20K at 23 Y/O

sambessey

Hi

I am single (Not married or kids etc), 23 and have ~20K I have saved from a combination of my savings and dabbling in the stock market.

I have 8.5K in a tracker ISA, and approximately 12K in various stocks. (Some of which are wrapped in a Maxi ISA). I have no cash at all.

I am a graduate with £11,000 student loan as my only debt. and have a job paying a couple of K under £30,000 (plus bonuses). I already have a pension (Work contributes 7% and I contribute 3%) and have good job security.

My job means I can expense a lot of my outgoings, and I tend to work abroard a lot (Where the company pays for everything apart from leisure activites) which means I can have over £1000 a month to add to my savings (I like to have fun when I'm abroard so consider spending around £500 per month on leisure resonable).

I just wanted some advice on how I should be dividing up my cash? I have had nothing but success so far with investing and have generated about £4,000 profit in 4 or so months... I tend to invest in a mixture of AIM listed, FTSE 250, and US- listed stocks. Am I currently exposing myself to too much risk? Am I in danger of just being on a 'lucky streak' and losing out big- time soon? How should I be dividing my future savings?

I am thinking about regularly purchasing physical gold and silver to go alongside my pension/ be a hedge against inflation as my amateur research has lead me to believe it is a cheap resource at the moment. I have used up my ISA but still have some room inside it for further investment this year. I would like to buy a house, and whilst I could probably get a mortgage, my job and my beliefs about the state of the UK's housing market prevent me from doing this.

What is the best way forward? Should I carry on as I am and put all my 'new' money into stocks as I have been doing, given my age and my success rate so far? Should I split between stocks and gold, or gold and cash? etc.

Also my 8.5K is in a mixture of Halifax tracker funds, but I'm not seeing that much movement. Can anyone suggest something that might give me greater returns? Should I perhaps look at seeing an IFA or will they not want to bother with such a small sum or someone in my financial position?

I mention my age, as I feel I can afford to expose myself to a reasonable amount of risk. Also having no family or mortgage means I feel I can take a reasonable amount of risk without losing out too badly.

Thanks

zag2me

Yes you need to diversify more, what about bonds, property and cash? You should look at taking a little bit of each just to cover yourself if the stock market does crash.

lynzpower

just to say mate, you sound like you have a cracking life

Wish Id had my head screwed on at your age as you seem to.

Happy moneymaking

brabzzz

zag2me wrote:

Yes you need to diversify more, what about bonds, property and cash? You should look at taking a little bit of each just to cover yourself if the stock market does crash.

I agree but also disagree. I'm in a simialr boat to the OP, but currently have everything in ISAs and high interest accounts. I'm going to dump ~£8k into risky funds. It's not money i 'need' so if i lose, say, half of it, i can <touch wood> get it back again in a few months. A safe secure bond paying 5% isn't cool in your early 20's, not with a good income and secure-ish job. That does not meen you pop by Gala and put everything on red, but diversification (whilst still important) isn't nearly as important as it might be to someone who is 40. If you're making money on the shares, i'd stick with that until your luck changes!

What you doing? long/short-term/spreadbetting?

-i'm not a fianancial advisor, i work in fianance, i appreciate the benefits of actively diversification. But, frankly, at the age of 23, i couldn't care less about it (within reason, obviously).

Gold is cool. Get some. No idea whethers its good vlaue right now (prices have been climbing for 12+ months) but it's a really nice feeling to cradle a few gold coins!

mattih5

Yeah i'm with lynzpower on that, well done.

I am in a similar situation, just graduated a year ago and in a fairly good position as a web developer looking to move upto technical director of our fund company.

With being in employment for just over a year now I have acquired a lot of skills mainly around industry skills but our sister company is an investment company which trades globally. Shares have always been something I am interested in but have never had exposure to them - until I strated here and happened to mention my interest I started looking for opportunities for trades (we spreadbet/ buy options and CFD's) as a sideline to my day job to gain exposure. As a way to gain experience my boss (boss of both my company and the sister company) 'lent' me £1,000 (company money) to trade in a couple of companies I had identified as being potentials to make some good money. I identified Allied Waste (AW) and Ross Stores (ROST) last August.

I generated around 40% profit on the £1,000 'lent' to me which I was very impressed with.

