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  • FIRST POST
    • Gurses
    • By Gurses 10th Jul 17, 11:03 PM
    • 10Posts
    • 1Thanks
    Gurses
    Pension at a young age
    • #1
    • 10th Jul 17, 11:03 PM
    Pension at a young age 10th Jul 17 at 11:03 PM
    Good evening,

    I'm 21 years old and make just over £19,000 at the moment, and I'm still going university (had a year off).At the moment I'm just a typical 21 year old, I blow my money when I get paid, live month to month. But I feel like this is a waste.

    Do you guys suggest I take out a private pension scheme? I don't have to pay for rent or any rent at the moment, so I can easily deposit £300 or so into the account. I have no debts apart from my car finance, which I'm happy just paying it off month by month.

    Do you suggest I take out a pension or a savings account such as an ISA? The earlier you start the better for when you retire. I'm interested in pension schemes as you obviously can't withdraw, which is good as I don't want to.

    How will I go around setting one up? What's the best service providers, what options do you suggest etc..? I don't taking a few risky steps as I'm starting early so it will compensate for any mistakes I make before I'm 30 or so. Thanks very much!

    I pay £50 into my company pension at the moment, which I believe is matched by my employer.
Page 1
    • Not Me Officer
    • By Not Me Officer 10th Jul 17, 11:16 PM
    • 262 Posts
    • 46 Thanks
    Not Me Officer
    • #2
    • 10th Jul 17, 11:16 PM
    • #2
    • 10th Jul 17, 11:16 PM
    How do you rate your willpower? By that i mean if you put it in an ISA but then you see a really nice [insert item you reeeeeeeeeeeeeeeeeeally want here] would you take it out of the ISA to buy it? I know you wouldn't want to (now) but if you're 100% honest with yourself would you take money out or would you be strict with yourself and say no that's my retirement pot and it stays that way no matter what?

    You earn slightly south of what i get right now (£20.5k) but way more than i was ever getting at 21. My aim at your age was to save for a house, enough of a deposit to get a house i'm happy with in an area i like with mortgage payments at a comfortable level.

    If i could go back to your age i would've still had that as my main priority but i would've also put aside for retirement planning.

    Have you factored a house purchase into your £300 per month deposit? Or would saving for that reduce your £300 per month retirement plan to say £200 or £100?
    • Gurses
    • By Gurses 11th Jul 17, 12:28 AM
    • 10 Posts
    • 1 Thanks
    Gurses
    • #3
    • 11th Jul 17, 12:28 AM
    • #3
    • 11th Jul 17, 12:28 AM
    How do you rate your willpower? By that i mean if you put it in an ISA but then you see a really nice [insert item you reeeeeeeeeeeeeeeeeeally want here] would you take it out of the ISA to buy it? I know you wouldn't want to (now) but if you're 100% honest with yourself would you take money out or would you be strict with yourself and say no that's my retirement pot and it stays that way no matter what?

    You earn slightly south of what i get right now (£20.5k) but way more than i was ever getting at 21. My aim at your age was to save for a house, enough of a deposit to get a house i'm happy with in an area i like with mortgage payments at a comfortable level.

    If i could go back to your age i would've still had that as my main priority but i would've also put aside for retirement planning.

    Have you factored a house purchase into your £300 per month deposit? Or would saving for that reduce your £300 per month retirement plan to say £200 or £100?
    Originally posted by Not Me Officer
    Well that's the problem I have. I have savings accounts etc but I always dip into it. If I see something I want for myself, my mrs or anything like that, I most likely will dip into it. I just bought Reading tickets for the whole duration and it cost me a fortune. That's why I want somewhere I can deposit but no withdraw.

    That does not count towards my house purchase at all. I currently live in London and I haven't even counted that into my whole saving as it costs way too much for me to save on 300 a month.

    If i could pick between saving for a deposit and pension, it would be for the house - but I don't know what to do with the money I save. If I put it into a regular savings account, I'll withdraw it and buy myself something shiny like you said. I've tried to look at notice accounts but couldn't find one where I can deposit but restricted withdraw.

