James Helliwell compares retirement investing paths from age 20 to 67. A financial advisor charging 2.25% fees cuts your final amount from £775k to £315k. Low-fee ETFs like S&P 500 keep the full £775k, while active investing that beats the market by 2.1% annually could reach £1.75M.
The fastest money you make is usually the fastest money you lose. According to a study by the CFA Institute, nearly half of Gen Z have made a trade based on fomo. And most of those trades, you guessed it, are in meme coins. And the result is this dopamine roller coaster of easy come and easy go. But with the strategy I'm about to show you, you could be 20xing your long term wealth instead will take our typical 20 year old, which means average earnings. They should be setting aside around half their age, 10% of their monthly paycheck. The current retirement age is 67. They have at least 47 years to retirement. Beginning at age 20, you're adding 2,444 pounds. So that amount invested at a real rate. Of 7.4% in the stock market, we'll come on to how exactly or where in a moment grows to over 70 grand per year year. If you scale that through your 20s, you will have invested more like 38 grand by your 30th birthday. Again assuming the same return at 67 retirement age, 775 grand. So from contributing just 10% initially when you're age 20 and continuing to step that up at a ratio of half your age by the time you hit your 30th birthday, you could theoretically not invest a penny more. And according to the long term averages, which is really important to emphasize, the future could be different. End up coming out at 775 grand, nearly a million quid in real terms. Now that's all well and good, but the question is what should I invest in? So scenario A is the advisor. You're going to be paying out a couple of percent in fees. I'll use the exact number of 2.25%. That's a typical advisor fee. So that of course is coming off the return. So you're earning more like five and a quarter, 5.2%. The difference that makes is rather than turning or that 38 grand becoming 775k at retirement, you come out with just 315k, the equivalent of 460 grand in fees to leave you with 315. And that is why I'm on this mission to educate you all away from taking that lazy dirty default option. Scenario B, do it yourself in an ETF contributing the same amount, 10% of your age every year of your twenties. You will have set aside 38 grand by the time you hit your 30th birthday on average money, remember? So you could be earning more or contributing more. That's Entirely up to you. You come out with the full amount. 775k ETFs don't have those advisor fees, which added up to about 2.25% every single year. The fees are more like this. If you take the S&P 500 tracker for example. 0.07% per year, I think it still compounds or adds up to about 20 grand over the course of your investing career. But in the grand scheme of things, this is a heck of a lot better than that. Duh. But remember to retire comfortably, per the other video that I put together, 1.5 million. Now for the third option. And this is what I spent my career doing. I mastered how the stock market works so that I never needed an advisor and I didn't need to take the ETF and chill approach and just bury my head in the sand. Settle for average returns. If you can add an extra 2% per year, 2.1 to be exact. Your 38,000 pounds dollars, what have you invested at a rate of no longer 7.4, we're adding 2.1. You're getting a real return of 9.5%. Real bad man. So compounding that over the same term so through until you're from 20 until 67, retirement age 47 years, this will turn in to £1.75 million. You've literally just added over a million pounds in real terms to your retirement by learning one skill. Now here's the kicker that was just in your twenties. If you never invested another penny beyond your thirtieth birthday, you could still retire with well over one and a half million quid locked in for life. Once you understand this game, you'll never play it the same way again.
