By Alan Steel

For Publication in The Scotsman
Saturday 24 December 2011

With all this gloom around I wonder what Rev I M Jolly would make of it. I guess he'd have a field day. But then, every year we're told the Christmas shopping period is going to be the worst ever.

So we should have expected the same old story this year, but not that the end of the High Street is nigh. But hey - in a few days they'll be telling us it was another record Christmas spend.

Stockmarkets over the last 6 months will leave another deep scar on the minds of too many investors. Over in the US the extent of investor worry can be easily measured. It was noted last week a net $455 million new money flowed into equity funds. But over $36.5 billion went into money market funds (deposits to you and me).

Now it's easy to get lost in numbers but that's roughly eighty times more money going into almost non-interest bearing cash accounts than stockmarket funds.

Guess what the numbers looked like at the height of the dot.com boom in early 2000, almost 12 years ago? That was a time, if you recall, everybody was rushing to invest in stockmarkets because you couldn't go wrong. Aye - you're right, the reverse! We just go on buying and selling at the wrong times.

Despite the fact we've lived in the last 60 odd years of the most prosperous the world has ever seen, far too few of us somehow strike a balance between living for today - for Christmas, and holidays - and planning for tomorrow. By tomorrow I mean retirement.

A Survey in the US carried out on 80 odd year old residents of old folks' homes - posing the question "If you could live your life again, what would you do differently? generated answers unsurprisingly similar -- everybody would take charge of their life earlier, and plan better for retirement!.

Now I appreciate there's loads of reasons why people don't invest. But these figures from the US show, in a country where experts tell us folks aren't saving enough, facts demonstrate that they are, but usually in the wrong places. And probability tells us if they saw the consequences of not saving efficiently, they'd save more.

At the end of the day, I suppose many folks assume the State will look after them. Well it doesn't just now, and will be doing even less in future. So let's get some perspective on this real problem of poverty in retirement that's simply unnecessary.

Let me give you a couple of examples. I've a friend who's been self employed all his life. He had to give up slightly before normal retirement through ill health, and despite earning serious money over the last 15 years, he's now having to get by on a gross income of £7,500 a year, and that includes his State Pension.

A couple of weeks ago a professional partner asked for our help, turning his pension fund into an income for him and his wife. His accumulated pension fund was below £100,000. After removing some tax free cash, the fund is providing £300 a month gross. Add this to his State Pension, and other income, and he's having to live on an amount one-fifth of what he earned before.

So, this Festive Period, why not face up to two things. One - the world is not ending and the smart move is to invest in good equity funds with decent income and prospects.

Two - do realise your standard of living in retirement is proportional to the efforts you make now to save effectively and reduce taxes. A Guid New Year to you!

Written for publication in the Scotsman Saturday 24 December 2011