    Where can I store my savings for a house deposit? What kind of account, savings account, etc... ensures that I can't dip into it? IRAs aren't an option really as most of them you can't really add to throughout the month, and/or they have unrealistic reqs like a £1000 deposit.

    I know I make a decent amount, hence why I really want to start saving while I don't have to pay for any bills. I make around £1.3-1.4k after tax, £250 goes to my car finance, the rest I literally blow throughout the month. New clothes, treating the mrs, going for a nice meal etc...

    I still want to do all those stuff, but I also want to save at least £300 a month.
    • Vaskor
    • By Vaskor 11th Jul 17, 3:59 AM
    • 11 Posts
    • 6 Thanks
    Vaskor
    • #4
    • 11th Jul 17, 3:59 AM
    • #4
    • 11th Jul 17, 3:59 AM
    You could also consider a Help to Buy and/or Lifetime ISA.
    • Kynthia
    • By Kynthia 11th Jul 17, 8:14 AM
    • 4,939 Posts
    • 6,920 Thanks
    Kynthia
    • #5
    • 11th Jul 17, 8:14 AM
    • #5
    • 11th Jul 17, 8:14 AM
    It's a good idea to start your pension early and I do wish I'd paid more before I had a mortgage and children to pay for. However you'd be locking your money away for a long time and if you hope to purchase a property some time you need to save towards a deposit.

    If I were you I'd put half the extra money in my employers pension and the other half into a LISA or an ISA that was fixed so I couldn't keep dipping into it for a property purchase.
    Last edited by Kynthia; 11-07-2017 at 8:29 AM.
    Don't listen to me, I'm no expert!
    • worried jim
    • By worried jim 11th Jul 17, 8:21 AM
    • 8,399 Posts
    • 12,794 Thanks
    worried jim
    • #6
    • 11th Jul 17, 8:21 AM
    • #6
    • 11th Jul 17, 8:21 AM
    I started my first pension at 20 when I was earning £8.5k on a training program. I'm 43 now and well on my way to having £1m+ come retirement due to saving, good investing and the sweet beauty of compound interest. Best thing I ever did.

    Maybe £300 just into a pension is a lot but every £ you invest now has 45 years to work for you. Good luck!
    "Only two things are infinite-the universe and human stupidity, and I'm not so sure about the universe"
    Albert Einstein
    • OldBeanz
    • By OldBeanz 11th Jul 17, 9:06 AM
    • 655 Posts
    • 481 Thanks
    OldBeanz
    • #7
    • 11th Jul 17, 9:06 AM
    • #7
    • 11th Jul 17, 9:06 AM
    http://www.telegraph.co.uk/finance/personalfinance/investing/10742396/When-saving-for-10-years-pays-more-than-saving-for-40.html
    • DairyQueen
    • By DairyQueen 11th Jul 17, 9:23 AM
    • 40 Posts
    • 16 Thanks
    DairyQueen
    • #8
    • 11th Jul 17, 9:23 AM
    • #8
    • 11th Jul 17, 9:23 AM
    I wish I had had your sense at your age. I am now in my 50s but I remember very well how I felt at 21. I couldn't imagine then ever being the age I am now.

    I was lucky that I was automatically enrolled in my employer's company pension at age 26. I was unlucky that pension providers in the 1990s charged extortionate fund management fees and financial services were then on gravy train commission.

    Things are very different now.

    Within the next 10/15 years you are likely to have all kinds of pressures on your income (house purchase, kids) which you don't have now. You are also likely to be earning a lot more relative to your current income. Once those pressures kick-in the temptation to minimise pension savings will be extremely difficult to resist. Those pressures are very different to the temptation to spend on the stuff-and-fun things that you are feeling now.

    If I had been properly advised at your age, and if the pension vehicles available now had been available back then, I would have dropped that £300 a month directly into the hands of any pension provider who charges low platform fees. I would have opted to invest in a single tracker fund with low admin charges. I would have chosen a tracker which offered geographical diversification and then ticked the 'savings' box on my 'to do' list for the next 3-to-5 years.

