Where else is your money coming from?
Thirty years ago, someone gave me a gift that is now worth a lot of money. She didn’t know that’s what she was giving me. I don’t think she really believed I’d ever even exist. But nonetheless, that is what she did.
It didn’t cost her that much. Mainly, it was a leap of faith.
That person was me, aged 23. Just starting my first job in journalism, just about getting by in London, I decided to start investing 5 per cent of my meagre income into a tax-free savings account in case my future self ever needed it.
My parents had wanted me to have a steady, reliable job. To be a secretary, or a nurse. Instead, I chose to be a writer.
I knew being a writer was risky.
And I knew that, if I failed, my family couldn’t afford to bail me out. So I saved what I could, weaving my own flimsy safety net in case I ever needed it.
A couple of years later, I started investing these savings in stocks and shares, mainly via low-cost tracker funds. And I have continued doing that, pretty much all of my working life.
There were a few times when I couldn’t afford it. We were buying a flat. Then renovating our first house. My son was born. The car died. Then my dad passed away suddenly, and I took some time off, to take care of my mum.
More rarely, there were times when I was able to put in a little more. A redundancy payment. A reprint of an old article. Something I’d written got optioned as a film. (It was never made, but it gave me a tidy and totally unexpected one-off payment.)
This wasn’t money I ever missed.
It never felt like it was mine. When I had staff jobs, I’d arrange for the 5% to come out of my account every month, on the day my wages were paid in.
When I was freelance, 25% of every cheque I banked went straight into a savings account for taxes and accountant’s fees, another 5% into investments.
I learned to live on the rest, whatever that was.
We only recently bought our first new car (and only then because it was heavily discounted, and we couldn’t find what we wanted second-hand). Nearly all of our furniture is vintage, much of it bought for bargain prices. And we’ve never been big on takeaways, or convenience foods.
Yet we’ve also had great holidays, made substantial donations to causes we support, and very rarely go without anything we really want. We also live in an absurdly big house by the sea.
As a family, we’ve never suffered, for these savings. Quite the opposite.
I did nothing complicated or fancy with my investments.
I read the financial sections of newspapers, read a few books, and educated myself in a very basic way on how the stock market worked. But I didn’t overthink it, or try to be clever.
When the iPod came out, I knew it would change everything. So I bought some shares in Apple – which turned out to be a good idea.
But mainly, I just kept steadily depositing small sums in tracker funds, then left them alone. Over time, the magic of compound interest did the real work.
The stock market can be volatile. I watched my savings rise, and fall, and rise again. I tried not to panic when the market fell dramatically (which happened a few times). Or to get too smug in the years when it kept on rising.
Most of the time, if I’m honest, I’ve never thought about it at all.
Just knowing that money was there gave me confidence.
As a family, it gave us the freedom to take risks, sometimes. (Leaving a job I didn’t enjoy; branching out to write about different subjects; buying our first house, knowing that it needed a ridiculous amount of work to become fully habitable.)
It also meant, when we decided on the spur of the moment to sell our home in London and settle on the east Kent coast, we had a cushion to protect us if it all went wrong. (It didn’t.)
What it really freed us from was worry. If the worst somehow happened, we wouldn’t be wealthy. But we would be able to survive, pick ourselves up and start again. Just knowing that saved a lot of sleepless nights, over the years.
It took 25 years before my savings earned more than I did. But I clearly remember doing my annual accounts, working out how much I’d earned from writing, and realising that my investments had narrowly beaten me.
It was a good, good feeling.
There are two of us working full-time, now: myself, and my investments.
More than 30 years later, I can look back on that girl of 23 and see how daft she was, in all sorts of ways. (I admire her energy, of course. But how could I ever have thought those haircuts were a good idea?)
I’m not sure I ever really thought I’d get to this age.
I certainly couldn’t imagine a time when I’d be thinking about retiring, or at least writing less. When I’d sometimes choose the expensive, hand-made thing because it would last, rather than the cheap, throwaway thing that wouldn’t. Or when I’d want/need to travel in a bit more luxury than I did in my back-packing years.
But here’s the thing: daft 23-year-old me gave Future Me the means to do all of those things, if I want to. That’s the real gift she gave me, when she started investing. Not money, but options. Choices.
It’s never too late to save.
It’s a habit, like any other. It’s never too late to find out how investments work. Just keep it simple, watch out for hidden costs and charges, and avoid get-rich-quick schemes – because the person getting rich from them is very rarely going to be you.
But really, the sooner the better.
Start now, even if it’s just with a little. Set up a system, and just add to your investment pot regularly. Then, if you bring in more income later, increase what you save.
You might need to examine some of your old, limiting beliefs about money, to make thus shift in attitude, from mindless spender to mindful saver. But you need very little else.
Time is your friend when it comes to investing. Along with the magic of compound interest. (You don’t have to believe me on this one. Just play with this calculator, and see how saving even small regular amounts pays off as years turn into decades.)
Start saving and investing now. Future You will be very, very happy that you did.
What do you think?