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  • FIRST POST
    • kasworld
    • By kasworld 6th Oct 17, 9:17 AM
    • 7Posts
    • 0Thanks
    kasworld
    First investment advice
    • #1
    • 6th Oct 17, 9:17 AM
    First investment advice 6th Oct 17 at 9:17 AM
    Hi all!

    I have just recently purchased a house for which I used up all my savings on the deposit, so I am in the process of starting off fresh again with my savings and investing in my future and would like to see what you guys think my best options might be.

    Having done some research of my own, I was looking in to a Stocks and Shares ISA and was thinking of opening an account with Cavendish Online and putting money into an investment fund such as the Vanguard Life Strategy 80. To start of with I was looking to invest an amount of £2000 and then top it up initially with a monthly amount of £100.

    A bit about myself, I am 33 years old, I currently contribute towards a final salary pension at work and I am in the higher tax bracket. As the money will be for the future I am in no hurry for a return so I am happy to leave it invested for the next 5 years at least.

    Does this seem like a good idea or am I better of exploring a different investment?

    Look forward to your thoughts.

    Thanks.
Page 1
    • Eco Miser
    • By Eco Miser 6th Oct 17, 9:36 AM
    • 3,226 Posts
    • 2,989 Thanks
    Eco Miser
    • #2
    • 6th Oct 17, 9:36 AM
    • #2
    • 6th Oct 17, 9:36 AM
    Have you got an emergency fund of at least 6 months spending? Houses tend to consume money.
    Five years is the minimum to consider for investments, 10 years plus would be better.
    Eco Miser
    Saving money for well over half a century
    • kasworld
    • By kasworld 6th Oct 17, 9:57 AM
    • 7 Posts
    • 0 Thanks
    kasworld
    • #3
    • 6th Oct 17, 9:57 AM
    • #3
    • 6th Oct 17, 9:57 AM
    Hi Eco Miser.

    My partner and I keep an emergency fund separate to cover a period of 6 months if either of us were to lose our jobs or anything like that.
    • Audaxer
    • By Audaxer 6th Oct 17, 1:07 PM
    • 655 Posts
    • 295 Thanks
    Audaxer
    • #4
    • 6th Oct 17, 1:07 PM
    • #4
    • 6th Oct 17, 1:07 PM
    Hi all!

    I have just recently purchased a house for which I used up all my savings on the deposit, so I am in the process of starting off fresh again with my savings and investing in my future and would like to see what you guys think my best options might be.

    Having done some research of my own, I was looking in to a Stocks and Shares ISA and was thinking of opening an account with Cavendish Online and putting money into an investment fund such as the Vanguard Life Strategy 80. To start of with I was looking to invest an amount of £2000 and then top it up initially with a monthly amount of £100.

    A bit about myself, I am 33 years old, I currently contribute towards a final salary pension at work and I am in the higher tax bracket. As the money will be for the future I am in no hurry for a return so I am happy to leave it invested for the next 5 years at least.

    Does this seem like a good idea or am I better of exploring a different investment?

    Look forward to your thoughts.

    Thanks.
    Originally posted by kasworld
    All sounded good until you mentioned you mentioned the next 5 years. In 5 years you will have invested £8k. With a continuing strong bull market, the value could have possibly doubled to £16k in 5 years. However more likely there will be an equity crash and it could end up being worth less than the £8k you invested in 5 years time.

    If I was in your position at 33 years old, I would be looking to invest monthly hopefully until I was at least 55, then there is a very good chance you will have a significant sum to supplement your final salary pension, and enable you to retire early if you choose.
    • AlanP
    • By AlanP 6th Oct 17, 2:24 PM
    • 998 Posts
    • 708 Thanks
    AlanP
    • #5
    • 6th Oct 17, 2:24 PM
    • #5
    • 6th Oct 17, 2:24 PM
    If you can afford to put it away for longer consider additional pension options (AVC alongside DB or a SIPP / PP) as you are a HR taxpayer.

    Locks it away until 55 at least but you'll get a 40% tax saving.
    • kasworld
    • By kasworld 6th Oct 17, 2:34 PM
    • 7 Posts
    • 0 Thanks
    kasworld
    • #6
    • 6th Oct 17, 2:34 PM
    • #6
    • 6th Oct 17, 2:34 PM
    I probably could have explained that part a little clearer

    What I meant was that I wanted to do an investment longer than 5 years and would be prepared to contribute monthly until close to retirement age when I might need it.

    Would the Vanguard Lifetime Strategy 80 be a good option to consider to start of with and then as the pot grows and I get older reduce the risk? Or are the better funds out there?
    • TheShape
    • By TheShape 6th Oct 17, 3:29 PM
    • 1,145 Posts
    • 920 Thanks
    TheShape
    • #7
    • 6th Oct 17, 3:29 PM
    • #7
    • 6th Oct 17, 3:29 PM
    I'm a relatively novice investor. I invest in VLS 100 in my S&S ISA as a long-term investment. It is likely to be very volatile and experience both very large gains and falls in value. It has been mentioned in this forum that VLS 100 (and VLS 80) are well above the risk profile of the average investor so you should be prepared to see significant falls in the value of your investment at times.