    The key to a comfy retirement is to save as much as you can when you are young, young, YOUNG. The younger the better as you will max-out the investment period and you won't be bothered about the timing of market highs/crashes. Don't try and understand all the pension stuff right now. The detail is so complicated that it's likely to confuse you into pension-savings-paralysis so focus on understanding the principles. You will discover what all the jargon means over time, and the pension environment will change over your working life anyway.

    Even if in, say, 3-to-5 years time you feel pressure to divert your savings elsewhere your 50-year-old self will be congratulating your 21-year-old self in 30 years time for any pension savings you make now.

    The reasons that I would opt for pension over any other savings vehicle - even if only for the next 3-to-5 years (until those other pressures begin to mount):

    1) Tax relief. An instant boost of 25% means that your investment will cost you £300pm but £375 will be invested.
    2) You can't access the money.
    3) You will begin your working life with the savings habit and, in particular, the pension savings habit.
    4) You can't access the money.
    5) In 3 years you will have squirrelled away the best part of £14k (inc tax relief). The markets may move down in that time so your £14k may then be valued at (say) £13k. They may have moved up so your £14k may then be valued at (say) £16k. It doesn't matter what the 'paper' value is in 3 years. The important thing is that, in 30 years, it is very likely that your £14k will be worth £100k+. Over that kind of time period you can expect to receive an average annual return of about 8% by investing in the stock market.
    6) You can't access the money.
    7) Future governments are likely to protect existing pension savings. Lots of short-term economic/political factors impact the housing market, and other savings vehicles, and governments are always interfering with those. It's easier to time your entry into the housing market than the stock market and, at your age, the stock market is definitely the place for as much of your savings as you can pack away for later life.
    8) Long-term savings in the stock market give the best overall return on your money. That means investing young and staying invested. You need decades to benefit from those great average annual returns but those returns will be the key to your income/lifestyle in later life.

    If you decide to go the pension route:
    1) Research on the lowest charge SIPP providers for small portfolios. You will learn a lot from researching and nothing beats research to help make informed decisions in the future. Typically small portfolios (0-50k-ish) are best served by SIPP providers who charge a percentage of the fund size each year rather than a flat fee.

    2) Don't be tempted to invest in managed funds, or in trackers which focus on small companies or developing markets, when you are just starting out. Stay with indices which track big company shares in developed markets as index trackers of this type are seldom out-performed by experienced fund managers, let alone self-investors, over the medium/long term, and the charges on trackers are much lower (win/win). Diversification into other asset types/markets/sectors is best left for the future. Keep it simple. Keep it mainstream.

    3) Check the admin/management charges of any tracker fund you are considering. This will be vital to how much of the return you get to keep. For example, in the bad old days funds often charged 4%+ in fees. This meant that, for example, a healthy 8% return would be disproportionately shared between you and the fund manager as you would only receive 4%. Although those days are over the principle of management/admin charges impacting the value of your savings over time remains. If you stop contributing the impact compounds. I would consider a 0.2% fee for a tracker to be high when 0.1% is available.

    If I was 21 now then I would head straight toward Vanguard's funds. Their charges are super-low and they specialise in trackers. I would choose a 100% global equity tracker and invest in it through a SIPP (e.g. AJ Bell, BestInvest, Hargreaves Landsdown, several others). I would then save my 300 quid each month for as long as I comfortably could knowing that, even if I felt compelled to stop contributing, the money already saved would be very, very unlikely to erode through (my) neglect or high charges. It would also be highly likely to give the best possible return in 30 years time.

    Most of us will have times in our lives when we would love to get our hands on our pension savings. I don't just mean for something like a new car. Nope, there have been times when I have had to split paying the electricity bill over two months. I would have done anything to raid my pension fund back then. I couldn't. I am now very thankful that I couldn't.

