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Caitlin, 55

Caitlin loves to travel and lives for today, and would love to open her own care home one day. But although she’s quite independent when it comes to managing her money, she knows there’s still a lot to learn to balance her short- and long-term goals.

My relationship with money: "Patchy"

"It comes and goes. Some years we spend it on a holiday and some we try and save. If I want to go shopping I go shopping. Just try to go with the flow. I live for the day, really."

"I like to be independent. I look up things by myself rather than ask my husband. Leaflets and stuff. Citizens Advice. When I got divorced I had so much advice given to me by people and I was offered a financial advisor but I don’t like… not men in general… but anybody pompous telling me what I can and shouldn’t do.

"I tried a financial advisor years ago but I just couldn’t deal with him. It put my back up. And I get it in my head that all financial advisors are going to be like this. I’m sure they’re not but…

"If it was an older woman who’s seen the world and worked in business like myself and is good at budgeting and that sort of thing… if they had that kind of background it could be alright. I’m not against men or anything! People just treat people differently. They say they don’t but sadly they do."

Getting smart with money when pregnant

"The first time I took maternity leave I didn’t have to plan much. The second time I did. I had two kids in two years when I was about 30 and I worked full time at the time. We both did. So I had to plan around the lost income.

"I had endowment savings insurance and cashed them in after my daughter was born and got money from them for a deposit for somewhere to live and went from there really. But nowadays its easier for women to be independent than it was when I was young."

The retirement income question

"Do I know what my retirement income will be? No I don’t, actually. Unless I get all the paperwork out, I’m not sure. Probably in the region of… £150 a week? Not much more. 

"I get annual statements but I don’t really read them. I file them and then I just live for the day really. The language puts me off. I manage my job and I manage to get by but when you feel like you’ve got some pompous person talking to you – like when people come to me at work with their solicitor or financial services son or something – it feels like it’s all meant to go over my head."

Answer by Helena Wardle.

If you have a long term in mind, such as 15 years then saving it into investments should be more appropriate for you. It may help to understand some basic principles:

If you are investing the money into stocks and shares this investment needs to be long term and will go up and down in value. Investors normally feel the ‘down’ periods more but it is typically only a loss if you take it out! You will see some good and some bad years so sticking with it is normally the best plan...

Reveal the full answer...

Only invest money if you can afford to leave it invested long term. We can’t control what happens, so your investment journey can start off poor and redeem itself after a few years or go the opposite way and you have good returns at the start with some rocky patches along the way.

Past returns have shown us investments have done better than saving it in deposit accounts and it gives your money a better chance of keeping pace with inflation over the long term than if you saved it in a bank or building society savings account.

If you save regularly you are buying the investment at different ‘price’ points and in time this typically reduces the cost of buying into the investment. You will not always notice the investment growth at the start as quickly as you would once you have built it up over time and this mainly due to you earning a return on a smaller amount.

Invest in something that spreads your money so it is not all in one area. This doesn’t have to mean holding loads of individual stocks or investments if this level of effort makes you feel out of your depth – you can simply save into a mixed bunch of investments (this is called an investment fund) to suit the level of risk you feel comfortable with.

Returns are hard to forecast and this is typically done by using either a flat fixed rate of return (this is less likely to happen as returns vary!) but it helps to paint the picture or you can use past performance or probability based tools to show you what your money may be worth in time.

As an example if I use a fixed growth rate of 5% (a rough average for stock market growth), and deducted investment fees of 1% of what your investment may be worth:

Your total contributions of £300 a month for 15 years: £54,000

Your potential investment value in 15 years’ time: around £75,400

I have then used a software programme to run a simulation using past market returns on a 3 out of 5 risk scale (meaning you'd be invested in medium-risk stocks, shares and other assets) to show you the variance of potential returns:

Both comparisons are not taking into account inflation within your potential returns so this is very simplistic but it may help you understand that the outcome will be varied, some years will be better than others and if you are starting with regular savings only it may take a while for you to see the benefits.

I hope this helps