Question
I don't have a pension and am 33, I have a small amount in a Shares ISA and wanted to use this to build up a retirement fund. Do you have any advice on which shares to invest in for around 30 years? I'm going to try put £200 away each month and top it up with extra money when I can.Answer
The answer largely depends on how much risk you're comfortable taking. If the thought of seeing your investment fall in value will give you sleepless nights, then better to take a more cautious approach. Conversely, if you're quite comfortable with this on the basis you should end up with a decent profit after 30 years you can probably afford to be more adventurous.
If I were taking a bet over 30 years, two areas spring to mind: emerging markets and commodities. The former will very likely continue to outpace lethargic Western economies while commodities should prosper overall thanks to growing global demand and their scarcity.
Of course, it's not that simple. There are plenty of unexpected events that could hit both these investment areas over the next 30 years - so high volatility is more or less a given. But looking at the big picture I struggle to see scenarios that would prevent both these areas delivering good longer term investment returns.
So, if you're comfortable with the risk, I'd be inclined to consider emerging markets and commodity funds. You might offset risk a little by holding a UK equity income fund or shares in large companies paying high dividends. And perhaps include commercial property or corporate bond funds if you want to dial down risk another notch or two.
Good luck!
I don't have a pension and am 33, I have a small amount in a Shares ISA and wanted to use this to build up a retirement fund. Do you have any advice on which shares to invest in for around 30 years? I'm going to try put £200 away each month and top it up with extra money when I can.Answer
The answer largely depends on how much risk you're comfortable taking. If the thought of seeing your investment fall in value will give you sleepless nights, then better to take a more cautious approach. Conversely, if you're quite comfortable with this on the basis you should end up with a decent profit after 30 years you can probably afford to be more adventurous.
If I were taking a bet over 30 years, two areas spring to mind: emerging markets and commodities. The former will very likely continue to outpace lethargic Western economies while commodities should prosper overall thanks to growing global demand and their scarcity.
Of course, it's not that simple. There are plenty of unexpected events that could hit both these investment areas over the next 30 years - so high volatility is more or less a given. But looking at the big picture I struggle to see scenarios that would prevent both these areas delivering good longer term investment returns.
So, if you're comfortable with the risk, I'd be inclined to consider emerging markets and commodity funds. You might offset risk a little by holding a UK equity income fund or shares in large companies paying high dividends. And perhaps include commercial property or corporate bond funds if you want to dial down risk another notch or two.
Good luck!
Read this Q and A at http://www.candidmoney.com/askjustin/799/which-30-year-investments-for-pension
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