    Desperate times tend to be short-and-sharp and you get through them somehow. The things you want right now will change over time but you will always be tempted to spend surplus cash on something or other. Pensions savings are best invested as early in life as possible. House purchase is also important but, at your age, you can wait a few years to begin saving for that.

    Others here will hold different views but I believe that you will be giving your 50-year-old self a very big gift by saving that money in a (low-cost) pension right now.

    Good luck and let us know what you decide.
    • atush
    • By atush 11th Jul 17, 12:44 PM
    • 16,155 Posts
    • 9,850 Thanks
    atush
    • #9
    • 11th Jul 17, 12:44 PM
    • #9
    • 11th Jul 17, 12:44 PM
    Well that's the problem I have. I have savings accounts etc but I always dip into it. If I see something I want for myself, my mrs or anything like that, I most likely will dip into it. I just bought Reading tickets for the whole duration and it cost me a fortune. That's why I want somewhere I can deposit but no withdraw.

    That does not count towards my house purchase at all. I currently live in London and I haven't even counted that into my whole saving as it costs way too much for me to save on 300 a month.

    If i could pick between saving for a deposit and pension, it would be for the house - but I don't know what to do with the money I save. If I put it into a regular savings account, I'll withdraw it and buy myself something shiny like you said. I've tried to look at notice accounts but couldn't find one where I can deposit but restricted withdraw.

    Where can I store my savings for a house deposit? What kind of account, savings account, etc... ensures that I can't dip into it? IRAs aren't an option really as most of them you can't really add to throughout the month, and/or they have unrealistic reqs like a £1000 deposit.

    I know I make a decent amount, hence why I really want to start saving while I don't have to pay for any bills. I make around £1.3-1.4k after tax, £250 goes to my car finance, the rest I literally blow throughout the month. New clothes, treating the mrs, going for a nice meal etc...

    I still want to do all those stuff, but I also want to save at least £300 a month.
    Originally posted by Gurses

    Who pays you 19K a year? Do they have a pension? That is the one you should join, as yur employer pays in too?

    Second, open accounts you cant get your hands on. A regular saver. Check out the thread in the savings forum. And a pension is also something you cant touch.

    second, impulse control. You are 21 so time to grow up.

    Set a budget. Include Leisure/fun money so you dont think you are being too frugal and not having fun. Dont use more than this. Leave your DC and other cards at home, and go out with the max amount of cash you want to spend.


    Do a spending diary, set it up at home and write down everything you spend 1 quid and over. See how much is wasted at the end of the month.
    • Gurses
    • By Gurses 11th Jul 17, 3:37 PM
    • 10 Posts
    • 1 Thanks
    Gurses
    I wish I had had your sense at your age. I am now in my 50s but I remember very well how I felt at 21. I couldn't imagine then ever being the age I am now.

    I was lucky that I was automatically enrolled in my employer's company pension at age 26. I was unlucky that pension providers in the 1990s charged extortionate fund management fees and financial services were then on gravy train commission.

    Things are very different now.

    Within the next 10/15 years you are likely to have all kinds of pressures on your income (house purchase, kids) which you don't have now. You are also likely to be earning a lot more relative to your current income. Once those pressures kick-in the temptation to minimise pension savings will be extremely difficult to resist. Those pressures are very different to the temptation to spend on the stuff-and-fun things that you are feeling now.

    If I had been properly advised at your age, and if the pension vehicles available now had been available back then, I would have dropped that £300 a month directly into the hands of any pension provider who charges low platform fees. I would have opted to invest in a single tracker fund with low admin charges. I would have chosen a tracker which offered geographical diversification and then ticked the 'savings' box on my 'to do' list for the next 3-to-5 years.

    The key to a comfy retirement is to save as much as you can when you are young, young, YOUNG. The younger the better as you will max-out the investment period and you won't be bothered about the timing of market highs/crashes. Don't try and understand all the pension stuff right now. The detail is so complicated that it's likely to confuse you into pension-savings-paralysis so focus on understanding the principles. You will discover what all the jargon means over time, and the pension environment will change over your working life anyway.

