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    • xylophone
    • By xylophone 7th Sep 12, 11:20 PM
    • 17,055 Posts
    • 9,469 Thanks
    xylophone
    • #2
    • 7th Sep 12, 11:20 PM
    • #2
    • 7th Sep 12, 11:20 PM
    Do you have an emergency fund?
    Do you have debts on which you pay more in interest than you can earn?
    Do you use your ISA allowance?
    Do you need capital security?
    Do you have a mortgage?
    Do you have a pension?
    And so on.

    You can save or invest or save and invest - what you choose to do depends on your circumstances and your attitude to risk.
  • I<3Moneysaving
    • #3
    • 7th Sep 12, 11:36 PM
    • #3
    • 7th Sep 12, 11:36 PM
    Do you have an emergency fund? Yes about three years salary above this 50k
    Do you have debts on which you pay more in interest than you can earn? No debts apart from student loan
    Do you use your ISA allowance? No, not sure what the big deal in 5k at 3% is.
    Do you need capital security? No
    Do you have a mortgage? No
    Do you have a pension? No am 24


    I do not mind risk, but obviously would not like to lose significant amounts. I know nothing about investing but would love to broaden my horizons
    • Lokolo 2
    • By Lokolo 2 7th Sep 12, 11:56 PM
    • 934 Posts
    • 719 Thanks
    Lokolo 2
    • #4
    • 7th Sep 12, 11:56 PM
    • #4
    • 7th Sep 12, 11:56 PM
    OP you say what is the big deal with a 3% ISA, well it does work out quite a big deal as it is tax free interest, so compared to your 2.8% account which is taxable interest it makes quite a difference to use an ISA!

    Also you answered that you are 24 with regards to a Pension, does this mean you think you only need to start saving a pension when you are older? If you think that you must be naieve! I am 22 and have been saving into a pension since last year, I think the sooner you start the better, otherwise you'll regret the low payout when you retire!

    If you want to learn more about investments, then it may be wise to do your own research into them, nobody on here can spoonfeed you with the "right" option as it is a personal choice!
  • innovate
    • #5
    • 8th Sep 12, 12:02 AM
    • #5
    • 8th Sep 12, 12:02 AM
    Do you have a pension? No am 24
    Originally posted by I<3Moneysaving
    24 is pretty late to start on a pension - - but better now than later/never

    http://www.adviceguide.org.uk/england/debt_e/debt_pensions_e/debt_starting_a_pension_e/why_have_a_pension.htm
    • xylophone
    • By xylophone 8th Sep 12, 12:22 AM
    • 17,055 Posts
    • 9,469 Thanks
    xylophone
    • #6
    • 8th Sep 12, 12:22 AM
    • #6
    • 8th Sep 12, 12:22 AM
    You could use a stocks and shares ISA.
    You could start a pension.
    Both the above can have tax advantages, even more so if you are a higher rate taxpayer.

    Get reading!
    http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/index.htm
    http://www.hmrc.gov.uk/incometax/relief-pension.htm
    http://www.hl.co.uk/investment-services/isa/why-invest-in-a-stocks-and-shares-isa
  • MoneySaverLog
    • #7
    • 8th Sep 12, 12:39 AM
    • #7
    • 8th Sep 12, 12:39 AM
    Get the ISA and pension (ideally Defined Benefit if you can get it) sorted as a priority. ISA rates may not be great right now but it is tax free and builds up the amount you have over time.
  • Colin297
    • #8
    • 8th Sep 12, 12:56 AM
    • #8
    • 8th Sep 12, 12:56 AM
    Wow, that's impressive savings for your age. What do you do / earn?

    As for ISA's, you should realise that you can add to them every year. So if you had one for 10 years that would be about 60k 3% tax free interest each year. You'd be shocked at the saving you make, especially when the interest rates go up again.

    Obviously a few % on 5k isn't much for one year. But what about 10 years cumulatively? That and the fact your balance would be far higher than 5k after each year. That's the beauty of ISA.
  • I<3Moneysaving
    • #9
    • 8th Sep 12, 8:46 AM
    • #9
    • 8th Sep 12, 8:46 AM
    I never realised you could add to your ISA every year.I thought they expired at the end of the tax year. I have done some reading into ISAs and they do not make this very clear.

    I earned the money playing poker online, played a lot through uni and it was good to me.

    I did not mean to be negative towards pensions, I would like to start one once my company starts to at least match my contributions.

    Thanks for the replies guys, interested to know more about investing but it just seems like a minefield. Anymore input is very welcome.
    • gadgetmind
    • By gadgetmind 8th Sep 12, 8:52 AM
    • 10,173 Posts
    • 7,893 Thanks
    gadgetmind
    interested to know more about investing but it just seems like a minefield.
    Originally posted by I<3Moneysaving
    You indulge in online gambling but regard investing as risky?

