Retirement may still seem a long way off to anyone in their 40s but it is never too soon to start saving extra.

Most people will have already started saving for their retirement, and by this time anyone saving into a self-invested personal pension – also known as a Sipp – will be ahead of the curve. But these DIY investors take on all the risk and responsibility of managing their money. 

There are some important dos and don’ts when it comes to how you invest, depending on your age. 

The good news is that pension nest eggs are locked away until age 55 so they still have time to recover from any surprise swings in the stock market. 

Laith Khalaf of AJ Bell, the stockbroker, said this meant pension savers could afford to take a high degree of risk in their 40s. They should invest all their money into stocks and shares, he said. 

“With such a long time frame until you draw on your investments, you can consider higher risk areas such as smaller companies and emerging markets, which tend to experience more ups and downs, but also come with the potential for higher returns, and of course, better performance spells a more affluent retirement,” he said. 

The Fidelity Index World, a passive fund that tracks the global stock market, is a simple, hands off investment that is also cheap, at 0.12pc per year, he said. 

The Abrdn UK Smaller Companies Growth trust, run since 1993 by manager Harry Nimmo, is one fund that should be able to weather the occasional market storm. The trust invests in tomorrow’s largest companies that have good growth prospects, according to Mr Khalaf.