    Even if in, say, 3-to-5 years time you feel pressure to divert your savings elsewhere your 50-year-old self will be congratulating your 21-year-old self in 30 years time for any pension savings you make now.

    The reasons that I would opt for pension over any other savings vehicle - even if only for the next 3-to-5 years (until those other pressures begin to mount):

    1) Tax relief. An instant boost of 25% means that your investment will cost you £300pm but £375 will be invested.
    2) You can't access the money.
    3) You will begin your working life with the savings habit and, in particular, the pension savings habit.
    4) You can't access the money.
    5) In 3 years you will have squirrelled away the best part of £14k (inc tax relief). The markets may move down in that time so your £14k may then be valued at (say) £13k. They may have moved up so your £14k may then be valued at (say) £16k. It doesn't matter what the 'paper' value is in 3 years. The important thing is that, in 30 years, it is very likely that your £14k will be worth £100k+. Over that kind of time period you can expect to receive an average annual return of about 8% by investing in the stock market.
    6) You can't access the money.
    7) Future governments are likely to protect existing pension savings. Lots of short-term economic/political factors impact the housing market, and other savings vehicles, and governments are always interfering with those. It's easier to time your entry into the housing market than the stock market and, at your age, the stock market is definitely the place for as much of your savings as you can pack away for later life.
    8) Long-term savings in the stock market give the best overall return on your money. That means investing young and staying invested. You need decades to benefit from those great average annual returns but those returns will be the key to your income/lifestyle in later life.

    If you decide to go the pension route:
    1) Research on the lowest charge SIPP providers for small portfolios. You will learn a lot from researching and nothing beats research to help make informed decisions in the future. Typically small portfolios (0-50k-ish) are best served by SIPP providers who charge a percentage of the fund size each year rather than a flat fee.

    2) Don't be tempted to invest in managed funds, or in trackers which focus on small companies or developing markets, when you are just starting out. Stay with indices which track big company shares in developed markets as index trackers of this type are seldom out-performed by experienced fund managers, let alone self-investors, over the medium/long term, and the charges on trackers are much lower (win/win). Diversification into other asset types/markets/sectors is best left for the future. Keep it simple. Keep it mainstream.

    3) Check the admin/management charges of any tracker fund you are considering. This will be vital to how much of the return you get to keep. For example, in the bad old days funds often charged 4%+ in fees. This meant that, for example, a healthy 8% return would be disproportionately shared between you and the fund manager as you would only receive 4%. Although those days are over the principle of management/admin charges impacting the value of your savings over time remains. If you stop contributing the impact compounds. I would consider a 0.2% fee for a tracker to be high when 0.1% is available.

    If I was 21 now then I would head straight toward Vanguard's funds. Their charges are super-low and they specialise in trackers. I would choose a 100% global equity tracker and invest in it through a SIPP (e.g. AJ Bell, BestInvest, Hargreaves Landsdown, several others). I would then save my 300 quid each month for as long as I comfortably could knowing that, even if I felt compelled to stop contributing, the money already saved would be very, very unlikely to erode through (my) neglect or high charges. It would also be highly likely to give the best possible return in 30 years time.

    Most of us will have times in our lives when we would love to get our hands on our pension savings. I don't just mean for something like a new car. Nope, there have been times when I have had to split paying the electricity bill over two months. I would have done anything to raid my pension fund back then. I couldn't. I am now very thankful that I couldn't.

    Desperate times tend to be short-and-sharp and you get through them somehow. The things you want right now will change over time but you will always be tempted to spend surplus cash on something or other. Pensions savings are best invested as early in life as possible. House purchase is also important but, at your age, you can wait a few years to begin saving for that.

    Others here will hold different views but I believe that you will be giving your 50-year-old self a very big gift by saving that money in a (low-cost) pension right now.

