Your thoughts on my first steps?

amosworks

Hi folks,

I've been hanging about on the Debt Free Wannabe forum for a small while now and have slowly been learning about savings and investments too, but not posted here yet.

I started off in several thousand Pounds worth of debt but managed to clear most of it before I really found MSE. I'm currently in the position where my debt is nearly gone (it should be totally gone in under 2 months now) and I'm looking to start investing and saving.

In about 2 months I expect to have received 2 bulk sum payments from my current litigation, which after completely clearing my debts and some bills will leave me with £5k. I will also at that point be in receipt of about £900pcm surplus income.

I'm quite keen to save and invest money, and something I recently discussed on the DFW board was what I would do when I was debt free, and I decided that I'd like to become a shareholder in various companies so that I could get more power to get things to go my way and also look to start receiving shareholder perks and benefits. I'd like to buy shares in companies that I use often so that I can use my position to leverage better customer services if need be (yes, I complain a lot about bad service and not getting what I think I deserve so I think being a shareholder would help my cause a little) Is that bad?? Also mainly companies that I always seem to have problems in would be nice - and I admit these investments are mainly for non-financial gain (well not directly at least).

Saying this however, I don't want to put all my money in higher risk activities such as investments, I do want to save and have some security on those savings so that I've always got something to fall back on in harder times if need be. I'm 24 so if I start saving now then it will give time for the wonder of compound interest to work in my favour so I've got something quite nice to look forward to in the future.

As i'm 24, I am quite open to taking some higher risks with certain investments at the moment knowing that if I did happen to lose out then it really wouldn't be the end of the world, there will still be time to get back on track.

To summarise, I will have a £5000 lump sum and £900pcm to save and invest.

Firstly though I would like to open an ISA and max that out for this tax year leaving me with £2k and my regular monthly income. I don't have any children to use for tax efficient savings, so I'm thinking that I will invest the £2k in various places and then just use my monthly cash to drip-feed regular savings accounts and also to go towards further growing my investment portfolio when desired.

However, these are just my ideas from reading MSE and my understanding of the market but I am totally open to every and all suggestions and ideas.

I'm going to investigate some of the share dealing services mentioned throughout this board. If I invest in Lloyds TSB there is a shareholder perk of reduced trading costs, I want to investigate this too as I am opening an account with them shortly. Any thoughts on this also?

What higher risk investment areas would people recommend? I'm not totally new to investments, I do research and try and understand my subject matter, and as mentioned, am young and open to taking some risks so any thoughts on this too will be gratefully received.

Along with my higher risk investments I'd also like some bonds. Unit trusts don't appeal to me at this point TBH, it sounds a bit boring :-\

Plus, just to make this post extra hard (:rolleyes:) I suppose I should be thinking about pension related things too at this point.

Thanks in advance of your thoughts folks

ReportInvestor

Hi and welcome to this section of the site. I'm sure you'll get some good savings and investment ideas in due course.

amosworks wrote:

I'd like to buy shares in companies that I use often so that I can use my position to leverage better customer services if need be (yes, I complain a lot about bad service and not getting what I think I deserve so I think being a shareholder would help my cause a little) Is that bad??

Times - Turn up the heat at the AGM
This writer, Graham Searjeant, is worth following if you are serious in your quest to be an activist shareholder.

At the Investors' Association we have a section entitled - "Enfranchising small shareholders"
If you want to attend AGMs, then a key factor at the moment is to ensure that you do not become a shareholder via a nominee account, as these people's AGM and voting rights have been whittled away :mad: . Companies would rather not deal with your type of "sokaiya" activist :rotfl: but with institutional shareholders who often don't turn up at AGMs & work behind the scenes. In fact it would help companies connect to the real world if they listened to their own small shareholders more.

So good luck .

amosworks

Thanks for the links ReportInvestor, I read them with great interest. I don't think "sokaiya" is quite what my plans are but as yourself and the first link mentioned, it would be nice to help get companies back in touch with the real world through a few well worded questions

I was already aware of the problems of shares through a nominee but thanks for the heads-up

al_yrpal

amosworks wrote:

Hi folks,

Along with my higher risk investments I'd also like some bonds. Unit trusts don't appeal to me at this point TBH, it sounds a bit boring :-\

Plus, just to make this post extra hard (:rolleyes:) I suppose I should be thinking about pension related things too at this point.

