Boring Money: Planning for the Future

The Motherload® has been talking to the brilliant financial website Boring Money, about savings versus investments, junior ISAs and pensions (surely we’re too young to worry about those?)

You can catch up on last week’s live broadcast with CEO of Boring Money Holly Mackay in The Motherload® here. But finance can be a tricky old world to navigate so we’ve been asking Boring Money to help us fathom it out…

I want to save some money, but what should I do with it?

For so many of us the mere act of saving may seem like we are doing “enough” toward building a more secure future. But it is one thing to habitually commit to the act of saving verses actually building a future nest egg.

Avoid the pitfalls of holding cash. Over the long-term, holding cash ensures our money isn’t working as hard for us as it could be. Begin by thinking about your time frame. If you can set savings aside for at least 5 years do consider the stock market. Did you know that over any 10-year period since the stock market began, stocks have done better than cash 9 times out of 10?

It doesn’t have to be all or nothing. Could you start with £25 a month, save £300 into the stock market this year and just see how it feels? That way you can put a cap on potential losses which can be reassuring. Don’t be recklessly cautious. If you have 20 years until retirement and you are sitting in cash because that first step feels too huge, I think you’re shooting yourself in the foot.

I can’t really afford to be an investor though can I?

Some of the online investment providers will let you start from £25 a month. Most ask for a direct debit of £50 a month as a minimum. If we assume yearly returns of about 4% over a 10 year period which feels reasonable to me, that monthly £50 could turn into about £7,400. Could you spare £100 a month? That could look more like £15,000 after 10 years.

By ‘drip feeding’ in to markets you are also smoothing out the risks of jumping in just as things slide south. You’ll never buy in at the best time. But neither will you buy in at the worst time. In addition, the drip feed approach will also allow you to keep a smaller emergency fund (up to three months salary) in cash. This will prevent you from dipping into savings for things like school fees, helping family and holidays.

I want to save some money for the kids – what are the options?

If you want to set aside money for kids or grandchildren, then Junior ISAs are a largely tax-free savings account which can be linked to the stock market. This money is set aside until their 18th birthday at which point the children can access it, or the money can also get rolled over into an adult ISA. Our nervousness means that most of the Junior ISA savings sit in cash although the long time-frames suggest that shares will do better. Did you know you can also get friends or relatives to pay into these which can be great at Christmas and save your house from piles of incoming plastic too!

To supplement this, apps such as GoHenry are great. You can use the app as a pre-paid pocket money card and is ideal for kids aged 6 to 18. It’s a great and fun way to teach them and even ourselves about the fundamentals of budgeting and good money management habits.  

I’m far too young to worry about a pension, aren’t I?

Not enough people know that the Government gives us free money if we save into a pension. Basic rate taxpayers will get an extra £20 for every £80 they pay in. Higher rate tax payers get more. We’re being incentivised to take charge and save for our futures. The strings? You can’t get your hands on it till you’re at least 55. And there are annual caps on the freebies! If you work, make sure you have a workplace pension and ask your boss how much they pay into this as well. It really pays to make the most of these new structures, as the contributions come from you, your employer and the Government.

How on earth do I work out where to invest?

Avoid the temptation to run this into gambling by trying to pick the next ‘hot’ stock. We all hear stories from cabbies or people down the pub about a share which “can’t go wrong.” This makes me nervous. Good investing is much more boring than this! We have to spread our bets around and diversify. Which means choosing a fund or a robo-adviser or another option which offers a large mixed bag of investments (see below for more options). A fund is like an investment ready meal – a collection of about 50 shares or investments. Someone else has prepped a balanced meal for you and you don’t need to select and blend the individual ingredients. A robo-adviser is basically an online quiz which steers you into a ready-made investment portfolio.

What about the apps I’ve seen advertised? Can they help?

We really are spoiled for choice when it comes to the assistance we have at our finger tips. We have apps for almost every part of the savings and investment journey. Personal budgeting apps like Monzo and Mint help you through the budgeting and savings aspects. These are great for the absolute novice before deciding to invest. For more insight into personal budgeting experience head to the Boring Money website,

Robo-advisers like Nutmeg, Moneyfarm, and Wealthify offer options to start the investment journey by working out the levels of risk you are comfortable with. This gives you a chance to dip a toe into the investment waters for as little as £1. You can see how the most popular robos have performed against cash

Once you feel like to want to wade a bit deeper you could look at visiting an “investment supermarket” like Vanguard, Charles Stanley or Hargreaves Lansdown and pick one of their low cost ‘ready meal’ investment funds

What about pension apps? Aviva has a simple way to set up an online pension and really helps the less confident to sort it all out online. For those who want to play it as safe as the markets allow. There’s also the nifty Pension Bee that will collect all your pension info into one handy dashboard so you know exactly where you stand.

To see how all the big brands stack up against in each other and hear how other investors are ranking them have a look at the Boring Money best buys.

Want to read more? Catch up on Boring Money: Why Investing Isn’t Just For Rich People

Disclaimer: This article forms part of sponsored promotion with Boring Money.