The key to saving and investment is taking a longer term view. Not spending now in order to have a reward in the long run is vital to building the value of an investment, but it is something that many people struggle with. According to a recent survey, as many as one out of every eight British people confessed that they are so impatient that they would take a £640 holiday this year rather than waiting five years for a holiday worth £5000.
This does show something of a worrying short termism, but perhaps it is not so strange. A lot of things can change in five years. Circumstances can change, health can wane. Sometimes a bit of seizing the day is absolutely what is called for. Not being able to plan five years ahead though can prove to be a serious issue.
Indeed so bad has the situation got that an official survey has revealed regardless of intention, just a third of people are saving for their retirement. The Office for National Statistics has found that the median average savings for those for whom retirement is looming is £151,900. To put into context, that would yield an annual income of around £6000 a year. With the effects of general inflation, as well as the steep rises predicted for food and energy, that might not go so far.
Lower paid workers are set to be the biggest pension losers. Just 16% of men earning less than £300 a week from working full time are in any kind of private pension scheme. It can be difficult to know what kind of pension scheme to go for – especially if you are young. There have been the horror stories of funds going under and of miss-selling, but you still need to get something put away. Getting into the habit of having a portions of your monthly income being put aside for the future in something like a regular savings account is a must, even if you are not sure yet which pension plan you are going to opt for. The alternative? get used to the idea of your retirement meaning sitting in a doorway holding a cardboard sign.