New Grad Maximise Earnings

Andrew8141

Hi all,

Looking for some advice - as the title says I am a new grad and I want to save / invest my money to maximise my earnings. Unfortunately, I don't have the financial knowledge or experience to work this myself yet.

My income after tax is £3000 per month.

Bills: 700pcm Rent, transport £60 PCM, 12pcm phone, £45pcm gym, £160 food, socialising maybe £150pcm.

I have been managing to 'put away' £400 per week into an esavings section of my account and also have £9000 in a fixed savings ISA.

I have been reading a lot of this site ... Probably too much and worked myself into a muddle. I would like to start by building myself a base, safely. Before then diversifying and looking at more risky investments. Eventually, I would like to buy a car and also house / flat.

Appreciate any input you may have, thanks.

bigadaj

Saving and investing is fairly straightforward for most people though it can sound complicated.

Process is first to pay down any debt, or at least debt that is expensive so zero deals and many student loans are best left alone.

Then cash savings for emergency fund, typically three to six months pay.

Pension considerations. Do you have any employee funded scheme, are you paying in enough to maximise their contributions? It sounds a s though you are a higher rate tax payer in which case try and contribute all salary above that level, use salary sacrifice if possible, this assumes a defined contribution scheme. If defined benefit then do all you can to maximise benefits.

Next decision is house purchase, when and how important. You want a decent deposit but this should normally be in cash, so poor returns with low interest rates.

Once all the above is sorted then saving into shares isas, read and learn about investments, your attitude to risk etc. for most initial investments into general funds such as vanguard lifestrategy are fine, diversifying as you have more funds and learn more.

Job doen, though I will no doubt be corrected on some points.

Andrew8141

Thanks for the reply bigadaj.

Fortunately, I have no debts other than my student loan repayments.

Taking your comments into consideration, would you recommend a regular savings account to start, to build up the 'emergency fund'? Only problem I see with these is the maximum payments appear to be quite low.

How would you look to reinvest the £9000 once I have access? I would prefer this money to be safe and look to invest my future earning into things like Vanguard.

I am starting to read about Vanguard lifestrategy. A lot to learn!!

Re: the house - honestly I have no idea when I would want to buy. I've just always been taught a house is a good investment. So, when I can afford one, I will look at buying.

Really appreciate the reply, thank you.

bigadaj

Regular savers are good, low limits as you say and whilst most institutions only allow you one, you can have several running at once with different banks or bs.

In terms of your isa then its a bit difficult, you're only getting less than 2% or maybe a bit more with a fix.

You can get better rates in current accounts now, just look around the board however if you are a higher rate tax paygt you would be be paying 40% on this! which you'd have to declare to hmrc, so 5% on a nationwide flex direct only gives you 3% net. By taking it out of an isa you'd also lose the tax free staus for ever for this money and be limited to annual limits in future, so trya Nd find the best home for it, if it is the majority of your liquid savings then a fix could be better if you find a good rate that allows access without too high a penalty.

atush

I would have some of your cash in instant access (which reg savers tend not to be) as you would lose that interest if you had to make a withdrawal.

have you looked at Santander 123 accts?

But after an emergency pot a regular saver or more than one is good. Money once the anniversary comes around can be put into ISAs

You didn't answer the pension question. you need a pension, your employer Should offer one, so join it asap if you haven't.

Try a spending diary to see if you actually spend within your (reasonable I think) budget.

Andrew8141

I think the problem I may have (looking at the santander account mentioned) is that you need two direct debits paid out from it. I pay my rent by standing order and it is inclusive of all bills. So it is only my phone bill which is direct debit. I think this would nullify the large advantage of the santander account also - the cash back.

Re: pension - I am not currently enrolled to the company pension but I am aware of the importance and I've started that ball rolling.

I actually started a spending diary on Friday - so I can keep you updated on this.

So if I am correct, taking on both opinions, the following two should be my priority:

- Get pension in place.
- Develop an emergency pot (Keep some in instant access & the rest through regular savings)

Correct?

In the meantime I will work out the best place for my £9000 to go.

Once the emergency pot is in place, I should consider something like the Vangard life strategy mentioned? How does this work? What earnings could I expect?

Thanks again guys!

atush

vanguard performance (doesn't say the yield but it is accumulation so yield does buy more shares- you can probably find the yield elsewhere)

http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-80-equity-income/charts


yes- don't let another day go by before joining that pension. How much does your employer pay in? Or is it a DB pension?

yes, emergency pot accessible- you could still have it in an ISA if you like.

Yes save into Equities once you have a certain amt of cash, and don't have a deadline of a year or 2 away for the house. VGLS is one way, and you can choose how much equity exposure. If you deciode to buy in the next 2 years or so, i'd stick to cash.

As for the 123, you could get one of the DD from the household put into your name- the sky subscription maybe?