Investing Basics

1. The stock market rises over time as more people are paying into their pensions than withdrawing money from their pensions.
2. The stock market has outperformed other assets over the last 100 years :
   • Stocks - Some indexes like the S&P500 have returned 10% per annum
   • Gold - has returned apx 5%
   • Property - has returned apx 4%
3. It is easy and quick to sell stocks, as opposed to other investments which can take a long time to sell.
4. Save as much as you can, you don't need flash cars, houses, holidays etc
5. A lot of people with flash cars, houses, holidays etc don't actually have that much money saved for their retirement, so don't aspire to be like them, aspire to have invisible wealth.
6. Pay as much in as you can from as young as age as possible to give the money the longest possible time to grow.
7. Keep your living expenses as low as possible, but earn as much as you can - put the difference into the stock market.
8. When you get a pay rise, instead of spending more, pay more into your pension and savings.
9. Obviously try to live a little bit, as if you don't live to retirement age then saving all that money might have been a waste.
10. You can avoid paying income tax by paying more money into your pension, for example :
    • Everything you earn over £50k is taxed at 40%
    • But if you pay everything you earn over £50k into a pension then you pay no tax on it now
    • When you are 57 years old you can withdraw that money tax free up to £268275
    • Or you can withdraw it as a normal pension withdrawal and pay 20% tax
11. Aim to have at least £2 million by the age of 67, you will then be able to live off the interest instead of spending the capital, which means the money will never run out no matter how long you live.
12. If retiring before age 57 then make sure you have paid enough money into ISA's to cover the period when you cannot access your pension.

1. Lump Sum Allowance (LSA) – This limits the total value of tax-free lump sums you can take from all your pensions to £268275
2. 5 ways to make your pension last - Which?
3. The Engineering Approach to Compound Interest - Rule of 72 = [72/7(% interest) = 10 years to double the investment]