retirement strategy, costs will mount up fast.
So how do we come to an effective financial strategy?
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First there are small ‘rules’ one can live by.
One good practise is to put 10pc of what you earn in a savings account on payday. Saving in this way is not only easier but also a lot more efficient that only putting ‘whatever is left’ in your ISA at the end of the month.
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Another tip is to reduce the amount you spend on buy-out drinks and food throughout the week, referred to as the ‘coffee factor’. People on average buy three coffees per working day, 15 per working week, and at the average price of £3 each that amounts to £2,160 per year and £21,600 over 10 years.
This example can be extended to buying lunch out, buying alcoholic drinks out and so on.
Now I am not suggesting you give up on all of these all the time, but rather that it is worth considering how you can reduce your ‘coffee factor’ expenses as it could help you see some significant savings.
Once you have your finances in hand, and are able to save consistently, there are more substantial retirement strategies to think of.
My favourite one, not surprisingly, is property.
I am currently doing a lot of consultancy with landlords who are either starting off, or further growing their portfolio, and most of them do so with the incentive to build security for themselves and their family, most importantly after working-age.
Investing in property is arguably the best strategy since there is a growing demand continuously. By providing quality houses where people actually feel at home, you ensure very low void periods. Add in the regular rent and ‘better than the banks’-return, with the possibility of capital growth, and it definitely proves to be an attractive option indeed.
Of course I do live a bit. But keep in mind none of us are spared from the ageing process, and we all will retire at some point in the future.
I encourage everyone to practise at least a ‘coffee factor’ opposing strategy to start those savings coming in.
Think of other strategies, do consider other investments, seek the right professional advice and guidance for your situation, and let your savings work harder for you than they would in a bank.
Times columnist and entrepreneur Ryan Windsor is the director of Windsor Properties.
To ask him a question about the material discussed email firstname.lastname@example.org