Financial planning is a crucial part of life, irrespective of your age – so it’s important to seek expert financial advice even early on in your career.

Being smart with money in your twenties is essential, especially if you’re planning to buy a house, start a family or both. This stage in life often comes with many hurdles to navigate too, including student loans, expensive rent, high mortgage rates and the challenges involved with stepping foot on the property ladder.

Buying your first home

If one of your main priorities is to save for a house, then there are schemes in place from the government to help you do this. Firstly, if you haven’t already, I’d recommend opening up a LISA – which stands for ‘Lifetime ISA’.

To benefit from a LISA, you must be over the age of 18 and under 40. You can put in up to £4,000 per year until you’re 50, which the government will then add a 25% bonus to your savings (up to a maximum of £1,000 per year). If you were to save the maximum amount for five years, you’d receive an extra £5,000 – providing you with a sizable £25,000 deposit.

When you’re ready to buy your first home, you can use your Lifetime ISA as long as you meet the following criteria:

  • The property costs £450,000 or less
  • You buy the property at least one year after first paying into your LISA
  • You use a conveyancer/solicitor to act for you in the house purchase
  • You’re buying the house with a mortgage

If you’re buying with someone else who also has a LISA, then the good news is that you can both use them towards the house purchase, as long as you’re both first time buyers.

Saving up for a house and going through the process of finding and buying one can be complicated but we’re here to help with all of your financial questions. At Matthew Douglas, we also have mortgage advisers on hand to help you to obtain the very best rates, exploring all available options. We pride ourselves on being able to offer every service that you may need, all in one place.

house insurance

It may seem a way off, but consider your pension too

Being in your twenties, reaching pension age will feel like a long time away, but it always pays to be prepared and organised for later life – you’ll be able to get the most out of your money this way.

For example, if you’ve had a few different jobs throughout your early career, you may have multiple different pension pots floating around. At Matthew Douglas, we can help to combine all of these together to make it easier to manage, and make your money work as hard as possible to help you later on in life.

Most individuals are taught little to nothing about pensions in school, so we find that the majority of our clients understandably have a lot of questions. Our financial advisers are on hand whenever you need us to ensure that you know exactly what you’re investing in and your risk levels too – we’re just a phone call away.

With most standard pension plans, you’ll be automatically allocated a risk profile, but these don’t often perform well. By using an adviser, we can tailor this to your personal preferences and select a plan that gives better long-term performance.

Income protection is key, especially with dependents

If, for whatever reason, you are unable to work, your family won’t often be protected in the long term without income protection. While this isn’t as well known as life protection, it is just as important, if not more so – as it is rare that employers will continue to provide full pay if you’re off work for a while.

Income protection insurance will pay you a regular income if you are unable to work due to an illness or disability, giving you the peace of mind that you’ll be able to pay bills and support your family even if you’re not working. Most policies will continue to pay out until you return to work, or choose to retire.

The cost of income protection depends on a number of factors, including your age, your health, whether you smoke, your type of job and the level of income you’d need to cover. Being in your twenties should hopefully result in your income protection being more affordable, provided you’re not a smoker or have any long-term health issues.

Advice on saving, spending and investing

If you’re a high-earner in your twenties, you might be earning a lot more than you actually need at your current stage of life. The temptation for frivolous spending might be attractive, but we can help you find the right balance between enjoying your earnings, securing your future and helping you to generate more through wise investing.

Adjusting your investment portfolio as you age

As you grow older, ensuring your retirement portfolio aligns with your risk tolerance is crucial for financial security. While some retirees can live off returns without touching their principal, others may need to access their savings over time. Regularly adjusting your portfolio helps maintain the right asset allocation to match evolving needs.

Why does rebalancing matter?

Over time, market fluctuations can shift your asset mix, potentially increasing risk exposure. Rebalancing ensures your investments stay in line with your risk tolerance and objectives, allowing you to safeguard your capital, especially as you approach or enter retirement.

How often should you rebalance your portfolio?

There’s no fixed rule, but most investors find that an annual review suffices. Some prefer more frequent adjustments, like semi-annual or quarterly, to better respond to market changes.

Tips for effective rebalancing

  • Set allocation targets: Monitor and rebalance when asset weights significantly deviate from your targets.
  • Mind costs and taxes: Be aware of transaction fees and potential tax implications when making adjustments.
  • Stay disciplined: Stick to your plan and avoid knee-jerk reactions based on market volatility.

Exploring your retirement considerations

As retirement progresses, it’s essential to adjust your portfolio to match lower risk tolerance levels. Unlike younger investors, retirees aim to protect their capital rather than maximize gains, focusing on steady income and security.

Note: This content is for informational purposes only and should not be taken as legal or tax advice. Investment values can fluctuate, impacting the level of available benefits. Always seek professional advice tailored to your situation.

For advice and guidance on any of the matters I’ve mentioned above, or if you have any other queries, get in touch with our expert team today!