When you first enter the workforce, it can be difficult to understand exactly what you should be doing with your money once you start earning. While you might ask for advice from your parents, your investment goals and circumstances will be different from past generations. Our team of experienced advisers are on hand to make sure you’re on the right track.

As a younger individual, you’ll likely be looking towards your long-term future, whilst also thinking about shorter-term goals such as buying your first home. We can help you to get the right balance between locking away your money for the best possible returns via a pension, and still having enough funds available for easy access.

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When should I start saving into my pension?

There is no set right or wrong as to when is the right time to start paying into your pension, as it will differ for each individual depending on their own circumstances. However, we’ll always recommend to start saving into your pension as soon as you can afford it, to give yourself the most comfortable retirement.

Most employers will also contribute to your pension when you start paying in, meaning that you’ll receive more money than just what you’re putting aside. This will differ depending on the company, with some committing to contributing more than others – so it’s important to look at these benefits when job hunting.

You can also set up an additional pension alongside your workplace one if you want to make the most out of your investments. At Matthew Douglas, we have an excellent, diverse portfolio of funds that we can tailor to suit your appetite for risk.

How much should I be paying into a pension whilst I’m young?

It can be tricky to commit to saving large amounts of your salary every month towards your pension whilst you’re young, as there are so many other aspects to think about, such as saving for a house deposit.

We’ll always recommend making sure that you’re saving as much as you can, while still allowing yourself to have enough money left over for other important commitments too.

There is a rule of thumb that many experts recommend to help calculate how much you should be saving:

At the time you start saving for your pension, halve your age. Then, use that number as the percentage of your salary that you should aim to save each year (including any employer contributions too). 

For example, if you start saving at the age of 20, then you should try to pay 10% each year into your pension. This could equate to 7% paid by you and 3% by your employer, depending on their contributions.

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Do I need to be saving too?

Ideally, it’s always good to have some savings to fall back on in case you need it, and also to start building up your house deposit. If you can, we always recommend trying to have at least six months worth of income in a savings account as a contingency.

A Lifetime ISA (LISAs) are the best type of ISA to use for first time buyers, as they are designed to help you to save for your first home. The government will give you a bonus worth 25% of what you pay in, up to a limit of £1000 per tax year.

Should I be investing in the stock market?

If you can, almost everyone should be entering the stock market, as it is the best way to beat inflation to ensure that your savings don’t devalue. Stocks and Shares ISAs are a great way to invest your money without completely locking it away.

It’s very easy to start DIY investing and googling on the internet, but there’s always a large associated risk – would you really be prepared to see all of your hard-earned savings potentially lose value regularly? You wouldn’t fly a plane if you’re not a fully trained pilot – the same goes for investing.

I’ve inherited an ISA or SIPP: where do I start?

If you’ve recently inherited money from a parent or family member, we can help you to best decide how to invest it to get the most out of your gift. If you’re not ready to purchase a house just yet, our team of advisers can recommend the best options for you, depending on your desired level of risk and accessibility needs.

As a young individual entering the workforce, it can be very overwhelming and tricky to understand exactly what you should be doing for your future.

At Matthew Douglas, we completely understand – many of our team members were once in your very position! Contact us today for a free initial consultation.

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