Grow It – Week 3

12 min Read Published: 19 Mar 2022

Grow it

If you missed week 1 or 2 you can access them here:

Grow It – Week 1

Grow It – Week 2

Grow it - Week 3

Day 15 - Building and/or choosing a portfolio

Task: 1 - Having completed Week 2 of GROW IT you now need to decide whether you are comfortable making your own investment decisions or not, or indeed whether you have the time and inclination to do so.

2 - If you would rather someone else made the investment decisions for you then you have two choices:

  • If you have a significant sum to invest, have legacy investments, investing for income, complicated financial circumstances or want a holistic review of your personal finances then you should seek the help of a financial adviser. If you don't already have a reputable financial adviser who specialises in investments and would like assistance in running your own investments, then check out our independent reviews of VouchedFor and Unbiased.
  • However, most people do not need to speak to a financial adviser in order to begin investing. You should now be familiar with the idea of cost-effective online investment services, (commonly called robo-advisers) that will invest your money for you. Have a look at our best-buy robo-advice table where you will find details of our ratings and full reviews as well as any offers available. This should help you choose the best service for you. But before you take action, wait until you have finished all 28 days of the GROW IT campaign.

3 - If you would rather build your own portfolio of funds then read our article "How to build the best ISA portfolio".

4 - If you wish to explore investing in shares directly (i.e. share trading) then we will touch upon this later in the course.

Key Takeaway: There are a host of investment services out there that can help you invest cheaply and effectively. Many will make the investment decisions for you and manage your money. But if you want to take a more hands-on approach then you can. Or you can do a bit of both.
Time Required: 30 mins
Click to play:  Best all-weather portfolios
 
Additional Reading: Investing: the best free asset allocation tool

Day 16 - Investing for children

Task: 1- Read our article "Investing for children: What are your options?" to give you an overview of what your options are when investing for children or grandchildren.

2 - If you haven't already, listen to the podcast below on "How to become a millionaire" which will inspire you to start investing, even a small amount, for your children's future.

3 - Look at our round-up of the best savings accounts, Junior ISAs and Junior SIPPs in the additional reading section below

Key Takeaway: Now that you have an understanding about investing, and before we explore pensions in more detail, it is possible to invest and save for your children's future. A recent survey showed that more than 4 in 5 UK parents are putting money away for their children exclusively in cash. With interest rates on children's accounts at historically low levels, and inflation running so high, the purchasing power of any money put away will fall.

However, there is a range of other investment options available that means you could build a more substantial fund over time, even with low monthly contributions. The power of compounding means it is possible for anyone to put their child on the path to becoming a millionaire.

Time Required: 25 mins
Click to play How to become a millionaire (and your children)

Infographic: Investment options for children

(click to enlarge)

Additional Reading:  Best children's savings accounts

Best Junior Stocks and Shares ISA

What is Junior SIPP and children's pensions explained

Best Junior SIPPs


Day 17 - Pensions vs ISAs

Task:
  1. If you have not already completed our OWN IT course, then go back and complete the tasks on DAY 25 of our 28 Day Challenge. The tasks help you build a retirement plan by:
    • ensuring you are auto-enrolled into your employer's pension scheme (assuming you are employed)
    • using our pension calculator to understand where you are with your retirement planning and what you need to do to get to where you want to be
    • finding out your potential State Pension (not everyone gets the same).
    • showing you how to start a pension
  2. Read our articles Pension vs ISA and Pension vs Lifetime ISA.
  3. Listen to the podcast below about managing the asset mix held within both your pension and ISAs.
Key Takeaway: Pensions remain the most tax-efficient way of saving for your retirement. It is important that those who are employed take advantage of the benefit of auto-enrolment (i.e. free money) and not opt-out unnecessarily. It is also important to understand how pensions and your other investments, such as ISAs, can complement each other to help fund your different goals over different timeframes.
Time Required: 30 mins
Click to play: Pension vs ISA asset mix

Additional Resources: On Auto-enrolment:

Nest pension review (the auto-enrolment pension provider)  – what is it and is it any good?

On State Pensions:

Will I get a state pension?

It is often difficult to accurately calculate your state pension yourself, especially as there is no simple state pension calculation.  That's because the amount of state pension entitlement depends on your own National insurance Record. Instead you need to request a state pension forecast from HMRC.

Day 18 - How much should you be putting in your pension?

Task:
  1. Listen to the podcast clip below to find out how you can get a £30k a year pension for £80 a month
  2. Read our article "7 quick tips on how to boost your pension" which includes tips on how to boost your state pension
Key Takeaway: Up to this point you have developed an idea of what your retirement might look like and how much you might need to contribute. But today is all about the financial planning tricks/tips that can help boost your retirement savings and make your dream retirement more achievable.
Time Required: 20 mins
Click to play: How to get a £30k a year pension for £80 a month

Additional Reading: Can I carry forward unused annual pension allowances?

Day 19 - Find and consolidate old pensions

Task:
  1. If you have multiple pensions, possibly from past employers, then read our article "Should I combine my pensions? - What you need to know". Also listen to the "Pension consolidation pros and cons" podcast clip below and watch the video for a summary of pension consolidation.
  2. If you have a final salary pension (also called a defined benefit pension) then also read "Should I transfer my final salary pension? The risks and benefits". The default stance is that you are unlikely to be better off transferring your final salary pension to a defined contribution pension such as a SIPP. If you have previously been advised to transfer a final salary pension then listen to the "Final salary financial advice checker" clip below to whether you received good advice, or have grounds for a complaint
Key Takeaway: During your working life, you’ll have on average 11 different jobs according to research by the Pension Tracing Service, and that means you might have as many as 11 different company pensions floating around. There could be other types too - maybe you’ve been auto-enrolled in the government’s workplace pension scheme NEST, or you set up your own Self-Invested Personal Pension (SIPP).

It can make sense to combine them all into one pension to make them easier to manage and cut costs.

Time Required: 15 mins
 Click to play: Pension consolidation pros and cons of smaller pension pots (defined contribution)

Click to watch: Can I consolidate my pensions?

Click to play: Final salary financial advice checker

Additional Resources: Where’s the best place to transfer my pension?

Day 20 - Taking money out of your pension

Task: Read our article "What are my pension options at retirement?". In addition, watch and listen to the media clips below that explain your options with regard to drawdown and utilising pension freedoms in more detail.

We will cover annuities in more detail next week.

Key Takeaway: When you get to retirement you have a host of choices when it comes to accessing your pension pot, some are more tax-efficient than others. Today we will focus on drawdown and cashing in all or part of your pension. Next week we will look at annuities in more detail, which are a far less popular option than they once were, but are still a valid option at retirement.
Time Required: 40 mins
Click to play: Drawdown explained:

Click to play: Tax-efficient pension withdrawals:

Click to play: Cashing in small pensions:

Additional Reading:  What is a sustainable income that you can drawdown from your pension?

Day 21 - Rest day

Task: Use today to finish off any Week 3 tasks.

 

Now that you have completed Week 3 of GROW IT, make sure to continue with Week 4.