The Motley Fool

The investment revolution that can rescue your retirement

Over the weekend, our Bosch dishwasher broke down after a decade of faultless service.
I researched the fault on Google, determining that it was either the door interconnect switch, or the on-off switch. Hopping onto the website of a domestic appliance spare parts e-commerce retailer that I use, I typed in the model number of our dishwasher, and quickly located the parts.

Next, I watched a video on how to replace the parts, and cross-compared the prices with similar offerings elsewhere.
Finally, I placed the order, taking advantage of a discount code that had previously been e-mailed to me by the supplier in question.

Total cost: £59. Try getting a dishwasher repaired that cheaply by going through an authorised – or even unauthorised – repair company.

A remarkable revolution

By now, you’re probably thinking that the purpose of this article is to emphasise the virtues of DIY repairing, so as to generate savings that can be invested in the stock market.
Well, maybe. But there’s actually a much more important point to make.
Which is this: not so many years ago, all of that – from watching the ‘how to’ video to locating the parts online – would have been impossible.
Back then, you pretty much had to go to an authorised or unauthorised repair company.

Click-based investing

But it’s not just DIY appliance repairing that has been revolutionised by the Internet.
Very arguably, there’s been an even bigger revolution take place in the field of DIY investing.
How’s your portfolio performing? You want to research shares to add to it? Huge numbers of websites carry financial analysis and share performance data.
Buying shares online? Likewise – online brokerages abound. With a click of the mouse, you can buy almost any share, index tracker or fund.

Cost is no barrier

And it’s not just been a revolution in terms of the availability of information, and the ability to transact online.
The cost of investing has plummeted, too.
As I’ve written before, somewhere I have one of my father’s contract notes from a purchase of Marks and Spencer shares in 1992, acquired via an old-fashioned ‘full service’ broker. The minimum commission: £31.
What would it be today, a quarter of a century on? I shudder to think. But through today’s Internet-based ‘execution only’ brokers, you’ll pay around £12 – or even less, if you buy on one of a broker’s ‘cheap dealing days’.
Quite a saving – and that’s 25 years on.

A whole new world

At which point, let’s step back.

We have much, much more information than was available 25 years ago. Gone are dry and dusty brokers’ research notes, and in their place every investment resource on the World Wide Web.
Plus we have low-cost investing in the form of cheap commission, as well as low-cost investments for those who like a few funds and index trackers in their portfolios. Back when I started writing for The Motley Fool, a typical tracker had an annual charge of around 1% – these days you can get them for around a tenth of that.
It really is a revolution, and a very compelling one.

Protect your retirement

And some would say not a moment too soon. Because over the past 25 years, the retirement prospects of each of us have also been transformed.
Partly in a good way: we should all live longer, say the actuaries and statisticians. But also in a bad way: our retirement savings and pensions have to stretch further – and let’s face it, the days of generous pensions have gone.
What to do? Well here you probably can guess what I’m going to say. Each of us has to take control of our own retirements, and invest for our old age.

And do it properly, too: save sensible amounts, review those amounts regularly, and review our pension projections regularly, as well. Plus, it goes without saying, invest those savings in sensible products and businesses – shares that will deliver the goods over the long term.
It really isn’t rocket science.

Foolish Final Thought

Here at the Motley Fool, we focus on investing in great businesses for years rather than months. It's over that kind of time horizon that we can make sensible judgments on how a business is likely to perform, and whether the price is right.

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Malcolm owns shares in Marks & Spencer.