    Good luck and let us know what you decide.
    Originally posted by DairyQueen
    Thank you very much for all the info! I was actually looking at Hargreaves Lansdown SIPP last night while writing this thread up. The thing I'm concerned about is:
    -
    "however a SIPP lets you invest almost anywhere you like and choose your own investments.".
    I have no idea what to invest in. All I know is that I wouldn't mind trying out some aggressive tactics for a couple years before settling down for a traditional balance between profit and risk.

    Obviously taking into what you said, atm I can save £300 a month easily, when I marry, have kids and so on, and I want to reduce this amount to lets say £100, will this be possible?

    I like the way you explain stuff so another question (question time aye); If I want to put £200 into the SIPP and £100 towards house deposit savings - where should I keep my £100? ISAs are locked and I can't deposit monthly so that isn't really an option.

    Thank you very much!
    • Gurses
    • By Gurses 11th Jul 17, 3:41 PM
    • 10 Posts
    • 1 Thanks
    Gurses
    Who pays you 19K a year? Do they have a pension? That is the one you should join, as yur employer pays in too?

    Second, open accounts you cant get your hands on. A regular saver. Check out the thread in the savings forum. And a pension is also something you cant touch.

    second, impulse control. You are 21 so time to grow up.

    Set a budget. Include Leisure/fun money so you dont think you are being too frugal and not having fun. Dont use more than this. Leave your DC and other cards at home, and go out with the max amount of cash you want to spend.


    Do a spending diary, set it up at home and write down everything you spend 1 quid and over. See how much is wasted at the end of the month.
    Originally posted by atush
    I work in a private sector, I'd rather not state the company. They do have a pension scheme but I was 20 when I was employed so I wasn't enrolled into the scheme automatically. I'm currently in the process of joining the scheme. They match 1% of my savings (no idea how much I want to save).

    The thing is I'm really bad with money. These been times where I saved up £2000+ in a regular savings account, but then spent it on a holiday, shopping, phone etc... This is why I want a private pension as I can't touch the funds, even if i wanted to.
    • MallyGirl
    • By MallyGirl 11th Jul 17, 4:02 PM
    • 1,821 Posts
    • 6,180 Thanks
    MallyGirl

    ISAs are locked and I can't deposit monthly so that isn't really an option.

    Thank you very much!
    Originally posted by Gurses
    I pay monthly into my S&S ISA - and have it scheduled to buy Vanguard 60 with every deposit. I am older than you - you could go 100% equities at your time of life.
    • atush
    • By atush 11th Jul 17, 4:39 PM
    • 16,155 Posts
    • 9,850 Thanks
    atush
    I work in a private sector, I'd rather not state the company. They do have a pension scheme but I was 20 when I was employed so I wasn't enrolled into the scheme automatically. I'm currently in the process of joining the scheme. They match 1% of my savings (no idea how much I want to save).

    The thing is I'm really bad with money. These been times where I saved up £2000+ in a regular savings account, but then spent it on a holiday, shopping, phone etc... This is why I want a private pension as I can't touch the funds, even if i wanted to.
    Originally posted by Gurses

    True enough but you also want to try and improve your impulse control.

    So transfer your reg saver money to a 1 year bond the day it is released.

    On pay day, set up a regular transfer of funds to an account that belongs to your mom so she can save it for you (if she is good with money). Surely she wont let you get your grubby little hands on it?

    I am not saying dont do the pension, do. You can even put more than 1% in if you want to. But you need strategies to cater for your impulse spending.

    Perhaps you should hang out on t he debt free wannabe forum for a bit and see what happens when people cant control their spending?
    • Gurses
    • By Gurses 11th Jul 17, 7:11 PM
    • 10 Posts
    • 1 Thanks
    Gurses
    I pay monthly into my S&S ISA - and have it scheduled to buy Vanguard 60 with every deposit. I am older than you - you could go 100% equities at your time of life.
    Originally posted by MallyGirl
    If I open an S&S ISA I most likely will also go for the VG60 as my ISA will be my house deposit pot (hopefully), so I would rather have something less risky as I'll be withdrawing it quicker. On the other hand, I wouldn't mind going for something more risky for my private pension as a loss in the next 20 years wouldn't have a huge impact due to not withdrawing it before retiring.