    What you do in terms of risk would depend on your circumstances at any particular point in time.
    • steampowered
    • By steampowered 6th Oct 17, 3:31 PM
    • 1,954 Posts
    • 1,825 Thanks
    steampowered
    • #8
    • 6th Oct 17, 3:31 PM
    • #8
    • 6th Oct 17, 3:31 PM
    Yes, this is a very good idea. Getting into a habit of saving a reasonable amount is one of the best things you can do.

    The question you need to ask yourself is whether you are better off investing through an ISA or through a pension. There are pros/cons to both.
    • Eco Miser
    • By Eco Miser 6th Oct 17, 3:59 PM
    • 3,226 Posts
    • 2,989 Thanks
    Eco Miser
    • #9
    • 6th Oct 17, 3:59 PM
    • #9
    • 6th Oct 17, 3:59 PM
    The question you need to ask yourself is whether you are better off investing through an ISA or through a pension. There are pros/cons to both.
    Originally posted by steampowered
    Or you could do both - pension for the tax reductions now (but possibly tax to pay in retirement), and ISA for availability before age 55 (or whatever the lower age limit for pensions is by the time you get there).
    Eco Miser
    Saving money for well over half a century
    • TARDIS
    • By TARDIS 6th Oct 17, 7:01 PM
    • 51 Posts
    • 33 Thanks
    TARDIS
    You need to make sure you are happy with the risk associated with any investment you choose and you understand the implications of your decision. If not, advice from an IFA may be money well spent. You also need to think about what you want from the money. If you may need it before retirement age an ISA offers more flexibility. Additional pension contributions will save you more tax now and possibly child benefit payments, but if you're likely to exceed the LTA additional pension contributions may not be the right thing for you. Often both an ISA and pension will be the right path, but how you divide funding of each will be individual to your situation.

    A book often recommended on these forums is Smarter Investing by Tim Hale. Reasonably easy read and as a novice investor I found it a good overview of what you should be looking for if you're going down the passive investing route, which sounds you are if you're looking at VLS80. That said you need to know yourself eg what are you likely to do emotionally when things drop (which they will) and do you have the self control to rebalance or will that tempt you to over tweek things? After reading the book I knew a lot more, but still went for a funds of funds (VLS60 in my case) as I'm too likely to meddle if I have to rebalance something regularly.

    Cavendish are slightly more expensive that vanguard for those sums if you do go with a vanguard fund, although you may want to move to a fixed fee platform in a few years as money accrues such as Halifax.
    • Alexland
    • By Alexland 6th Oct 17, 11:35 PM
    • 766 Posts
    • 473 Thanks
    Alexland
    In terms of efficiency the first priority is usually to contribute enough into one or two pensions to get out of the 40% tax bracket before considering ISAs.

    Once you are considering ISAs consider a LISA if you can commit the money until 60. Only if you are likely to need earlier access consider a regular ISA in which case the Vanguard Investor direct would be a cheaper platform than Cavendish if you only want to hold a VLS fund.
    • kasworld
    • By kasworld 9th Oct 17, 8:45 AM
    • 7 Posts
    • 0 Thanks
    kasworld
    Thank you all, some very helpful advice received.

    I have decided to increase my AVC for my pension and will be going ahead with the Vanguard Life Strategy for the flexibility it offers.

    Also, good shout on the Smarter Investing book by Tim Hale, I have just purchased it and looking forward to giving that a read.

    Thanks again!
    • chiang mai
    • By chiang mai 9th Oct 17, 9:14 AM
    • 88 Posts
    • 17 Thanks
    chiang mai
    I think it's important you use your annual ISA allowance and take advantage of the tax break, regardless of however you do that, even if it's just a cash ISA at the outset. Also, getting into the habit of savings every month into a specific account is very important so I strongly recommend you get into that habit asap and stick with it, again, no matter where or how that money is saved, developing the habit is the impiortant part.

    As for where to put those funds: most of the investment world is looking for equity markets to crash soon simply because that's what happens in cycles and we're long overdue. Putting your first 8k into an equity fund right now might not be such a great idea if you don't have other reserves to see you through any potential crash. Drip feeding might be a better approach and spread any remaining cash into other more liquid and secure assets, assets you can easily access so that when the markets do crash, you can jump in and buy at the bottom.

    As for what to buy: I'm a big fan of equities now but I'm not an experienced investor, for those reasons I like mixed asset funds such as VLS which are great for people who don't have an abundance of experience and/or time to look after their investments - whatever you don't know how to do well yourself, leave it to the professionals, is my motto.
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