Sharkey’s Shares

Have you noticed how you very rarely receive �5 notes in your change nowadays, a further indication of how paper money loses its value, especially during a prolonged period of corrosive inflation.

Of course, the notes hold nothing in the way of intrinsic value other than the promise to pay the bearer a fiver, but as they're printed on such poor quality paper, they almost feel worthless. Time was when a fiver formed the basis of a decent night out; today, you couldn't buy two drinks with it, so how long will it be before the �10 note follows suit? Not long, I suspect.

Before that happens, is there anything we can do with our tenners?

Admittedly, most of us would like more of them, but few of us have access to a printing press that would enable us to commence our own version of 'quantitative easing'. Instead, there could be great merit in setting aside a few of these brown pieces of paper and investing them on a regular basis in something as simple as a cash ISA.

Investment isn't necessarily all about share prices, p/e ratios, balance sheets and P&L accounts; indeed, at its most basic level, investing is about our respective futures. I've mentioned here many times before that there is no possible way the state will be able to support people currently in their 30s and 40s (and probably early 50s) by the time they reach retirement age, which is why we must each make provision for our own future.

I read recently that, in order to enjoy a comfortable retirement, we should be salting away �14,400 a year into a pension. I imagine that such a figure, drawn from post-tax income, is slightly beyond most folks, which brings me back to the increasingly humble tenner.

Let's assume that instead of finding �14,400 a year (�1,200 a month), you set aside a quarter of this, a tenner a day, and at the end of every month invest �310 into a cash ISA.

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The best cash ISA rates currently hover around 3.2pc, so assuming you could invest �310 a month at this rate for five years, the miracle of compound interest does the rest, turning those humble �10 notes into �20,141.59. Carry on with this exercise over a fifteen year period and those tenners would be turned into �71,498.66.

A recent report by HSBC revealed that only 40pc of UK households have made adequate financial arrangements for their future, while almost one in five people have no idea what their main source of retirement income will be. This latter statistic serves to illustrate the widespread apathy towards retirement planning, often perceived as the driest of subjects, though it's absolutely critical. I'm all in favour of a 'live for today' attitude, but it's clearly possible to temper this, simply by setting aside a batch of tenners every month.