If you're approaching retirement age, your thoughts are probably turning to how you'll fund your post-work years. Hopefully you'll be on your way to amassing a decent pension pot, but you'll probably want other savings vehicles behind you as well, and you may not want to rely on traditional savings accounts. Rates may be showing signs of life but they're still not that impressive, which is why many people are turning to the stock market instead.
According to research from Saga Share Direct, one in three over-50s surveyed have bought shares in a company to help fund their retirement, suggesting that many want to use the potential returns on offer to boost their finances when they've stopped working.
A further 21% buy and sell shares to have a regular source of income, while 26% think that they'll get a higher return by investing in shares than if they left their money in a savings account. However, for some, it isn't all about the money – 7% consider keeping a close eye on the FTSE 100 a hobby, while others find that trading shares keeps them mentally active.
However, despite many over-50s leaning towards stock market investment, not everyone has actually bought the shares they own. For example, one in 13 of those surveyed inherited their shares from a family member, while the same number acquired them through an employer. It's also interesting to note that the likelihood of owning shares increases with age, with almost three-fifths of those aged 80-89 saying that they've bought shares over their lifetime.
It can't be denied that investing in the stock market offers the potential for lucrative returns, but it's also important to remember the risks involved. Unlike with a savings account, your returns aren't guaranteed and you could be left with less money than you put in, which is why it's vital to make sure you're prepared for that fact.
"These days lots of people are worried about making their money last in retirement, and now that people are able to take their pension as a lump sum, I wouldn't be surprised if we see more people start trading to help boost their income," said Jeff Bromage, chief operating officer at Saga Personal Finance. "However, people should remember that there are some risks involved with share dealing, so they should always do their research before they start investing their money."
If it's something you're considering, make sure to research the area thoroughly so you know exactly what you're getting into. Contact our share dealing service if you want more information, or if you're looking to maximise your tax-free allowance, you may want to consider stocks & shares ISAs, too.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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