What is your long term saving strategies?

LongTermLurker

Accountant_Kerry wrote: »

:A You sound like an inspiration, your family are very lucky to have you.

I'd second that. There are many different styles of help and advice to be had on the forum but JakesGran doesn't give advice or say how things should be done, she just gives examples of what she does and how she comes to her decisions. In other words, it's all given in terms of personal ideas and experience and I think that's what makes her such an inspiration :cool:

Take it easy JG and enjoy the Canaries.

MyLastFiver

Rictus,

I admire your resolve, but you do need to have a think about your strategy. Your plans so far revolve around cash savings and property speculation. These are two extremes of wealth-creation, in that one is unsuitably liquid for your purposes and provides no real-terms growth, and the other is extremely illiquid, and risky. There is a vast array of investment opportunities between these extremes, which provide a more suitable balance of liquidity, risk and return.

You will have many financial priorities between now and retirement. House, marriage, kids, etc etc, so setting your sights on retirement from such a young age is going to mean breaking your plans somewhere along the line. Wealth creation is about balancing short, medium and long-term priorities, which is why liquidity is an important consideration.

Can I suggest a starting point? You correctly identify your building skills and contacts as a wealth-creation asset. Instead of plunging into the planning nightmare and money pit that is self-build, why don't you start with buying yourself a tired old house and doing it up? There's little risk because, whether or not you make money on it, it's a home you can live in.

Regarding growing your cash, there are two principles you ignore at your peril. Firstly, make your wealth as tax-efficient as possible. Secondly, be prepared to accept some risk over the medium to long term. To these ends, if I were in your position, of the £1000 per month you have to save/invest, I would be putting £500 into a cash ISA and £500 into a Stocks and Shares ISA. Once my £10200 ISA limit was reached, I would put the surplus into something novel and interesting to invest in. Wine, rare books, gold, art, football memorabilia, collectable toys, whatever floats your boat.

This is not advice, you understand: Just an illustration of what I would do (actually, it's pretty much what I DO do)

LongTermLurker

Excellent advice ^^ (sorry, it's not advice ). The only think I'd challenge is putting a potentially large amount of money into collectables. While I can see the "build yourself an interest factor", apart from gold, the rest are quite subjective investments.

After the ISAs, there's still room for raw investments - with another £10100pa capital gains tax exemption, it's possible to continue with the tax free growth. However, of course, if you go into the housing market you'll blow your CGT allowance in one sale.

bodmil

Accountant_Kerry wrote: »

a more focused career plan is likely to bring higher rewards

I think this is really good advice. It's great to have a plan but this one seems dependant on having a low paid job. Why are you closed to the idea of increasing your income?
It's really good to hear of your plans but I do feel like you're holding yourself back so much too.

rictus123

bodmil wrote: »

I think this is really good advice. It's great to have a plan but this one seems dependant on having a low paid job. Why are you closed to the idea of increasing your income?
It's really good to hear of your plans but I do feel like you're holding yourself back so much too.

I dont want to set myself at taking in 3k a month and making that the height of it. Id love to work and get it higher and higher. The question is not do i want to increase it through hard work, the question is how to increase it.

I really agree with the doing up a tired house and using it as a home if i cant sell on and make money from it. How long would i have to live in a house for me not to have to pay CGT? Im sure i read somewhere it was 9 months? Might be wrong, im sure someone will sort me out.


In my eyes the sooner i buy my first house the better. Il be overpaying as much as i can without penalty. Id love to see a 25 year mortgage gone by the time im 30...not so sure thats being realistic but im sure many have done it before. Id rather be mortgage free in a £150k home at 40 than £50k mortgage on a £200k home. If i were to upgrade from my first home id like to rent it out and use the rent to pay mortgage, hopefully id only have a small difference to pay.

bodmil

You could increase it by gaining a more valuable skill set than you currently have. Go to university or college get some qualifications. I think you are spending far too much time planning for your current situation, when your current situation is holding you back.
Someone with as much drive and ambition as yourself is wasted in an environment that isn't paying well surely?

rictus123

bodmil wrote: »

You could increase it by gaining a more valuable skill set than you currently have. Go to university or college get some qualifications. I think you are spending far too much time planning for your current situation, when your current situation is holding you back.
Someone with as much drive and ambition as yourself is wasted in an environment that isn't paying well surely?

