The longer you leave an investment or a debt, the more the interest accrues, although rates can vary by quite some margin. This same idea can be applied to a person’s life experience, the longer life you lead, the more experience you gain – and similarly it compounds at different rates depending on a whole host of factors. But how should we spend this wisdom of a lifetime? Where best to reinvest so that we achieve maximum returns on our hard-earned wealth? It seems quite simple to me: we should invest it in the young and less experienced. If I were to sit down for a talk with my younger self, what could I tell her that might help her on her way in the wide world of finance?

Start saving
Nobody wants to hear this when they’re young. At a time when your salary is most likely to be at its lowest and the pull of the social world at its most magnetic, it’s easy to put off saving until later. How easy it is to burn through any disposable income in a flurry of nights out, new shoes and taxis – and how much easier for young people today with everything available to buy online instantly.

Start by putting a little away every month, that way firm foundations are built and good financial habits are formed – and the mini miracle of compound interest is set in motion from the earliest opportunity. Save a little before you spend; direct debits take away the pain and temptation.

Pensions – Not just for Old people
Like most people when they’re young, I felt like retirement was so far in the future that it simply didn’t have any relevance to me. If savings could be put off easily enough, then saving for retirement could be locked in the box marked ‘much later’. But time does have a habit of getting away from us, and tomorrow is here much earlier than we generally expect.

At the very least, be sure to make use of any company pension schemes that may be at your disposal. I’m fond of telling younger people that the easiest way to a pay rise is to pay into your workplace pension. Often these schemes see your employer agreeing to pay a percentage into your pension pot just because you’ve decided to do so – they’re paying you extra to save, win-win.

Also, be sure to benefit from any tax relief on offer by starting a pension. Find out the maximum amount you can pay in that will count towards your tax liability at the end of the financial year. This differs wildly depending on where you choose to live, so be informed, and make best use of it.

Don’t waste it
One of my big bugbears – waste. How often do we see the younger generation in a queue at the local coffee shop? You didn’t have time for breakfast, so grab a quick latte and a croissant at the station –and there goes five euros. Add on a few disappointing ready-made sandwiches for lunch during the week with a soft drink and snack, and you’re on track for spending fifty euros in today’s money. That’s two hundred spent in a month that could have gone on savings or pensions. I’m not advising you live like a renunciant, but you can save a lot of money from cutting back on the small, frequent, unnecessary expenditures. It all adds up.

Educate yourself
It’s all too easy to float along in life, assuming that things will somehow take care of themselves and work out in the end. Perhaps they will – but far better to be somebody who is informed and educated well enough to make sound financial decisions based on solid understanding. Be aware of where you can get best returns on your money, and take the time to find out if you don’t know. Understand where your money is going and take it upon yourself to change things and make decisions about your own financial future when necessary. But be aware of your limitations also. Taking advice on your finances can be a hugely empowering experience, and one that will make you feel much more in control of your future – financial and otherwise. Simply put, there are professionals out there that know the financial landscape better than you do, and can help to steer you in the right direction from the very early stages of your career.

The above information does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.

Blacktower Financial Management has been providing expert, localised, wealth management advice in Portugal for the last 20 years. We can help with specialist, independent advice on securing your financial future. Get in touch with us on +351 289 355 685 or email us at