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How to plan investing across the years – from your 20s to your 60s

Whether you're 20 or 60, investing could be a great way to boost your finances.
How to plan investing across the years – from your 20s to your 60s
Reading time: 7 mins

15 years ago, before Elizabeth Warren was a US Senator, she co-authored a book with her daughter Amelia. The 2006 book, titled “All Your Worth: Your Ultimate Lifetime Money Plan” was pretty special. It pioneered a simple but ground-breaking budgeting rule, which continues to be praised by experts 15 years later. The rule is known as “50 - 30 - 20”. 50% of your take-home income should go on what you need, 30% should go on what you want and 20% should be put aside. Easy to remember, stunning to witness.


How much should you plan to invest?
The 50 – 30 – 20 rule is designed for real life. To quote Pirates of the Caribbean’s Hector Barbossa, “the code is more what you’d call ‘guidelines’ than actual rules.” It gives you a good idea of how much to spend or save every month. And depending on your own situation and personal circumstances, the 50 – 30 – 20 rule could help you plan your financial future across the years.


Investing for ages 20 – 30
The roaring 20s. You’re young, adventurous and hungry to live your dreams.

If you have been making savings, we applaud you. Getting into good budgeting habits early on takes serious willpower. Don’t worry if you slip up from time to time, or have to dip into your savings pot. Life happens. Just keep going.

So, what are your plans? And where will the 50 – 30 – 20 rule get you? It’s sensible to have a chunk of money ready in a savings account for life emergencies. Experts recommend that around 3 months’ worth of living costs is the right level to aim for. After that, it’s not really doing a lot for you. With measly interest, ever-looming inflation (when you need more money over time to pay for the same goods or services) and potential currency depreciation (which is when your money is worth less compared to other currencies), savings accounts could be less about saving money and more about losing it these days. But there are a bunch of other options, including investing with a Stocks and Shares ISA. This could be a good way to maximise your money and make a dent in your financial future goals.

In your 20s, time is on your side. Investing now could be extremely profitable later.

The longer you leave your investments, the more money you could potentially make. Once it gets over 30 years, that’s when we’re really talking. If you want to get to be a better off pensioner, look into investment options while you are in your 20s. It could be a good route for you. Higher risks open the possibility of higher reward over the long term, so bear this in mind as you begin your plan.


Investing for ages 30 – 40
Isn’t it funny how something seems to click as you enter your early thirties? That chilled out approach starts to get replaced with a “hang on… what’s my pension contribution?”. While ‘future you’ may not be as plush as those savvy investors who began in their 20s, you are still in a really good position to start now. The good news is that you probably have a better salary than 10 years ago, and may have learnt a few good money habits along the way. You may also have some new little family members in your life, which may need a little financial planning.


How to start investing for your children with Junior ISAs
We are not kidding when we say that the earlier you start investing, the better. With a Junior ISA you can invest a maximum of £4,368 per tax year (subject to change) with the same significant tax breaks as a normal Stocks and Shares ISA.

This works out at £364 per month. If you invested this in a Junior ISA, by the time your child is 18 years old they could expect to have around £109,783[1].  Affording university could be hassle free.



Investing for ages 40 – 50
The fabulous forties! You know who you are, you know your values and easy embarrassment or celebrity fads are way behind you. With more of a focus on your loved ones and the question of retirement beginning to appear, you are in a great headspace.

With a shorter time horizon, possibly around 25 years until you will need your money, you may not have the same investment returns as the early birds. However, with a couple of decades of work behind you, you could have built up an enviable pension pot. You are also more likely to be able to put a little more money aside.


Consolidate your workplace pensions
Dribs and drabs of pension here and there are hard to keep track of. Everyone likes to be organized, but often life just gets in the way. We understand that. However, there is another more important reason to bring your pension pots together. Compounding Returns. What are compounding returns? Basically, it means the bigger your pot, the more profits you make. That makes your pot a little bigger, which makes your profits a little bigger. Again and again in a beautiful cycle until your pot is a lot bigger and with much bigger profits. Bingo! Hello better retirement prospects. It also means that investment managers can better ensure that your money is appropriately mixed across assets.

Pension consolidating may not be at the top of your fun list. But taking a few hours to bring everything together now and then, will save you stress and hopefully make you money for decades to come.  


Investing for ages 50 – 60
So you may be a little late to the investment party, but there are still plenty of opportunities to benefit from, and get your money working harder. For many people, your 50s is your new freedom. It’s the age to shed a tear dropping teenagers off to university and then begin to embrace a new life of self-fulfillment. You may have paid off your debts, and now have a little extra income which could have the word “investing?” written all over it. Good for you!

You are likely to have a clearer idea of what you want. Your goals also become more realistic. For many people, its less about owning a party boat in Ibiza and more about paying off a mortgage.


How risky should your investments be?
So let’s talk investing. You might be looking at withdrawing your money in 10 to 15 years or so. How you invest depends on your personal preferences. With this time frame, you could still invest in riskier investments.

If you are more concerned about preserving your wealth (rather than growing it) you may wish to focus more on less risky assets such as government bonds. This sort of investing means that you are unlikely to be raking in profits, but still projected to make more than if you just put it in a savings account. One example is our Cautious Stocks and Shares ISA.

A good middle ground could be a Confident Stocks and Shares ISA, which has a balance of riskier and less risky investments.


What is the impact of your money over a lifetime?
From your 20s to your 60s, your money goes around the world and back on a journey which is almost as crazy as yours! If you’re also inspired by teenage activist Greta Thunberg, you can also do something to help restore the world. Investing your money in an Ethical Stocks and Shares ISA could be a good way to help build a better society.  You have exactly the same risk options as a normal Stocks and Shares ISA (Cautious, Tentative, Confident, Ambitious and Adventurous). You also have the same expert team managing your money and making changes to your plan when needed. It’s simple to transfer your ISA and even simpler to set up a new one. A brighter and greener future for everyone could be just a few clicks away.


1: Source: Wealthify investment calculator

This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £85,291. If markets perform better, your return could be £140,192. Values correct as of 17/10/19.


The tax treatment depends on your individual circumstances and may be subject to change in the future.

Please remember the value of your investments can go down as well as up, and you could get back less than invested.


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