If you have no savings at 50, you can’t afford to waste more time. Retirement is closer than you think, and you don’t have long to get ready for it.
At Motley Fool, we believe the best way for most people to build long-term wealth is by investing in the FTSE 100. In our view, the index offers an unbeatable combination of capital growth from rising share prices, and income from dividends.
You’ll need to invest more than £5k to build enough for retirement at age 50, of course. When you’ve more money, you should look to invest that in a mix of FTSE 100 shares in order to continue to build up your retirement pot.
No savings at 50? Don’t panic
After investing your initial £5k, or whatever sum, you could either pay in more lump sums, or set up a regular monthly investment. Whichever option you choose, it’s vital you get the maximum amount of money growing in the market for the longest possible time.
The stock market is a great way to build retirement wealth, but it isn’t a get-rich-quick scheme. It takes time to work its magic. Most of the money you’ll make from investing in shares will come from compounding your returns over the years. In other words, taking all those dividends and reinvesting them back into your portfolio, to buy more stock.
That’s why we encourage people to invest their money in the market whenever they have funds to spare. Don’t try to time the perfect entry point, because you’ll never find it. There’s no time to lose. If you have no savings at 50, you don’t want to be in the same position at 51, 52, 53…
I’d buy cheap FTSE 100 shares today
Many will be worried about starting to invest during the current market. Share prices have been volatile since Covid-19 struck, and that may continue. The economic shock is intense, and the recovery could be slow.
This shouldn’t put you off from investing in FTSE 100 shares. At Motley Fool, we encourage readers to be active at times like these. That’s because all the stocks we know and love are suddenly that much cheaper to buy. The index is still trading 20% lower than it was in mid-January.
By the time you retire, this year’s pandemic will hopefully be a bad memory. But, with a bit of good fortune, the stocks you buy today will have grown to make retirement something to enjoy after all.
When investing in stocks and shares, you need to spread risk. So don’t put your entire £5k into one company. Spread the money around. That way, if one stock underperforms, the others may compensate by rising strongly.
Accept that, in the shorter run, they may fall in value. Keep your nerve and hold on for the long run. You’ll get there.