If I were to find myself with no savings at 40, there would be no time to lose. Nobody wants to find themselves in the same position at 50, or worse, 60. At 40, there’s still more than a quarter of a century before retirement comes knocking. That’s enough time to build a pot of savings and retire in comfort. I’d do it by investing in UK shares.
It’s very rare to have absolutely no savings at 40. An investor may already have some retirement wealth in company pensions. So I’d track down all my schemes and find out what i have. It could be a nice springboard, but I wouldn’t rest on my laurels after that. Everyone should ideally build up retirement savings under their own steam.
Some people repeatedly put off saving for retirement, kidding themselves that they can knuckle down later. By 40, this illusion should have faded.
Others are daunted by stock market volatility. Some end up with no savings at 40, decide it’s too late, and to give up altogether. No more excuses! Investing isn’t as complicated or scary as we think.
I can get exposure to UK shares quickly and cheaply, by setting up a Stocks and Shares ISA. Here’s a list of what we think are some of the best platforms on the market today. If I invest inside an ISA, all my returns will be free of tax for life.
No savings at 40? Act now
I can choose from hundreds of companies and thousands of investment funds, but if that sounds confusing, stay calm. There’s a simple way to get started. I could invest in a broad spread of UK shares by taking out a low-cost exchange traded fund (ETF). This will simply track the movement of a chosen market index, so I benefit from all the growth and dividends delivered by companies listed on the index.
I’d consider iShares Core FTSE 100 UCITS ETF which, as its name suggests, invests in all of the companies listed on the FTSE 100. Alternatively, the iShares UK Equity Index Fund spreads my money across medium-sized and smaller listed UK companies as well, by investing in the FTSE All-Share Index. HSBC FTSE 100 Index and HSBC FTSE All-Share Index do the same thing.
If I had no savings at 40, I’d change that today by taking out one of these FTSE trackers. Thereafter, I’d look to generate higher returns by investing in individual company stocks. That’s what we favour on the Fool, and the site is full of top tips to help newbie investors build a balanced portfolio of equities.
Today’s stock market is volatile, but equities always will be. Again, there’s a simple way to get round this. Invest for the long term. That means all the way to retirement and beyond. In the longer run, shares should beat almost every other investment. History shows us that. The first step is the hardest, but please don’t leave it any longer.