July 19, 2019
Summer is upon us but it’s never too late to give the personal and family finances a spring clean. For lots of people, that’s like a giant jigsaw puzzle – hard to know where to start. Often it involves shoe boxes stuffed full of statements and policies with jargon that doesn’t make sense.
Those brave enough to tackle it may be in for a nasty surprise: your financial future is not the one you want for yourself and your family.
According to the Office for National Statistics, the portion of income squirrelled away into savings has flatlined and you have to go back to the 1960s to find a time when we saved less.
The impact of this doesn’t just hit at retirement. Financial security is a vital part of social mobility and getting on in life.
Higher living costs, low wage growth and the decline of final salary pensions is a particularly toxic cocktail for young people starting out. That presents a wider societal problem because we live in a capitalist society but so few young people have any capital and it’s getting harder to acquire. Almost all young people come of age with debt instead of savings.
One thing is clear though: the sooner you start to save, the better. To achieve a £100,000 pension pot at age 67, a 22-year old would need to save £20 each week but that triples to almost £60 per week if you don’t start saving until age 42.
So how do we reverse the growing savings gap and also bring about genuine social mobility? These are two issues that go to the core of what True Potential is about.
The harsh reality is that the idea of a savings pot to a 21-year old is a distant dream. But it needn’t be – although it will require some help from the bank of mum and dad.
Opening an investment account is quicker than registering a birth. And putting away £520 per year, or £10 each week could grow to a savings pot of over £22,000 by the time the child is 21 years old. That 21-year old would not only have savings, but money to invest, to get on the housing ladder, to upskill further, to start a business or take on an apprenticeship. The point is they’d have more options to fulfil their potential.
These are opportunities that every parent wants for their children. Some investment companies demand large sums to open an account, but we don’t believe that’s fair. At True Potential, we believe in equality of opportunity both in society and in finance. That’s why anyone can open a True Potential ISA with just £1 and then invest in highly diversified portfolios from as little as £1 upwards via our True Potential Investor app.
The people who have collectively invested £10 billion in our portfolios come from all backgrounds and walks of life but have a common goal – greater financial security for themselves and their families.
Saving little and often is now within everyone’s reach and doing so could mean children don’t face the same nasty surprise when they come to sort out their finances in years to come.