Thanks in advance of your thoughts folks

Wouldn't it be nice when you retire to have a load of dosh, free of the pension stranglehold. So you don't have to hand it over to some company to pay some of it out bit by bit back to you over the years.

I held a unit trust that returned a gain of over 80% last year - does that sound boring? Unit Trusts and Investment Trusts offer some exciting prospects. Learn about what they are and have a look at performance here https://www.trustnet.com

Perhaps you'd like to just invest and hold like these guys at the Fool - http://www.fool.co.uk/specials/2006/specials060208.htm?ref=valuehome

Wish I'd had that sort of dosh at 24, I'd be on a yacht in the Med now!

amosworks

al_yrpal wrote:

Wouldn't it be nice when you retire to have a load of dosh, free of the pension stranglehold. So you don't have to hand it over to some company to pay some of it out bit by bit back to you over the years.

Yes it certainly would, but I can't help feeling that it's wrong not to have one. Maybe it's because the message is drilled in to my head that I'm gong to fail in the future without one. I know the government would rather we be dependent on them rather than independent (can you imagine a whole nation of affluent old folks who weren't on a leash - they would wreak havoc and destruction hehe!!) I think maybe the message is there because a lot of people just don't save for the future, but I have every intention of saving for mine so maybe it's not a necessity. I'll ask for opinions on the pension board with regards to this but thanks for raising the point

al_yrpal wrote:

I held a unit trust that returned a gain of over 80% last year - does that sound boring? Unit Trusts and Investment Trusts offer some exciting prospects. Learn about what they are and have a look at performance here https://www.trustnet.com

!! Wow that was certainly a high performer! OK, they don't sound so boring now and I will research your link - thank you very much 80%

al_yrpal wrote:

Perhaps you'd like to just invest and hold like these guys at the Fool - http://www.fool.co.uk/specials/2006/specials060208.htm?ref=valuehome
Wish I'd had that sort of dosh at 24, I'd be on a yacht in the Med now!

I'll certainly look at this information and see if it's something I could do - again many thanks for the link

My regret actually is only being in this position at 24 and not much sooner. I have been several grand in debt for all my adult life and it's been a very hard journey to change my destructive habits and get to the point where I live a frugal (but happy) life and am planning for the future. I've had some extremely bad experiences and I think that's what's really given me the drive to never be so financially insecure again. My opinion is everybody should have to deal with hunger and bailiffs at least once in their life to really appreciate all things fiscal.

Thanks very much for your reply al_yrpal

al_yrpal

Err...
G Brown certainly would be p***d off if as you say there was "a whole nation of affluent old folks who weren't on a leash " :beer: . You have only to reflect on his budget attack on tax avoiding Trusts, and the Prescott inspired thoughts on taxing second homes. :mad: http://www.timesonline.co.uk/article/0,,2-2137959,00.html Trouble with New Labour, most people haven't got it yet - I have! (Its a little old lady, on benefits, in Kirkaldy and Raith Rovers he really cares about - screw the rest of us [especially southerners]) :eek:

My thoughts are that with a small pension and a lot of capital, YOU are in control. Who knows whether the Pru, Scottish Widows or the state pension will exist in 30 years time? Perhaps if you are 40 with no pension you should consider getting one, but at 24, well, does it matter? The big question is - can you keep your hands off the loot? Actually, its more important to keep GB's off it.

Currently you get big tax breaks on pension contributions - some people say the taxman subsidises pensions. I say they are taking less of your money.

I wish we paid taxes like the yanks, once a year, people wouldn't vote for GB then.

Illuminating exercise: Write down what you earn, then add up your income tax, NI, and VAT you pay, petrol duty, alcohol duty, insurance tax, council tax, car licence, TV licence and work it out as a percentage of what you earn? - Ouch! :eek:

competitionscafe

amosworks wrote:

Along with my higher risk investments I'd also like some bonds. Unit trusts don't appeal to me at this point TBH, it sounds a bit boring :-\

A unit trust / investment trust just means your investment is in a portfolio of shares - but these need not be boring: there are unit and investment trusts specialising in Russia, Eastern/Central Europe, South Africa, New Zealand, Latin America, Alternative energy, technology, biotechnology, private equity, AIM, etc, etc - [I am NOT suggesting/recommending that you invest in any of these!] - but these are some of the more spicy options as oppossed to all the plain vanilla ones which concentrate largely on FTSE 100 companies.

