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NISAs allow you to invest in stocks
and shares without incurring income
tax on your returns and come with the
additional flexibility that allows access
to the funds at any time.
In our example, Stuart’s employer
decides to match his pension
contributions up to 5% of his salary.
In addition to his £3,500 per year,
just over £291 per month, Stuart’s
employer pitches in with another £291
a month and State tax relief will top
that up by another £73 to total £655
per month.
Not only has Stuart beaten his own
goal of saving £580 per month but
he’s done so at a cost of just £291
to himself. In this scenario, our
hypothetical forty-something is
squireling away 11% of his salary into
an investment pot that should see him
comfortably achieve the lifestyle in
retirement that he covets.
BY STARTING EARLY AND PLANNING
WELL THE DIY INVESTORS CAN
ACHIEVE THE LIFESTYLE IN
RETIREMENT THEY WANT WITHOUT
LIVING IN PENURY ALONG THE WAY.
Inevitably things will change over time,
but by adopting a pragmatic approach
to setting objectives, evaluating
progress and adapting accordingly,
Stuart should find himself sitting
pretty on his seventieth.
His 11% sits within the 10-15% range
that is accepted as a reasonable
percentage of annual income to devote
to pension provision and by starting
at aged forty he has a good chance of
achieving his objectives.
DIY Investor Magazine will return to
the topic of retirement planning often
and will invite readers to share their
own experiences – its mantra will
be that in the context of retirement
planning ‘more and earlier’ is rarely an
inferior strategy to ‘less and later’.
