Advice Wanted

shrifty78

Hi,

I'm thinking of starting some investment in stocks and shares, and I wanted to get some opinions at to whether it is worthwhile.

At the moment my situation is as follows. I have two student loans of approximately £1500 each, and I regularly dip into my overdraft, usually around £500 o/d each month. I've also got approximately £2k on an interest free credit card. (I also pay £100 p/m in a combination of sharepurchase and share incentive schemes through work)

I'm comfortable with the repayment of all my debits, and I have £2500 of a work bonus left. My plan is to pay off one of the student debits and invest the remaining £1k in shares. I'm aware a lot of people would advise paying off all my debits first, but I think it is important that I start to build up some kind of investment portfolio while I'm youngish (26).

I was therefore wondering what I should invest in? I was looking at individual shares, but the information I've read so far seems to indicate a tracker investment would be better value. Any thoughts?

Kazza242

Hi Shrifty. Welcome to MSE.

To be honest, in your position, I think it would be more sensible to start building up an emergency cash fund of around £3,000. Of course it is always best to pay off debts first, especially, if the interest rates on the debt are higher than the rate received on savings. Although, student loans don't really fall into that category, as the interest rates charged tend to be much lower. It's important to ensure that the credit card debt remains at 0%, otherwise it will really start costing you.

After you've got an emergency fund in place, in maybe a cash mini isa - as the interest is not taxed, then it might be a better time to think about investing in shares. Shares are a middle to long term investment. If you are likely to need to cash them in, in the short term then you could lose out, as the share prices may have fallen when you need to draw the funds. This is why I would recommend having easy access cash savings available in case of emergency.

At 26, it's also a good idea to look at retirement investments (like a pension) - boring I know, but important none the less.

I'm sure some of the others will be able to give you some info on investing in shares.

shrifty78

thanks for the advice, i will take a look at the cash isa's.

Also, I do have a fixed contribution pension with work, whereby i think they put about 5.25% of my salary in, on condition that I contribute 4%. I don't want to invest too much into pensions at this stage, as I'm not sure they're the best investment these days.

david78

Welcome.

If your employers are offering to put 5.25% of your Salary into a pension plan for you, then you should "bite there hand off". If you don't you are volunteering for a pay cut. This is probably a good first way into the stockmarket. You may have some control over the investments made on your behalf, though there will probably be a minimal number of funds to choose from if it is a stakeholder plan.

As for other stock market investments, I would first concentrate on eliminating the debt you have and building a cash fund. Keep visiting MSE to get great tips on how to do both. Then you can look into regular savings plans or contributing to a stocks and shares ISA.

Best of luck.

Al_Mac

Debt

Savings (1 month income, instant access, 2 months in a term account, higher interest rate).

Invesment.

Keep the pension.

Probably all already been said.

Congrats on the thanks, first I've seen.
:beer:

jimclark1967

Al_Mac wrote:

Congrats on the thanks, first I've seen.
:beer:

Wow - thanked by :money: that really is a claim to fame!!!

Al_Mac

First two posts in a thread!!!:eek:

BrightonLad

anyone reckon he's fishing for thanks himself??? see http://forums.moneysavingexpert.com/showthread.html?t=44210
JennyJo, foxy, redfox, and toozie are all ahead of him now!!
Just kiddin Martin!!!!:money:

good on ya shifty,

Al_Mac

BrightonLad wrote:

anyone reckon he's fishing for thanks himself??? see http://forums.moneysavingexpert.com/showthread.html?t=44210
JennyJo, foxy, redfox, and toozie are all ahead of him now!!
Just kiddin Martin!!!!:money:

good on ya shifty,

Breaking news, BrightonLad banned from MSE Website:rotfl:

BrightonLad

:rotfl: :rotfl:

Al_Mac

BrightonLad wrote:

:rotfl: :rotfl:

Not got the email yet?:beer: