I’d invest for retirement at 35, with £35 a week

Retirement can often seem like a long time. Many people have been busy working for years without giving serious thought to retirement – ​​or how they might finance it. But the longer they have to invest for retirement, the more people can benefit from the compounding long-term value that great stocks can achieve.

That’s why when I’m 35, instead of thinking about it for decades, I’ll start investing for the years after work. By starting early I don’t need a lot of money. I estimate £35 a week, which I could do with just £5 a day.

Little and often

It may be hard to imagine that £5 a day could add to a well-funded pension fund. But think about it for a second – I have £35 a week, and there are 52 weeks in a year. So that simple £5 a day adds up to more than £1,800 in a year – or close to £20,000 over a decade. Starting at age 35, I will have more than thirty years to improve my financial position before I retire.

But just putting money aside is just the first step. I will then use it by buying shares.

I would trickle feed the money into a share-dealing account or Stocks and Shares ISA over time and invest in some high quality Shares. I hope that I can benefit not only from regular savings but also from the investment returns that can be made by putting that money in the stock market.

Choose stocks to buy

My plan could work in a couple of ways. One of them is capital growth. For example, I can decide that the market for robotic surgery will grow and invest in stocks like that Intuitive surgery, a leader in the field. If sales and profits continue to grow, hopefully the stock price will do as well.

Or I can focus on income and invest in shares like that Direct Line, with a 9.6% dividend yield. By compounding dividends (reinvesting them in other shares), I can see my retirement pot snowball.

Or, instead of focusing on growth or income, I can do what other investors do and try to incorporate that style as I go along.

Aim for value

Finding stocks that seem to give me growth or income opportunities doesn’t have to be difficult. But in the long run, my return will be heavily influenced by what I paid. So as well as trying to buy shares in quality companies, I will also focus on buying them at attractive prices.

Surgery Intuition, for example, is trading at a price-to-earnings ratio of more than 70. While I like the business growth prospects, I feel they have been more than reflected in its share price. So I won’t be buying stocks for my retirement now.

However, I will keep saving £35 per week but invest only when I find what I think is a great business with an attractive share price. That way, I hope my retirement fund can grow comfortably over the decades between now and when I stop working. But, in order for that to happen, I’m going to start – today!