Let us help you navigate the financial landscape of your 20s and 30s
Starting your financial journey in your 20s and 30s can feel daunting, but now is the perfect time to start building towards a secure future! Our team is here to help young
professionals create a path that aligns with their immediate and long-term financial goals. We help clients tackle student loans, create smart savings and investment plans, and leverage the power of compound interest to maximise growth potential. Learn more below
1) Spend less than you earn. Developing this habit early can help avoid lifestyle creep as you begin to earn more and more. You can start building towards your financial future by keeping track of your income and expenditure. Remember – what gets measured gets managed.
2) Pay yourself first. Rather than saving what you have left over at the end of the month – save some off the top! Paying yourself first by saving and investing soon after payday can help ensure you stay on track to your desired destination.
3) Learn the basics: Investment horizon, volatility, and asset classes
1) Defined Benefit (DB) pension schemes are most common in publicly funded sectors like healthcare, education, and the civil service. Upon retirement, you’ll be paid a percentage of your salary annually until death.
2) Defined Contribution (DC) pension schemes are funded directly through individual and employer contributions. Some employers offer to match individual contributions above what they are required to. If you can afford to, this is another way to increase your total compensation by a couple of percentage points. An individual can draw from their DC pension once they reach the age of 55. From this point, they can take a one-time tax free lump sum of up to 25% of their pension value before paying income tax on further withdrawals.
1) Contributions to pensions are made before paying income tax. That is why income tax is charged on pension withdrawals after the tax-free lump sum is taken. ISAs on the other hand are funded after paying income-tax which relieves them from any future income-tax liability. Both pensions and ISAs are exempt from Capital Gains Tax (CGT).
2) In most cases individuals can withdraw money from their ISA portfolios, free of tax, at any age. This level of flexibility makes ISAs a great investment tool for short and medium-term investment goals. The exception is Lifetime ISAs (LISAs) which can only be drawn upon to purchase a first home (under a certain value) or when the individual turns 60.
3) Pension contributions are capped at 60k annually whereas ISA contributions are capped at 20k annually.
Look at what your investments could be worth in the future! As always, the key to investing is creating good habits. Pay yourself first, invest regularly, and understand that investments go up and down.
