Having no pension at 50 isn’t ideal from a retirement planning perspective. However, it’s also not the end of the world. By acting quickly, there’s still time to build a savings pot of £500k or more for retirement. Here’s a look at how I’d go about trying to do this.

Starting a pension

If I had no pension, the first thing I’d do is open one. I’d go for a Self-Invested Personal Pension (SIPP) from a reputable provider such as Hargreaves Lansdown, AJ Bell, or Interactive Investor.

This type of pension account allows full control over what’s invested. And ongoing costs are generally quite low.

Government support

Once my account’s open, I’d start contributing to it immediately.

Now the beauty of putting money into a pension is that contributions come with tax relief. The amount of tax relief available depends on an investor’s tax bracket. However, for basic-rate taxpayers, it’s 20%.

This means contributing £800, the government adds another £200 on top, taking the total contribution to £1,000.

This tax relief could boost my retirement savings significantly, helping me get to my £500k goal much faster.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Putting my money to work

Finally, I’d put my money to work by investing in the stock market.

Over the long term, the stock market has historically provided returns of around 7-10% a year for investors. That’s a much higher return than savings accounts have generated.

As for my investment strategy, I’d take a diversified approach.

First, I’d invest in a global tracker fund, such as the Vanguard FTSE Global All Cap Index. This would provide me with exposure to thousands of stocks for a very low annual fee.

Then I’d add in some actively-managed funds for growth. Fundsmith Equity is a good example of the type of fund I’d invest in here. It has an excellent long-term track record, having produced double-digit annual returns for investors over the long run.

Finally, I’d buy some individual stocks for my portfolio. Here, I’d focus on high-quality growth stocks that have the potential to outperform the market over the long term, such as:

• Alphabet (the owner of Google and YouTube)
• Diageo (the owner of Johnnie Walker, Smirnoff, and Tanqueray)
• Visa (the electronic payments network operator)
• Rightmove (the owner of the most popular real estate portal in the UK)

By taking this diversified approach, I should be able to achieve a return of 8% a year over the long term, although this kind of return isn’t guaranteed, of course.

How much would I need to invest?

As for how much I’d need to invest to build a portfolio worth £500k by retirement, I calculate that if I was starting at 50, I’d need to save around:

• £1,140 a month to hit £500k by 65
• £920 a month to get to £500k by 67
• £830 a month to reach £500k by 68

These calculations assume an 8% return over the long term (which isn’t guaranteed) and that tax relief of 20% is provided every year (it may not be in the future).

Obviously, saving this amount of money every month would take some discipline. However, I think it would be worth it in the long run.

The post No pension at 50? Here’s how I’d aim to build a £500k retirement pot appeared first on The Twelfth Magpie.

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Ed Sheldon has positions in Alphabet, Diageo Plc, Hargreaves Lansdown Plc, Rightmove Plc, and Visa. The Motley Fool UK has recommended Alphabet, Diageo Plc, Hargreaves Lansdown Plc, and Rightmove Plc. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

That said, these days you can get started in the stock market with just a small amount of money. This means you can dip your toes into the water without risking a lot of savings. With that in mind, if you’re keen to start investing but you’re a little bit worried about losing money, here’s how I’d start.

Open an investment account

The first thing I’d do is open an account with a reputable investment provider, such as Hargreaves Lansdown, AJ Bell, or Interactive Investor. These companies enable you to buy a wide range of different stocks and investment funds at a very reasonable cost.

Personally, I use Hargreaves Lansdown as its website and app are both really easy to use and its customer service is brilliant. If you have a question about investing, you can call them and speak to a customer adviser. 

Pick a fund

Next, I’d pick an investment fund to put my money into. The way funds work is that your money is pooled with that of other investors and managed by a professional portfolio manager who spreads the total over many different stocks.

Funds offer investors three main advantages. Firstly, you don’t need to worry about picking stocks yourself, which takes a lot of the stress out of investing. Secondly, they lower your overall investment risk because your money is spread out over many different companies. Thirdly, you can invest in funds with as little as £100 (and you don’t have to pay an upfront trading commission in the same way that you do when you buy individual stocks), meaning they’re ideal for those starting out who only want to invest a little.

I’d choose a ‘global equity’ fund such as Fundsmith Equity or Lindsell Train Global Equity which invest in leading companies all over the world. Both of these funds have excellent long-term performance track records, although past performance is no guarantee of future performance.

Invest a little bit of money

Once I’d chosen a fund, I would then invest a very small amount – perhaps £200 or £500 – and I’d monitor the investment for a few months. This would enable me to get used to the daily fluctuations of the stock market without risking too much money.  

Grow the portfolio

Finally, when I was comfortable with the stock market, I’d invest more and build up my portfolio. Here, I’d start spreading my money over a number of different funds for diversification and look to buy some individual stocks as well, in order to boost my returns. 

The post Never invested in the stock market before? Here’s how I’d start appeared first on The Twelfth Magpie.

More reading

• How much do you need in a Stocks and Shares ISA to earn a £25,094 tax-free income?
• Up 233% in 2026, can anything stop UK growth share Raspberry Pi?
• £20,000 in a Stocks and Shares ISA? Here’s a surging value share to consider
• This FTSE share’s crashed 31%, and I’ve just bought it. Have I gone crazy?
• 8%-yielding Legal & General shares just gave me another 395 reasons to like them

Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.