Building the funds they need to enjoy the retirement they want is a driving factor for many investors.
But to do that we need to get away from our cash saving obsession, think beyond our workplace pensions, be bolder in our choices – and get fees down, says Nick Perrett, of wealth platform Prosper.
The co-founder and CEO of the fast-growing saving and investing platform joins Simon Lambert on the Investing Show to discuss how to invest for the future and ultimately enjoy the best possible retirement.
He shares his thoughts on how people can make their money work harder to build their wealth and what ordinary savers and investors can learn from some of the high-net-worth clients that Prosper counts among its customers.
Perrett says that although pension auto-enrolment has been a huge success, we still have too many people saving into low-risk default workplace pension funds that may not be able to achieve the returns they need or reflect the risk they can afford to take.
He says: ‘For a lot of people who are working, they should definitely be bolder with their investment pot. They shouldn’t be so risk off.’
Having built a popular savings business at Tandem and then in recent weeks seen a flood of money into Prosper thanks to a table-topping cash Isa, Perrett has had a front row seat on Britain’s saving behaviour.
And while he has made a success of savings businesses, he says that too many of us are still putting too much into cash.
He adds that the FCA should have a ‘cash at risk’ warning on many savings accounts, alongside the ‘capital at risk’ one seen on investment adverts.
Perrett says: ‘If you can’t keep up with rate of inflation, in a few decades time your purchasing power is going to be significantly lower.
‘You need to take the risk for the potential to get ahead of that.’
Another crucial element for investors to stay on top of is fees, believes Perrett.
And he explains why Prosper decided to offer the option of completely fee-free investing and why it’s still possible to build a successful investment business without big charges.