Bodmil what great advice! Im definatly going to look into this! I was maybe going to see about learning another trade. Seeing as i build lots of different buildings/walls/garages maybe try the next steps. Pitching the roofs, haraling(can do, just need a bit more experience), slating etc etc. Well the way to do it would be to go to uni and be a site manager.....get taught about all aspects of every trade. Not sure what else i could be doing. Whatever i do i can always supplement my main income with homers, building being the main job.

Any ideas other than what iv said about how i could go about this? I am definatly going to look into this. To get to the very top would be to get to where my boss is. Have tradesmen, accountants and labourers, every worker he needs to build houses and maintain them and build houses.

Even small scale, my gfs dad is very well off and he is a builder and employs 1 time served builder and 1 apprentice and a labourer. He had 2 builders but 1 left so hes getting another in after winter. He does very well for himself.

I really dont want to cap my income at this height...im more open to taking risks right now as iv little expenses as living at home!

MiserlyMartin

bodmil wrote: »

I think this is really good advice. It's great to have a plan but this one seems dependant on having a low paid job. Why are you closed to the idea of increasing your income?
It's really good to hear of your plans but I do feel like you're holding yourself back so much too.

I wouldn't call building work low paid. It also is not easy to change ones career especially as time goes on. You usually have to take a pay cut and theres risk that you may never earn as much in the new career as the job you gave up. Rictus seems to have ambition to further himself in and around the building trade and we will need more houses to house the massive amounts of immigrants and their children, so no shortage of work.

But I would say to rictus, listen to your peers. You are putting too much into investment in houses. This worked for those in the last 10 years or so but this decade is going to be very different. Do think about putting some into a pension and diversify the rest of it. You are beign too optimistic with your calculations, ignoring CGT, inflation, other costs such as holidays, kids, marriage etc.
Aside this desire to get rich and retire early what else do you want to do with your life before you hit 50?

KPR11

rictus123 wrote: »

I really agree with the doing up a tired house and using it as a home if i cant sell on and make money from it. How long would i have to live in a house for me not to have to pay CGT? Im sure i read somewhere it was 9 months? Might be wrong, im sure someone will sort me out.

You have to be really careful with this one cause it's not as simple as buy a house, live in it for 9 months, sell it off and no CGT.

HMRC may/will argue that the main motive behind living in the house, that you purchased to do up and sell it for a profit, was to avoid tax and in reality your motive was always to make a profit.

Secondly, the length of ownership indicates that your intention wasn't for it to be your home - who buys a house to live in for 9 months and to sell?

If they do sell within 9 months, what was the reason for sale?

You have also spent time and money to do up the house thus increasing the value.

Finally, if you get away with it the first time you are unlikely to be able to get away with it the second time as you have not only demonstrated profit motive and the rest but also frequency.

Simple example is if you sell the occassional DVD on ebay / amazon, you are getting rid of junk but if you are listing 10s / 100s of dvds on a daily basis then you are a dvd trader!

Thus, based on the above reasons, it should be regarded as your trade - in which case, good bye no tax or even the nice reasonable CGT! Welcome Income Tax and NIC!

Hope it helps.

bodmil

I must admit I thought more about training in project management, engineering or architecture? In many cases a good company will support extra training for example with evening classes and project support so really the risk is not as high as for example quitting to go to university for three years. At 19, with no mortgage or children, there's no better time to take a leap up the career ladder. Even labouring in a different environment such as foreign projects or offshore could triple your pay with few extra qualifications required.