--- title: "Show me the money | Pensions Advice UK" url: https://pensionsadviceuk.com/show-me-the-money/ description: "How to invest your money and avoid costly mistakes. The staggering impact of the gender pension gap has been revealed in new research[1] which shows that…" last_updated: 2023-10-19 publisher: "Pensions Advice UK (a trading name of GAP-GNX Ltd)" language: en-GB --- Guide # Show me the money How to invest your money and avoid costly mistakes Last updated 19 October 2023 **Written October 2023.** Tax allowances, limits and pension rules may have changed since then, so some figures here could be out of date. For current information, see our guide to [getting pension advice](https://pensionsadviceuk.com/pension-advice/). The staggering impact of the gender pension gap has been revealed in new research[1] which shows that women have lower pension pot sizes in every age bracket, with the situation significantly deteriorating as they approach retirement. Worryingly, women on average retire with less than half the income of men. It’s not surprising that the world of investing can seem complex, especially in the current global economic climate. Investors face an endless supply of market news, many investment choices and often-changing market conditions. There are a number of key principles that every investor should follow with the aim of building an effective long-term strategy designed to achieve their financial goals. Here’s our rundown of the 10 principles that every investor needs to know: ## 1. Set investment goals It’s important that you set yourself investment goals – this will help you stay focused and on track to achieving your financial objectives – with a well-structured plan in place, you can confidently stay committed to it. There are a number of factors to consider when setting your goals, such as your age, investment timeframe and risk tolerance. ## 2. Plan on living a long time, and saving more for it People aged 65 years in the UK in 2020 can expect to live on average a further 19.7 years for males and 22.0 years for females, projected to rise to 21.9 years for males and 24.1 years for females aged 65 years in 2045[1]. Investors should start early, invest with discipline and have a plan for their future. ## 3. Cash is rarely king, and inflation eats away at your purchasing power Cash is a popular asset class, but its important to remember that it is not always king – inflation can erode the purchasing power of your cash, making it a less attractive option in the long run. When inflation is taken into account, cash typically lags behind other asset classes such as stocks and bonds which can mean that over time, cash will generally be worth less in terms of purchasing power. ## 4. Start early, and re-invest income, compounding works miracles Compounding is often called the eighth wonder of the world – by starting to invest early and reinvesting your income, you can take advantage of compounding to build your wealth over time. The power of compounding is so great that delaying investing by even just a few years, or choosing not to reinvest income, can make an enormous difference to your eventual returns. **5. Returns and risks generally go hand in hand, so be realistic about your objectives and what you can achieve** Of course, you always want to aim for the highest possible return while taking on the least amount of risk – but in reality, there is usually a trade-off involved – the higher the potential return, the higher the risk. And vice versa. Therefore, if you want to target a higher level of return, you have to be willing, and able, to tolerate larger swings in the value of your investments along the way. ## 6. Volatility is normal, so keep your head when all about you are losing theirs Volatility is a normal part of the market, so don’t let it rattle you – keep your head when all about you are losing theirs, and remember that the best time to invest is often when others are panicking. So don’t panic when the markets are down. Instead, stay calm and focused on your long-term goals. ## 7. Timing the market is difficult, staying invested matters It’s no secret that timing the stock market is difficult. In fact, it’s often said that trying to time the market is a fool’s errand – by staying invested you ensure that you’re participating in the long-term growth of the market and helps to mitigate the effects of volatility. Staying invested in the market allows you to take advantage of opportunities as they arise. By staying invested, you’ll be in a position to buy when prices are low and sell when prices are high. ## 8. Diversification works, don’t put all your eggs in one basket By spreading your money across different investments, you can minimise your risk and maximise your chances of success. Over time, different investments will tend to even out, so the aim is to grow your money even if some investments under perform due to market movements. ## 9. Review your portfolio Reviewing your investment portfolio allows you to monitor your progress and ensure that your investments are performing as expected, giving you the opportunity to make changes to your portfolio if necessary. It helps you stay disciplined and focused on your long-term goals. ## 10. If it seems too good to be true, it usually will be Promises of high returns with little or no risk are almost always too good to be true – there are a lot of scams out there, and many people looking to take advantage of unsuspecting investors. Before investing, consult with a financial professional to help you understand the risks involved. **Source data:** *[1] The Office for National Statistics (ONS) – Past and projected period and cohort life tables: 2020-based, UK, 1981 to 2070* THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE. ### Would you like to speak to an adviser? Tell us what you need help with and we’ll introduce you to an FCA-authorised adviser. It’s free to enquire. [Get started](https://pensionsadviceuk.com/qualified-advice-request/) ### Important information This content is for information only and should not be considered legal, tax or financial advice. Pensions Advice UK is a trading name of GAP-GNX Ltd. We are not authorised by the Financial Conduct Authority and act solely as an introducer. The value of pensions and investments can fall as well as rise, and you may get back less than you put in. Tax rules can change and depend on your circumstances. ## Speak to an FCA-authorised adviser Tell us what you need help with and we’ll introduce you to a qualified specialist. Start your enquiry 020 3778 0939 We’re an introducer, not an adviser. [Call us](tel:+442037780939) [Enquire](https://pensionsadviceuk.com/qualified-advice-request/) --- Pensions Advice UK (a trading name of GAP-GNX Ltd) connects UK residents with FCA-authorised pension advisers and pension tracing services. It is not FCA-authorised and does not give financial or tax advice. It acts solely as an introducer to FCA-authorised firms, who provide any advice and explain any fees before you proceed. This is the text version of https://pensionsadviceuk.com/show-me-the-money/. More pages: https://pensionsadviceuk.com/llms.txt