    True enough but you also want to try and improve your impulse control.

    So transfer your reg saver money to a 1 year bond the day it is released.

    On pay day, set up a regular transfer of funds to an account that belongs to your mom so she can save it for you (if she is good with money). Surely she wont let you get your grubby little hands on it?

    I am not saying dont do the pension, do. You can even put more than 1% in if you want to. But you need strategies to cater for your impulse spending.

    Perhaps you should hang out on t he debt free wannabe forum for a bit and see what happens when people cant control their spending?
    Originally posted by atush
    I understand your point. Me actually starting a private pension/S&S ISA is the first steps to me actually trying to be more clever with my money. I can't just stop spending £1000 a month - it isn't going to work unless the money is taken from me.

    Start small!
    • DairyQueen
    • By DairyQueen 11th Jul 17, 7:12 PM
    • 40 Posts
    • 16 Thanks
    DairyQueen
    When you feel the need to divert some of your surplus money to cash savings them go for a regular savings a/c with someone like Nationwide or First Direct (open a current a/c if you need to). You will typically earn 4/5% p.a. from this type of regular savings scheme (but who know what they will be paying in the future). However, the principle is sound. As long as you make sure that you move the proceeds from their (paltry) savings a/c on maturity then these regular savings a/cs will remain good value.

    Moving the proceeds form regular savings a/cs into fixed interest bonds is a good strategy. Note that managing your money always involves being proactive. Inertia is a great way to lose money. You can leave money in the stock market (wisely) invested for years but the same doesn't apply to cash in bank/savings a/cs. It's a constant chase to find the best home for your hard-earned dosh.

    Also (noting your comments), you can vary the amount that you save into pensions at any time.
    • Not Me Officer
    • By Not Me Officer 11th Jul 17, 9:11 PM
    • 262 Posts
    • 46 Thanks
    Not Me Officer
    Don't get offended but if you start locking away your money as you plan for the future how would this impact on your good lady? Will she still be around kind of thing? Don't think i'm saying she's out for your money or anything as i don't know either of you obviously, but if you're putting money aside then something has to give doesn't it? Instead of going out x-times per month you'll only be able to go out y-times per month instead. Just something else to think about which you may have already.


    Anyway my brother is very much like you. Spend spend spend but also knows he needs to save. Only a few years older than you too.
    Since you're a spendaholic what i would personally do in your situation is put money into a S&S LISA (for your house) and a pension (for your retirement). Sure you can withdraw from the LISA but only you will know if taking the penalty is worth it & getting back LESS than what you put in.


    As for not knowing where to invest - i was like that for years. I still don't really know but i have a better idea now than i ever did.

    I suggest looking for the book DIY Investing by John Edwards. It's a really small book, not so many pages so you wont feel baffled & it's explained very well. This would be just a START. I'm not saying it's the only book you ever need but it's a start & it explains things brilliantly i found. Helped me no end. Enough to give me confidence in going solo.
    • Vaskor
    • By Vaskor 13th Jul 17, 6:26 PM
    • 11 Posts
    • 6 Thanks
    Vaskor
    Thank you very much for all the info! I was actually looking at Hargreaves Lansdown SIPP last night while writing this thread up. The thing I'm concerned about is:
    -

    I have no idea what to invest in. All I know is that I wouldn't mind trying out some aggressive tactics for a couple years before settling down for a traditional balance between profit and risk.

    Obviously taking into what you said, atm I can save £300 a month easily, when I marry, have kids and so on, and I want to reduce this amount to lets say £100, will this be possible?

    I like the way you explain stuff so another question (question time aye); If I want to put £200 into the SIPP and £100 towards house deposit savings - where should I keep my £100? ISAs are locked and I can't deposit monthly so that isn't really an option.

