Call it quits – how you can help the iphone generation build their own wealth
This article is for information only and no recommendation is being made or should be construed from the contents of the article. Always seek independent financial advice prior to taking any action.
Do you know people who are hooked on upgrading their mobile phones every two years when their monthly contract runs out, yet complain that they don’t have cash to save for the future? Monthly contracts that give you a new phone typically cost between £40 and £50 a month, because they build in the cost of the phone alongside the tariff for using it. It’s possible to get contracts that don’t give you a phone yet still offer good packages of free calls, texts and mobile data for between £10 and £20.
Obviously, it seems a no-brainer that you can save around £30 a month if you just keep your phone for another two years and switch to a cheaper monthly contract but that doesn’t seem much in terms of building wealth, does it? Surprisingly, it’s a good start, especially for those who believe they can’t save any money so aren’t putting anything aside for their long-term future
The key is how that money is saved. If £30 a month over two years is put in a typical bank savings account, paying 0.5% interest, the amount at the end of the two years would be £754.06. If the same amount was invested in a stocks and shares type ISA, which let’s assume delivers an equivalent of 5% interest, the amount would be £791.87 after two years. Hmmm. Not a huge amount of difference. But wait! The real benefits lie in leaving this investment over the longer-term.
Over a 20-year period, the £754.06 saved in an account paying 0.5% interest would be worth £833.35, while the £791.87 invested in a stocks and shares-type investment fund that returned 5% would be worth £2,045.49.
Better still, if £30 a month was saved every month over twenty years, the investment paying a 5% return would be worth £12,463.77 – almost £5,000 more than if left in a low interest savings account.
As a client of Prosperity IFA you have the opportunity to help people you know to start saving in a way that could really make a difference to their wealth in later life, by introducing them to our Online Advice tool. This easy-to-use tool is designed to guide them to the right investment solution that matches their risk appetite and is right for their long-term goals. It uses a step-by-step process that gets them to think about their financial future and it helps them identify how much of a risk taker they are and, importantly, their capacity for loss. It then matches them with an investment fund package that uses their tax-free ISA allowance.
The fund packages bring together different types of investment options, blended together to produce solutions that take into account the risk profile of the individual. They can use their ISA allowance and complete the whole process online in less than 15 minutes. And guess what? They can even do it from their mobile phone! Find out more here.
We’ll give £50 each in Amazon vouchers to both you and whoever you refer when they start using the platform. All you have to do is email us with the names and email addresses of the people you are referring. Once they invest through the platform we’ll contact you to arrange delivery of your vouchers.
Send your referrals to Info@prosperityifa.com or contact your adviser.