17 year old wants to save

diable

slummymummyof3 wrote: »

Ooooh how synical!

Its boring but true ;o))))))

Running_Horse

Is it just me?

Should you save the maximum on an account paying 5%? Yes.

Should you gamble while saving for a home? No.

Should you raid your savings to gamble? No.

Should someone with a gambling habit be thinking of buying a house at 17? Hmmm.

evoke

Jeez. Why aren't you spending your hard-earned cash on binge-drinking, taking drugs and loose women, in between smashing up town centres? LOL.

Seriously though - very well done for having a good work ethic and being financially responsible. For now i'd have two savings accounts: one for 'fun' and the other for long-term savings. Then once a year i'd use the cash in the 'fun' account to treat myself to a nice present or a holiday. I'd use the long-term savings account to build up a nice pot of cash for maybe a deposit a property in a few year's time or a nice car.

Whatever you do, don't gamble any money. Consistent, long-term saving is the best way to avoid stress and enjoy life.

finbow

OP - I assume you'll be paying interest by paying your car insurance in installments? If so, the interest rate is likely to be much higher than you're actually earning on your savings. If this is the case, you'll be better off at the end of the year having paid the insurance in full.

princeofpounds

Cash returns are rubbish right now. If you save in any typical account then the interest is less than inflation. That means in real terms your money is shrinking, not growing. That's fine for the liquid buffer that everyone should have, and also fine if you are likely to be saving over short term horizon (i.e. house buying in 1-3yrs) as the decline won't be so bad. But it's not really an investment.

Why the situation is like this is an off-topic matter, but in short the bank of england is 'taxing' savers through low real interest rates to subsidise all the borrowers who got the economy into trouble. It's not really fair, but that's what governments tend to do.

So where to put the money? Here's a problem - I can't tell you for sure. You will have to take some risk if you want to deliver real returns.

There are some inflation-linked bonds that might be better at preserving the real value of your capital, but they are few and far between because obviously borrowing governments and companies don't want that kind of exposure. NS&I used to do a tax-free inflation-linker, but they axed it soon after the crisis. Maybe it is back now. I'm currently getting around 5.5% on the one I bought before the crisis. If inflation dips then these sorts of investments don't return much, but then it doesn't matter as costs of goods generally would be deflating.

Then you might want to consider equities. With investments of your size you would want a low cost diversified passive vehicle - a tracker fund or ETF of some kind. I would suggest that you go for a global or regional exposure, to minimise any UK or GBP-specific risks. As the average first time buyer without assistance is now 37, you have long-term time horizon. Equities offer a measure of inflation resistance, although high inflation is bad for the valuation of all assets, businesses don't simply disappear like cash does over time. Ensure dividends are reinvested and make regular contributions - whilst you can't accurately predict what money invested right now will return purchasing equity over time ensures that you buy it at cheap points as well as expensive points.

You could also employ the concept of asset-liability matching. If you are saving to buy a house then what you are clearly concerned about is the value of your asset (investments) compared to the value of your future liability (house). The actual value of your investments don't matter much at all. So you could invest in a diversified real estate vehicle like a REIT or a property company. The one big advantage is that much of the problems in the real estate world has been priced into such market vehicles in a way that it has simply not in terms of real physical real estate, which should deliver a relative return over time. Your investment is liquid and can be done with a small amount of money, unlike physical property. Just one word of warning - these investments are not the same as physical real estate, especially if they are highly financed using debt - that makes them more sensitive.

If I were you, I would probably use a multi-pronged strategy. I would hold some cash (not too much), and put the rest in a combination of real asset classes like equity, property funds, inflation-linked bonds. Currently your savings are much too small to do this efficiently as you will only have a grand or so in each, so perhaps choose cash plus one asset class now and add on over time as your savings grow.

Use tax efficient structures like ISAs where possible. No point doing otherwise. Avoid charges like the plague - they eat long-term returns so look very carefully at what you will have to pay to access any investment.

As the others said, I applaud you for saving, and would suggest you find a balance where you have some fun as well as behave responsibly. Thankfully not all fun needs to be expensive

Oh, I should also add that with small savings like your own it's actually much more important to look at maximising income and minimising outgoings. Tricks like that just suggested (paying insurance in one go rather than installments) can often be better 'investments' than any savings account.

morganedge

what job do you do?

bitsandpieces

pararct wrote: »

Oh and get rid of the betting habit.....

1. You are not old enough to be doing it now legally....

2. These things have a habit of creeping up on you and taking over your life....

3: in the unlikely event you did have a big win, the bookie might well try using your age as an excuse to wiggle out of paying.

Definitely good that you've stopped.

rictus123

Whats your job? I have earned just over £30k gross this tax year so far...plus a few homers..i am 19. I take it you are learning a trade/apprenticeship?

I would find the best net rate(whether thats an ISA or not and go with that. I started on here at 16 when i was on 9k a year and planned to save as my wages went up but it didnt all go to plan. My expenses also went up. Main one being getting a car. Im on my 7th car right now...had a van in between aswel. Its cost a fair bit to do all this but the car i have now is going in October and that will allow me to save alot more every month...im just going to run a cheap van. My wages go up again this summer as i go onto price work..so hopefully with that i can really push on with saving. I have time on my side so i would argue that you definatly do aswel.

Im giving myself time(2 and a bit years) to save, prepare and research about saving, mortgages and moving out...i suggest you plan to do the same.

mcbean2011

im not discussing my job, where i live, much detail etc im pretty private sorry but im didnt mean to put that i gamble 24/7. i put the odd £30 bet on, well my sister does for me etc which is fun, sometimes win mostly loose. i go out and drink and party etc. i was just trying to say thatt im now going to start saving all that money.

but was just thinking about saving for the future, so get on the property ladder asap. do like nice and fast cars and have a nice wee 1st car.

but joined this to get some advise etc,

Sosdon

Always have mates that drive , its a great way of cost cutting