Not so long ago, I overheard a story which goes this way:
“Once upon a time, there was an old fisherman by the river. He was a hard-worker for he knew that he would soon enjoy the fruits of his labor.
He took a pause and murmured to himself, ‘I remember the days of my youth—carefree, lax, and full of discovery—and the rest of my days were full of toil and hard work. Now that I am old, I would be harvesting the fruits of my labor and be spending the rest of my days in rest and repose, so I must work the hardest now so that I may gain more.’
Just by then, another boat passed. In the boat was a young man lying unperturbedly. The old fisherman noticed the young man.
‘Hey young lad, I see that you’re doing nothing—just watching the clouds fly and feeling the breeze blow. Why not start working so that you will have a good harvest of your labors when the time comes?’
The young man did not stir but gave a chuckle.
‘I already did!’”
End of the story.
Being young is not an excuse to plan and work for the future. When you’re young, you think most of the ‘present moments’ but as you become older and older you become more conscious of the future. You worry; thus, you work and work for the future, tediously and more diligently as the dawning of your life nears—you get a time-deposit account or a credible pension.
That ‘youthful tendency’ leads most of us people to cram later in our lives. And trust me my fellow youth and young adults, to consider a pension while we’re still young and at the brink of our energies is very important. Yes, you might be too comfortable with your employer’s company pension or you might not want to take a risk backing up your finances with a SIPP pension (which could also go Family or Group SIPP). Or worse, you might just want to do it later in your life, and take the example of the old fisherman. Nonetheless, in case you choose to follow the example of the young man, here’s an advice you might want to consider:
- If you’re still a working student, a personal pension best suits you. Why? Because it’s tax efficient!
- If you want a level-up, you could go to SIPP pension. A ‘Self- Invested Personal Pension’ offers a wider range of investment which puts the self-invested pension to be a pooling pension of a group.