Invest now for jumbo returns

747’s demise reminds us that time is our friend Three milestone events have had me thinking about how quickly the sands of time pass by.

In April 1988, the first Boeing 747-400 flight took place. And this summer, after 32 years of service, British Airways became the latest carrier to retire its 747 fleet.

I was fortunate to take my first flight in a 747 to Australia, so I have fond memories of the plane (and it was when you could visit the cockpit!).

The second event was the 30th anniversary of Germany’s unification. I remember it well, I was travelling home in the car, listening on the radio.

And the third was when Apple launched the iPhone 12. That took me back to June 2007 when the first iPhone came out. I bought one and was laughed at by Blackberry-using friends.

Such events are reminders that while our attention is often on our present worries, such as paying the bills, life marches on. Sometimes, we must make decisions now to provide a better future. Financially, that means investing.

If instead I had invested £1,000 in Boeing, today it would be worth £13,600

What if…

Rather than taking that flight to Australia, what if I had bought shares in Boeing?

If I’d invested £1,000 in the firm, today I’d have £ 13,600, having averaged around 8.5 per cent pa return. Not bad for a buy-and-hold strategy.

Or, after listening to the unification of East and West Germany, I’d taken a punt on the strength of the new nation and bought into the German stock market index, the Dax. I would have averaged a 8.4 per cent return per year.

And rather than buying that impressive iPhone which set me back £500, if I had instead bought £500 worth of

Apple shares, they’d now be worth £14,000 or so.

Don’t get me wrong – I don’t think betting on the next jet plane, post-Brexit outcomes or even the next iPhone is a smart investment decision.

But I’d back global business as a whole (and the humans running firms) to adapt, grow and progress.

So what if all I had done was to back the world’s biggest companies 30 years ago and left my money alone, allowing these firms to do what they do best?

I would have averaged almost 10 per cent annual returns. At that rate, you double your money every seven years due to compound interest, and over 30 years that’s a big return. Time matters.

When, not if

Retirement is expensive. We typically work 40-50 years and need to save enough money during this time to last us for our remaining 25 years or so.

Life doesn’t stop just because work does. The easiest way to do this is by using your employer’s workplace pension and investing using your provider’s target-date index retirement funds, index life- strategy funds, or global index funds.

While it often feels like time flies – especially with the jumbo – when it comes to investing, time is your friend. So think long-term, start short-term.

And remember to visit The Money Planner podcast to learn more about retirement planning.