Anyway to cut to my chase........how do you acquire your knowledge to invest your own personal money. Although I generated profit on the money lent to me I can't help but feel it was perhaps beginner's luck (even though I read the charts/support/resistence lines and researched). I would very much like to perform some of my own trades but spreadbetting isn't somewhere I would feel comfortable putting my money, even though I am young (23).

I have posted a few threads about the best place to start saving on a regular basis, i use all my ISA allowance each year and feel I could expose myself to risk now (just not as much as what spreadbetting offers). I have thought of maybe setting up a core fund which follows the FTSE and then perhaps having a couple of others which are invested globally, european etc.

Are you basically considering investing in Gold to provide bit of security in diversification?

Zag2me's suggestion of bonds and property is good idea.

sambessey

I don't spread bet/ use CFDs or anything yet-I just do straight trading at the moment... I make no hard and fast rules about when to get out, I just hold them until I feel I have reached a good point to sell (can be days or months). I just acquired my knowledge through reading books (One up on Wall Street by Peter Lynch is a good place to start), signing up to Champion Shares for the free period (Though I have never bought any of his reccommendations, I just use it to see what makes a good share, and just researching companies, reading tutorials on Halifax and Motley Fool sites and so on.

I am looking at gold for several reasons:

1. I think it is relatively cheap (This could all by hype though)

2. Diversification- no matter what happens I will still have gold and it has some intrinsic value- it's never gonna be worthless like stock in whatever company.

3. If I can hold on to it for long enough, I may consider using it to subsidise myself through retirement, as I doubt state pensions will exist in 40 years time, and having worked for the Pensions department at Norwich Union for a while, I am expecting to have to have something to subsidise any anuuity I draw from policies I collect over the next fourty-or- so years.

Property: I have considered purchasing something abroard, as purchasing in the UK is out of the question for me at the moment. I am keen to avoid what I consider to be 'bubble' markets such as Bulgaria, parts of the former eastern-European bloc, Spain, France, and Dubai. I am looking more at something like the Dominican Republic (Due to fantastic weather for much of the year and dirt- cheap property, and an explosion in the number of people visiting from the UK and America- slight concerns over crime and financial and political stability though. I have visited the carribbean, but never the Dom Rep.), or possibly Cyprus (I am half Greek and know it to be a lovely place and popular with holidaymakers- I feel it also has a strong economy, but may be over-developed on the property/ tourism front).

Obviously lots of thought, research and a few visits required on this one.

Thoughts? Am I too young and naieve- having never owned property to be diving into foreign investments?

I am keen to stay away from bonds and cash for the most part (perhaps just locking a small amount away?), as I feel I am too young to be safely locking my money away. I know absolultey nothing about bonds and so forth- where is the best place to look for adivce on these?

Thanks.

mattih5

I think if you can do it and are able to invest in property abroad, then have a crack at it - it would require a lot of research i would imagine.

Not too sure on where to research bonds.

Generali

mattih5 wrote:

.....how do you acquire your knowledge to invest your own personal money. Although I generated profit on the money QUOTE]

Personally, I'd start with a book called 'A Random Walk Down Wall Street' and go from there.

MrBen_4

Try bullionvault.com for an easy way to buy allocated gold. I put £5k in late last year when gold was @ $580. Personally, I would avoid UK property. I am also not very optimistic about the £ (the economist estimates it's 28% overvalued). I am close to buying a property in Hong Kong with my £ savings - good rate of exchange and market conditions feel relatively sound.

amcluesent

You may want to read "Reminiscences of a Stock Operator" for an insight into trading, especially on shorting.

Gold is a defensive play, are you really convinced that the post-oil western economy is a crock? Sadly we must expect use of nuclear weapons within your lifetime and gold will be valued then!

I've been worried about the political position in China, Vietnam and India but you can't argue with the growth achieved. But will further oil-price shocks (a per-emptive strike on Iran's bomb factories?) burst the bubble short-term? The USA looks finished, destined for same decline in the next 100 years as the UK experienced in the last. (Just compare the UK's quality of live in 1900 with now!)

What are the opportunities around carbon-trading/offsetting, forestry, and alternative fuels? The VCs are pouring money in - could this be bigger than the .com boom?

Profits are made when you buy, not when you sell!

sambessey

Yes I am avoiding UK property... As much as I would love to move out and buy my own place financially it makes no sense.

I have already stated my reasons for considering a gold holding. I am looking to buy the physical product and keep it in my home; I have heard about certain companies not actually owning all the gold that you 'purchase' through them, and there will be zero holding fees.