Student investments - ISAs, mutual funds, etc.

bargaindoctor

I am currently 24 years old, a student in my final year at uni, and I just want to optimize my assets before I wonder what's happened to all my money in a few years time. I will start work in a few months and be getting paid consistently around £2500 a month. I'm a bit of an entrepeneur so I probably want to save a chunk of that to invest and a chunk in savings, but I realized that just saving the money in the bank isn't going to help me retire before 35

I recently had a review with my bank manager and I'm wondering if I should put £3k from my savings account into a cash ISA before tomorrow (Halifax), so that it remains tax free for the next whole year, and since I can then put in another £3k after 6/4/06 I can open one up with A&L when I start work in September? On the other hand I was also considering putting the money into one of the high growth / higher risk mutual funds. I don't know if this is a wise move, but from the market growth in the past few years there seem to be quite a few funds that are consistently yielding about 45%. But perhaps I need to do more reading as I may be being ignorant on this. Any experts on these matters? Should I call my bank now and open that ISA?

thanks

cheerfulcat

It's great that you are thinking of saving and investing. With an early start you have every chance of doing very well indeed. It's probably not a bad idea to open the cash ISA today, if you can.

On the other hand I was also considering putting the money into one of the high growth / higher risk mutual funds. I don't know if this is a wise move, but from the market growth in the past few years there seem to be quite a few funds that are consistently yielding about 45%.

I would certainly encourage you to look at stock market investing but only once you have saved enough in cash for an emergency fund - six to 12 months' worth of your normal expenditure, say. The past three years have been fantastic for investors; it would have been very difficult not to make money. There is no saying that the next three won't be the exact opposite. This is not meant to discourage you, it's just a caution; I think that the best thing a newbie investor can do is make regular payments into a selection of tracker funds while learning. This ensures exposure to the market at all different levels.

HTH

Cheerfulcat

equitydealer

I assume when you say you'll be earning around 2500 a month that is before tax. It can sometimes amaze people with new jobs when they find out how much tax is taken out of your monthly wages! If £2500 is your gross pay you'll be down to £1825 per month after tax.

Now with that figure you can start planning how to save/invest. First is pay off your debts if you have any.

If you don't mind taking risks the stock market is a good option. If you don't know much abour sharedealing, probably best to go through unit trusts/tracker funds.

Apart from that spread that cash around, and if you want to retire before 35 consider buy some premium bonds, you never know!

sly_dog_jonah

It depends on your priorities, but you might be best off avoiding equities if your thinking about buying a house in the next few years and need to save for a deposit. Equities should be considered a long term investment (5yr+) so in my case at least (graduated almost 3yrs ago) I'm sticking to guaranteed investments like cash mini ISAs.

bargaindoctor

Thanks for the great advice guys. I've thought about sharedealing but with the kind of risk I'll be taking I might as well hit up casinos, unless I do day trading!

Anyway yeah I tend to be a pretty big risk taker, and have dabbled in businesses that could've lost me everything but I usually end up making pretty good returns on them. I once turned £10 into £10,000 over 6 months, but I really need to learn how to save!! (which is why I'm here!)

Anyway, I can start with a few thousand which is just sat in savings now, so I looked at the ISA options and it looks like I can choose between the following at Halifax:

Cash ISA
ISA Investor
ISA Investor UK FTSE 100 Index Tracking Fund
Share Dealing Self-Select ISA

Any thoughts? And is it true that the deadline to get the ISA before the new term year is tomorrow? Any benefits in me doing that immediately then?

Bazn

u turned £10 into £10000? teach me.....

as for the haifax isa investor, i'd highly recommend it.

mattih5

Yes, teach us, how did you turn 10 in 10000. Premium bonds are a good idea if you have some spare cash, I've had £3000 in for four or 5 month and have achieved 150. Off the top of my head i think this is better than what you would get in a savings account or instand access account over this time period (probably is, well most definately is).

You never know!!!

I'm in the same situation. Being a recent graduate I have been fairly wise with my financial affairs throughout university and I am at the stage of trying to decide what to do with money I save each month.

Take a look at my thread....http://forums.moneysavingexpert.com/showthread.html?t=178134