Women UK talks to founder of Boring Money, Holly Mackay, about how women can get the financial future they dream of.
We all fantasise about the things we look forward to doing when we retire, whether it be travelling, moving to that dream house abroad or on the coast, becoming a painter or a writer, getting the five dogs you always wanted, or simply having time to sit still for a few hours! Whatever we have planned for our autumn years ultimately costs money, and the more money you have in the pot, the more fun you’ll have fulfilling those dreams. I think that many of us would be better off longer-term if we thought about the stock market.
A lot of women feel that stocks and shares are just for men in grey suits or those with a PhD in finance, but getting involved in investments can be much simpler than most people think! In fact, studies actually show that women typically make better investors than men, yet our survey revealed that a whopping 85 percent are disengaged with the stock market.
What advice would you give to first-time investors?
It doesn’t have to be expensive and it doesn’t have to be a boring long-winded process. You can get a stocks and shares ISA sorted in just 10 minutes online, with a monthly direct debit of £25. And there are simple guides and questionnaires to help so, honestly, it’s not just for economics enthusiasts. There are investment versions of ready-meals available where the boffins make one for you.
Many women feel that investing is just like gambling when in fact, over ten years, shares are likely to outperform cash savings by 90 percent. So are we shooting ourselves in the foot by not considering this?
What about pensions – where do we start?
Firstly, it really is sensible to start as early as you can. Don’t roll your eyes and think I’m not being practical – I know day-to- day life is expensive and busy. But you can get going online from just £25 a month. Our survey found that more than a third of British women (34 percent) do not have a pension arrangement – so if you don’t have one, you’re notalone, and it’s not too late to start! We won’t all get the full State Pension – currently £155.65 a week. If you have worked for less than 35 years, this typically gets reduced.
The great news is that new government initiatives will ensure that you are automatically enrolled onto a workplace pension by 2018, which by 2019 will value 8% of your earnings including contributions from you (4% of your salary), your employer and the Government. This means a 40-year- old today, earning an average wage of £30,000 a year and working to retirement age, can expect to have around £150 a week from this
pot of money available when she retires. If you’re eligible for the full state pension that will be boosted to just over £305 a week and £15,860 a year.
And on top of the state pension and your workplace pension, it’s absolutely worth investing that little extra with a private pension to top up that pot in order to achieve the rewarding retirement you’re hoping for.
There are many simple steps you can take to help to get started and you can set up a DIY online pension from just £1 a day and pay a fair value fee of around 1.3%. That’s £130 in charges each year for every £10,000 you save; far less than most people think.
Boring Money has launched Ladies Losing Out, a new campaign aiming to bridge the gap between men and women in terms of securing a better financial future. For more information and for tips from Holly, please click here.