    The tricks with investing are to start early, take it seriously (put in decent amounts), contribute regularly (don't try and time it), make sure your investments are diversified around the world and across asset classes, and to keep fees low.

    You're right regards pension as here you benefit far more if you're paying tax at > basic rate and/or your employer will also contribute.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • innovate
    I have done some reading into ISAs and they do not make this very clear.
    Originally posted by I<3Moneysaving
    Did you read through this? http://www.moneysavingexpert.com/savings/best-cash-isa

    interested to know more about investing but it just seems like a minefield
    Originally posted by I<3Moneysaving
    Easily done - - just read some books (e.g. Smarter Investing by Tim Hales) and some reputable websites such as monevator.com
    • JoeCrystal
    • By JoeCrystal 8th Sep 12, 10:06 AM
    • 1,123 Posts
    • 615 Thanks
    JoeCrystal
    24 is pretty late to start on a pension - - but better now than later/never

    http://www.adviceguide.org.uk/england/debt_e/debt_pensions_e/debt_starting_a_pension_e/why_have_a_pension.htm
    Originally posted by innovate
    Pretty late? 24 is not late! I mean, once you finished uni, you would be 21. Of course, it may take a while before you realise that you need save up for a retirement eventually. I would put pretty late at 30 years old since you already potentially miss a decade of contribution but still got more decades to catch up with higher contribution.

    But then, maybe I am biased since I was 24 when starting my pension...

    Cheers

    Joe
    Last edited by JoeCrystal; 08-09-2012 at 10:12 AM.
  • I<3Moneysaving
    Ok thanks for tips. I always thought once the tax year ended the old ISA just went to 0%.

    Now I have been put right I have opened a 3 Year fixed ISA at 3.75% with max in it. Next I want to max my S&S ISA.

    Would a sensible approach be to buy 5 investment trusts at 1,000 each in different investment areas to try and diversify?
    • Froggitt
    • By Froggitt 8th Sep 12, 10:26 AM
    • 5,689 Posts
    • 3,015 Thanks
    Froggitt
    You indulge in online gambling but regard investing as risky?
    Originally posted by gadgetmind
    I also gamble online (Betfair), but I'm now only playing with other people's money (ie my winnings), having also funded various holidays over the past ten years or so.

    Need a ready supply of muggs though to fund my continued success......must admit though its harder to make money now than it was say five years ago.

    Is it risky.....no not really if you have an edge over the rest of the "table".
    illegitimi non carborundum
  • innovate
    Pretty late? 24 is not late! I mean, once you finished uni, you would be 21. .......

    But then, maybe I am biased since I was 24 when starting my pension...
    Originally posted by JoeCrystal
    OK OK, may be I am biased too - I started age 18, lol

    Other than severe lack of funds, there's no reason why people shouldn't start a lot earlier though - money such presents from family, CTFs, JISA etc can all go towards pension savings.
  • innovate
    You indulge in online gambling but regard investing as risky?
    Originally posted by gadgetmind
    There are quite a few forms of online gambling that are a lot less risky, and normally a lot more profitable, than investing in funds, shares, trusts etc.

    Not all online gamblers are mugs :-)
    • gadgetmind
    • By gadgetmind 8th Sep 12, 1:28 PM
    • 10,173 Posts
    • 7,893 Thanks
    gadgetmind
    Would a sensible approach be to buy 5 investment trusts at 1,000 each in different investment areas to try and diversify?
    Originally posted by I<3Moneysaving
    It would be very easy to do much worse, but -
    1) Many ITs only invest in equities. At your age, this isn't such a bad thing, but if you read Smarter Investing you'll understand the benefits of holding other asset classes.
    2) Diversification is great, but trading costs mean that you won't be able to rebalance very often. Again, not such a bad thing!
    3) Anything less than 1000 into each will mean you're paying a lot up front in dealing fees and stamp duty.
    4) Dealing costs will mean you'll be buying all at once rather than drip feeding.
    5) ITs tend to have lower fees than funds, but the gap is closing and neither can match passive investments.

    I don't want any of this to put you off, but you might be better drip-feeding money into a diversified fund and then selling this to buy into ITs as and when you fancy.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • Rollinghome
    • By Rollinghome 8th Sep 12, 5:39 PM
    • 1,992 Posts
    • 2,116 Thanks
    Rollinghome
    It would be very easy to do much worse, but -
    1) Many ITs only invest in equities.
    Originally posted by gadgetmind
    To avoid any confusion: while that's true, it's equally true that some ITs (including the daddy of them all, Alliance) invest world-wide in equities, bonds, gilts, property and commodities, including gold, all within the same fund.
    • gadgetmind
    • By gadgetmind 9th Sep 12, 9:34 AM
    • 10,173 Posts
    • 7,893 Thanks
    gadgetmind
    True enough, and my three favourites (PNL, RIT and RICA) are also multi-asset ITs, but I wouldn't recommend any of these for those who are just starting the wealth accumulation phase.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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