Investing for beginners

When asked, 40% of people didn’t realise their retirement savings were invested. It’s one of the reasons we’re on a mission to help people understand what happens to their money.

We work to grow your money

Pension providers are with you from the time you get your first job till the moment you’re ready to stop working, looking after your money for decades. We invest it in shares, property and more, working to boost your money more than the rising cost of living. This helps us unlock the power of your pension.

How Nest invests your pension

How time affects your pension

It’s easy to think of money in terms of short or medium-term needs, like saving up for a new car or a holiday. A pension is different because it’s one of the longest-term investments you’re likely to make. You contribute money today, knowing that you’ll be needing it decades later.

Investing helps you buy into economic growth in a way that a savings account can’t. Imagine that you regularly bought a £1 loaf of bread in your weekly shop. If anything within the production chain or the economy shifted to make it more expensive to produce – for example, the price of wheat rising or a supermarket’s transportation bills going up over the years – then farmers and supermarkets would pass that cost on to you so that they can still make profits. Over the years, it could rise from £1 to £2 or more. You’d spend more of your pay to get the same loaf of bread.

Having a pension means you’re invested in the supermarket and in commodities like wheat. When these prices rise, you benefit because the value of your investments also rise. You share in their profits rather than being left to pay higher prices – all because your money is working harder. Pension investments level the playing field for you over time.

Your property might not fund your pension

If you’re in the lucky position of owning your home, you may be planning on downsizing to free up your money or to unlock it through equity release. Worryingly, you may get less money than you realise from downsizing your home and equity release can be an expensive way of accessing cash.

Contributing to your pension alongside your mortgage means you can spread your risk, rather than relying on the performance of the UK property market. It also means you could benefit from investment growth in other markets.

See why spreading your investments is a good idea.

How do I find out what companies I invest in?

We’re partnered with Tumelo, an online investment information tool which allows you to see all the companies that your money is invested in. You can view the companies by industry or search for them individually. The companies you’re invested in will depend on your Nest fund choice. Members automatically join one of our Nest Retirement Date Funds when they start saving with us, and most stay in these funds. You can also use the tool to see which companies our other funds invest in and choose a fund that matches your faith or beliefs.

What happens to your money?

We know pensions can seem confusing, but knowing how Nest invests your money can help you have more control of your future.

You make a contribution to your pension pot.

This money is held with millions of other Nest members’ pots in one of our pension funds, and goes out into the world to buy lots of things.

It’s invested in shares, property and more by our expert fund managers. The investments can range from a share of large international companies like Apple, or smaller businesses like Greggs. Or it might be lent out to an infrastructure project like building a wind farm or a new hospital. This helps it grow to keep up with the rising cost of living. And while your money is working for your future, it’s helping to keep the world working too.

The exact markets you’re invested in depends on the fund you’re in and how far you are from retirement. But the bigger the trade, the better the deal we get – so being the UK’s largest pension provider pays off here. As the markets and world we live in changes, we’ll continue to adjust where your money is invested so it keeps working hard.

As you get closer to using your pension savings to live off, we’ll move more of your money into predictable markets, depending on the fund you’re in. This means you’ll have a better view on how much income you’ll have when you’re ready to stop working. Remember, you can always choose a different fund – it’s your money and your choice.

Once you’ve stopped working and need to use your savings, we’ll keep the bulk of it invested while you withdraw what you need. We’ll help you manage your pension pot, your way.

If you decide to withdraw your savings – usually after retirement or if you transfer your pot to another provider – we’ll cash your investments out and pass the value of your pot to you or your next provider. You’ll always know how much you have at any one time by logging in to your account.