How I’d double my State Pension with just £2 per day

first_img Rupert Hargreaves | Sunday, 4th October, 2020 Markets around the world are reeling from the coronavirus pandemic…And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away. Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. 5 Stocks For Trying To Build Wealth After 50 The current rate of State Pension is around £9,100 a year. Unfortunately, the amount each retiree receives may vary significantly from this headline number.The exact weekly State Pension will differ from person to person, depending on their retirement date, and National Insurance contribution record. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…As such, I believe the best way to produce a guaranteed income stream in retirement is to set up a private pension. Today, I’m going to describe how I plan to do this with an investment of just £2 a day. Beat the State PensionAn investment of just two quid a day might not seem like much. But this small daily contribution could grow into a significant lump sum in the long run. Indeed, £2 a day works out at £730 a year.That’s not all. The best way to set up a private pension is to open a Self-Invested Personal Pension (SIPP). Any money contributed to one of these products is entitled to tax relief at your marginal tax rate. That’s 20% for basic rate taxpayers. So, after tax relief of 20%, the annual contribution of £730 could grow to be worth £913. SIPPs also offer other tax benefits. For example, there’s no further income tax or capital gains charged on investment profits earned within one of these wrappers. Most investors can set up one of these products relatively easily today. Most online stock brokers offer SIPP wrappers as standard. And, in recent years, the costs of operating these products have dropped dramatically.Vicious competition in the online stockbroker market has forced many providers to slash their fees. This goes for both SIPP management charges and commissions on stocks and shares. What’s more, managing these products is very similar to any other online trading account. The provider deals with all the back-end paperwork, and all investors need to do is decide where they’re going to invest. The power of compound interestI believe the best way to make the most of these pension contributions, and beat the State Pension, is to invest the money in the stock market. Over the past 35 years, the FTSE 250 has produced an average annual return for investors of 12%. On that basis, over three decades, my numbers show that a weekly contribution of £25 could grow into a total pension pot of £270k. This would be enough to provide an annual income of £10,800 in retirement.These figures are only supposed to be a rough guide. The actual return and annual income possible will depend on many different factors. However, I think they clearly show how easy and straightforward is to build a steady, predictable income stream in retirement with a private pension. The bottom lineThat’s the simple strategy I plan to use to double my State Pension in retirement. By following a strict savings plan and making the most of compound interest over the long run, I reckon any investor should be able to copy this approach. How I’d double my State Pension with just £2 per day Enter Your Email Addresscenter_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: Getty Images Click here to claim your free copy of this special investing report now! See all posts by Rupert Hargreaves Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this.last_img

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