How to be a demon investor in your 80s

Reduce risk and play it safe: this is the conventional advice for investors in their 80s. Many are happy to take it, perhaps by employing a financial adviser to run a low-risk portfolio. 

Others, however, relish the opportunity retirement gives them to manage their own investments. Here Telegraph Money meet investors at the top of their game in their ninth decade – and hear the investment lessons gleaned from their long experience.

‘I learnt to invest at the Moneybucks club’

For Denis Pannett, 84, joining a local investment group – nicknamed “Moneybucks” – helped him gain the confidence and knowledge to manage his portfolio. 

Mr Pannett, who worked at De Beers, the mining company, for 20 years before pursuing a career as an artist, began to invest on a small scale in his 40s. At first financial advisers managed his portfolio, but he now says he feels more confident than ever thanks to discussions with his Moneybucks friends. 

The 12 members meet in each others’ homes and pay in small amounts to invest. Dividends pay for meetings and social events, including pub trips and a Christmas party. “It is all very pleasant, but we’ve also learnt a huge amount from each other,” says Mr Pannett, the group’s chairman for the past few years. 

“We’re all a similar sort of people, we discuss everything together – what to buy, what to sell. We’re normal middle of the road people and we use common sense. Because of them I know that what I’m doing is reasonably sensible.”

‘I study companies’ annual reports’

“I certainly feel more confident than when I was younger,” says Roger Young, 83. 

“I am more active since retiring, mainly because I have a bit more money to invest. And I have more time.” 

Mr Young, a former head of the Chartered Management Institute, spent most of his career in the City, where he honed his knowledge of corporate finance and management skills. 

“I study companies’ annual report and accounts, particularly the chairman’s and chief executive’s statements,” he says. 

“If investors knew how carefully they were crafted before publication, more people would read them – and read between the lines. 

“It helps ‘contrarians’ like me not to follow the herd. Profits are made by selling when everyone, including London taxi drivers, is telling you to buy and selling when everyone is ‘doom and gloom’.”

‘Scrutinising investments is not a hardship – it’s a pleasure’

Lord Lee of Trafford, 82, who is believed to be Britain’s first “Isa millionaire”, says he spends a couple of hours every day “keeping an eye” on the stock market. 

He reads the City pages every day and also meets the key management of the companies he has invested in over the years to discuss long-term strategy. 

“It’s not a hardship from my point of view. It’s interest and pleasure, as well as keeping an eye on one’s own holdings,” he says.

Take (some) risk – even if it means buying Bitcoin

Bitcoin caused much discussion at the Moneybucks club when Mr Pannett suggested that they invest in the digital currency.

Describing himself as between cautious and bold, he managed to persuade his fellow members following initial opposition. They doubled their money – but could have made even more had they taken more risk, Mr Pannett says. 

“They were much more cautious than me. But I did manage to persuade them that, knowing it was a risk, we should buy into it,” he adds. 

“The other members got very cold feet and said for goodness sake let’s get rid of this before we lose on it. I was outvoted and being democratic we went with the vote. And it went up fourfold just after we sold. 

“So I am prepared to take risk – a limited risk. I wouldn’t put a lot in but we could have made several thousand pounds if people hadn’t got cold feet.” 

Knowing your personal attitude towards risk is key, says Laith Khalaf of AJ Bell, the investment company. 

“The general rule is that as you get older, your risk tolerance declines,” he says. 

“If you’re 85, the ups and downs in the market really do matter. Because if there’s a down, as we’ve seen in the past in the markets, it can last several years. And if those are years towards the end of your life, that can have a serious impact on your finances. 

“Everyone needs to reflect on their own personal situation, how much wealth you have, how much risk you’re going to take, and the balance between income and growth, potentially with a view to passing assets on to the next generation as well.”

Wealthy investors can afford to buy some riskier investments, adds Mr Khalaf. One “very high-risk” option is stocks quoted on London’s junior Aim market, some of which can be exempt from inheritance tax. 

He says: “I would encourage people to take an interest in their finances regardless of age. But you probably shouldn’t be gung ho with your portfolio in your 80s in the same way that you might in your 20s.” 

Alice Guy, of Interactive Investor, a rival company, says “de-risking” too early could actually be a mistake for older investors because “risky” assets such as shares tend to grow more over time than bonds and cash, and are more likely to beat inflation. 

“Leaving some of your portfolio invested in the stock market in retirement is one of the best ways to boost your wealth, even if investment returns aren’t guaranteed,” Ms Guy adds. 

“Keeping a healthy cash buffer and investing in a mixture of shares, bonds and cash is a good way to keep your portfolio growing and also minimise volatility.”

Plan for the next generation

Leaving an inheritance is a major consideration for most investors in their 80s, says Mr Khalaf. “If you’re investing for an inheritance, you can probably afford to take a more growth-orientated approach,” he says. 

Assets to be passed on as a bequest do not necessarily need to be liquidated – they could instead be treated as a longer-term investment for those who inherit them. However, older investors should also ensure they have a steady income source, Mr Khalaf says. 

This is particularly important to meet the cost of any health or care needs that may arise. Making gifts to children or grandchildren within seven years of death may trigger inheritance tax, but there are some exceptions. 

Ms Guy suggests making gifts of £5,000 to children getting married (or £2,500 to grandchildren getting married). Both would be exempt from IHT. Gifts of £3,000 each tax year are also permitted. 

However, selling shares to make a gift may trigger a capital gains tax charge if you hold the shares outside a pension or Isa. It is important to take advice from a solicitor or financial adviser on tax, she added.

DIY – if you feel confident

After working with “perfectly nice” financial advisers from major firms, Mr Pannett decided to go solo at the age of 40. “I don’t think we need to pay for advice when we’re quite capable of sorting things out ourselves and I much prefer doing it myself,” he says. 

Mr Young agrees, although he cautions that doing so means taking on a “certain level of personal responsibility”. “The truth of the matter is I really resent paying the fees [for professional management],” he says. 

He points out that if advisers take fees out of capital, any income the investor receives from their investments is being undermined. “You virtually have to do it yourself. Otherwise you’re not gaining anything,” he says.

Ms Guy says many people are already comfortable making their own investment decisions. She adds: “It’s important to do your own research and understand your own risk level as the right type of investments will be different for everyone.”

Some prefer a mixture of different funds and shares while others are happy with a simple stock marker tracker fund, she adds. 

Lord Lee, who bought his first share, in a shipping company, in 1958 at the age of 15, says common sense and patience are needed. 

“Apart from a little money and time, that’s all you need,” he says. “Patience is the most important thing, and that’s what most people haven’t got. 

“I do understand that most people aren’t terribly interested, and are happy to pass investment decisions on to others, but it’s more expensive over time. I believe that most people can and should handle their own affairs.”