For example one of the investment trusts I hold has a portfolio which includes Japan, Russia, Private Equity, Property, Mining/Resources and Latin America - all in one fund : higher risk for potentially higher reward (currently up almost 50% over the past year) and also provides access to many areas which it would be difficult for small private investors to access. Again - this is not a recommendation and funds like this should not form the bulk of your portfolio - but it shows that investment trusts and OEICS'/unit trusts can be used to add spice and certainly need not be dull. Bonds on the other hand - now they are dull (although they have their place - diversification and asset allocation is important).

Many unit/ investment trusts also offer the option of a regular monthly investment which means you can build up a stake over a period of time rather than risk investing a lump sum just before a big price drop.

amosworks

al_yrpal wrote:

My thoughts are that with a small pension and a lot of capital, YOU are in control. Who knows whether the Pru, Scottish Widows or the state pension will exist in 30 years time? Perhaps if you are 40 with no pension you should consider getting one, but at 24, well, does it matter? The big question is - can you keep your hands off the loot? Actually, its more important to keep GB's off it.

Currently you get big tax breaks on pension contributions - some people say the taxman subsidises pensions. I say they are taking less of your money.

What you say makes a lot of sense, I would much rather have all of my savings accessible without being robbed. I never thought of it like that TBH, thanks :cool:

al_yrpal wrote:

Illuminating exercise: Write down what you earn, then add up your income tax, NI, and VAT you pay, petrol duty, alcohol duty, insurance tax, council tax, car licence, TV licence and work it out as a percentage of what you earn? - Ouch! :eek:

I don't drive a car, I don't drink alcohol, I don't believe in insurance (well I do, self insurance), I avoid council tax by not declaring where I live and I don't believe in TV licenses so don't have one (I think they are unlawful). As for VAT, it's in my interest to open a Ltd co and pass stuff through there, I'm investigating this at the moment :cool: I really dislike taxes lol

Oompa_Lumpa

As for VAT, it's in my interest to open a Ltd co and pass stuff through there, I'm investigating this at the moment I really dislike taxes lol

You can be quite sure that if you proceed with that idea, it won't just be you that'll be doing the investigating.
I wouldn't have thought that it would have been "in your interest" to open a limited compant and "pass stuff through there". For one thing, as far as VAT is concerned there is no difference between a sole trader and a limited company.

amosworks

lol I just don't mind playing the system a bit, it played me for 20 years :-\

amosworks

competitionscafe wrote:

A unit trust / investment trust just means your investment is in a portfolio of shares - but these need not be boring: there are unit and investment trusts specialising in Russia, Eastern/Central Europe, South Africa, New Zealand, Latin America, Alternative energy, technology, biotechnology, private equity, AIM, etc, etc - [I am NOT suggesting/recommending that you invest in any of these!] - but these are some of the more spicy options as oppossed to all the plain vanilla ones which concentrate largely on FTSE 100 companies.

For example one of the investment trusts I hold has a portfolio which includes Japan, Russia, Private Equity, Property, Mining/Resources and Latin America - all in one fund : higher risk for potentially higher reward (currently up almost 50% over the past year) and also provides access to many areas which it would be difficult for small private investors to access. Again - this is not a recommendation and funds like this should not form the bulk of your portfolio - but it shows that investment trusts and OEICS'/unit trusts can be used to add spice and certainly need not be dull. Bonds on the other hand - now they are dull (although they have their place - diversification and asset allocation is important).

Many unit/ investment trusts also offer the option of a regular monthly investment which means you can build up a stake over a period of time rather than risk investing a lump sum just before a big price drop.

Hmm thanks you have a good point, well it seems as though I ruled out unit trusts too quickly then, you guys are really doing a good job of sexing them up :cool:

Where do you go to find a list of trusts and the areas that they invest in? Sorry if that seems like a dumb question :rolleyes:

I like the idea of regular monthly investment to build it up over time, it does make the whole exercise seem a bit safer :cool:

Thanks for your help competitionscafe