Save, make, understand money


Brits taking later life planning seriously

Cherry Reynard
Written By:
Cherry Reynard

Two surveys have found that, contrary to a number of recent reports, people are taking provision for old age seriously.

The Share Centre, for example, reported that savings into the group’s Self Invested Personal Pension (SIPP) product have risen by 75% year-on-year. The group also found the level of trading activity within its SIPP increased by almost a third (28%) while inflows increased by a 87% year-on-year.

Helal Miah, investment research analyst at The Share Centre, said: “Investors are clearly recognising the need and importance of investing for their retirement.”

A second piece of research also showed investors are not complacent about their future financial planning: Aegon has found that only 21% of people anticipate that they won’t need residential social care in their old age. Of those who believe they may, two-thirds (67%) thought it most likely they would need it from age 80 or older. While only around one in ten are currently making provision for care costs, at least most recognise that it may be a problem.

Miah said that investors considering long-term financial planning need to consider their time frame, and added: “With this in mind, it is of my opinion that opting for investments that have attractive yields or track record of dividend growth could comfort longer term investors that they are getting value for money.”

The Share Centre’s recommendations for long-term investment

“Pharmaceutical group GlaxoSmithKline is definitely one for investors to consider. The group produces and develops vaccines, prescription and over-the-counter medicines, as well as health related consumer products and therefore has products that are unlikely to be going out of demand. Its defensive characteristics as well as 4.8% dividend yield should also be attractive for longer-term investors.

“Power and gas distribution group National Grid is another option. We have long been fans of the group for income seekers and the improving progress as well as the benefits it is getting from the weakness in sterling only strengthens this support. Investors should appreciate that this is a company that has been a consistent dividend payer, with an attractive dividend yield of around 4.5%. The dividend is due to grow by at least in line with inflation.

“For investors wanting to branch out and away from individual equities, from individual equities, considering an investment trust like the City of London Investment Trust could be of use. The company’s objective is to provide long-term growth in income and capital, principally by investment in equities listed on the London Stock Exchange. City of London has one of the longest track records for continuous dividend growth, dating back fifty years, helped by one of the advantages that investment trusts have, of the ability to use revenue reserves in difficult times. The current yield is around 3.9% and investors should appreciate that expectations for future dividend growth are for around 4% to 5% a year.

“Another alternative could be the SSGA SPDR S&P Global Dividend Aristocrats fund. This fund could well be suitable for investors seeking a regular income as it pays out quarterly with an annual dividend yield of around 4%. The Dividend Aristocrats series of funds do not just focus on the highest dividend payers, there is a strong emphasis on a good track record of dividend payments and sustainability into the future, providing SIPP investors with the possible sustainable dividend payments they require.”