In your 50s and don’t earn enough to save and invest for retirement? Read this now

Think investing is only for high earners or the super wealthy? Think again.

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Are you in your 50s and concerned that you don’t earn enough to save and invest your money for retirement? You may be surprised to learn just how little money you need to set up a regular investment plan these days. One of the biggest myths regarding investing is that you need to be wealthy, or earning a six-figure salary, in order to invest for retirement.   

Today, I’m going to dispel that myth and show you how you could start investing with just a few pounds per week.

Investing has changed a lot 

In the past, investing was indeed quite an expensive pastime. For example, 30 years ago, if you wanted to buy or sell a stock, you had to place a trade with your stock broker and the commission fee might have been £50 or more. Similarly, if you wanted to buy a mutual fund, you were often looking at a 5% ‘entry’ fee just to get started.

However, due to advances in technology, investing has changed a lot over the last 30 years and as a result, it’s now considerably more cost effective. Today, you can set up a regular investment plan with as little as a few pounds per week, which means that investing for retirement is now a possibility for almost everyone, no matter their income.

Invest from just £5.77 per week

For example, with Hargreaves Lansdown – the UK’s largest investment platform – you can set up a regular investment plan for just £25 per month, after an initial contribution of £100. £25 per month equates to just £5.77 per week – roughly the cost of a coffee and sandwich – a small price to pay to set yourself up financially for the future.

With that money you can invest in a broad range of mutual funds designed to help you boost your wealth, such as the popular Lindsell Train Global Equity fund, which has returned 152% over the last five years, or Terry Smith’s Fundsmith Equity fund, which has increased in value by 154% over the last five years. Investing in these kinds of funds, instead of leaving your money in a cash ISA, could certainly boost your retirement savings over time, although past performance is no guarantee of future performance. 

Growing your wealth over time

Even a small contribution of £25 per month could make a big difference to your wealth in the lead up to retirement. For example, assuming an average annual return of around 8% from your investments, an investment of £100 upfront at age 50 and then £25 per month up until age 67, could grow to around £10,500, according to my calculations. Invested in dividend stocks, a £10,500 portfolio could potentially generate income for you of around £500 to £700 per year in retirement, which would be a nice little boost to your State Pension payout. Double your monthly contribution to £50, and your portfolio could grow to over £20,000 by the time you retire.

So, in summary, investing is certainly not only for high earners these days. With monthly investing plans available from £25 per month, it’s an option for almost everyone.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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