    Thank you very much!
    Originally posted by Gurses
    If you're not sure where to invest with HL, you could try their Select Funds and/or Multi-Manager funds - it's probably difficult to go far wrong in the long term if you just split your money across a few/several of them. Alternatively, you could try their Portfolio+ service, although I haven't tried this.

    In terms of "trying out some aggressive tactics for a couple [of] years before settling down for a traditional balance between profit and risk", this would seem to be the opposite of a usual approach to investing for beginners, although I suppose it depends by how aggressive you mean by aggressive.

    Towards the most aggressive end of the spectrum are investments such as penny shares and aggressive specialised ETFs. To me, they would be almost like gambling, so I generally don't invest in them. Suppose you could either double your money or lose pretty much all your money in a year by investing in one of them, each with 50% chance. Then by the end of three years, you have an 1-(1/2)^3=87.5% chance of losing all your money, which isn't good. Obviously, this is a theoretical example, but hopefully it gets the point across.

    A better idea might be to invest in some mainstream funds for now, such as the Select/Multi-Manager funds, and either just keep doing this for the long run, or start adding in some more specialised investments after a couple of years of experience, if you feel comfortable with doing this.

    I admit that when I first started investing, in my late 20s about ten years ago (since savings were still giving pretty good interest rates at the time), I didn't really know what I was doing. As a result, I made some mistakes, lost some money from time to time, and learnt from my mistakes. I tried to follow the usual advice on diversifying and not taking too much risk etc., so as a result, my losses weren't disastrous, and in the long run, I made up the losses and made a reasonable gain on average of around 12% per year, roughly in line with typical returns of the stock market.

    Nowadays, I understand what I am doing better and enjoy researching new investments and reading about investment strategies, markets, the economy and businesses. As a result, I put a small amount of my money in more risky but potentially more rewarding investments, or more specialised ones such as REITs, Asian funds, individual UK/US shares and bonds in various industries and sectors etc.. This might not be for everyone, however, and there's nothing wrong with sticking to more mainstream investments if you don't have the inclination or time to spend the time researching and reading about more specialised ones.

    In terms of saving £300/m now, and maybe later reducing this to £100/m, yes, that certainly might be possible. Every penny you save/invest now is likely to make you better off in the future. Also bear in mind that if you are quite young now and just starting off in your career, you are likely to be earning more in the future, which might leave you more to save/invest, so you might actually find that you want to save £500/m in the future!

    Good luck in your investing journey!
    • bigadaj
    • By bigadaj 13th Jul 17, 8:04 PM
    • 9,573 Posts
    • 6,094 Thanks
    bigadaj
    You must be doing well if you can afford hl in house multi manager funds, that's a very expensive way of investing.
    • Vaskor
    • By Vaskor 14th Jul 17, 12:42 PM
    • 11 Posts
    • 6 Thanks
    Vaskor
    That's a fair point about the charges - a cheaper way to invest would be via the Index tracker funds, since you are paying for HL's own research for the Multi-Manager funds and hoping that the managers at HL will be able to beat the market enough to offset the extra charges.

    I only have holdings in the HL Multi-Manager Special Situations Trust and HL Multi-Manager Strategic Assets, neither of which are particularly core holdings. I made most of my fund investments over the years after looking through HL and third party companies' research on funds.
    • armchaireconomist
    • By armchaireconomist 14th Jul 17, 1:05 PM
    • 150 Posts
    • 157 Thanks
    armchaireconomist
    Hi, for some background i'm a year older than you and earn 23k (and at University too!)


    I was lucky in that I saw sense a few years earlier and had began saving - prices in my area are cheap so I bought a house last year with a relatively small deposit. If I were you i'd open a LISA. You won't be able to withdraw from it unless for a home purchase or retirement.


    Scrap the private pension route and enrol in whatever the company pension offers - avoid the SIPP as you won't get employer contributions (for example, I pay 3% and my employer 7%). You'll also contribute to it from pre-tax pay, so you'll save a bit on income tax and NI.


    At our age buying a home is more important, IMO. But making a start won't hurt (compound interest is beautiful)
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