Advice for a Young Investor

maxlovell2

Hey Guys,

I am 19 years old and have started to put aside at least 10% of that I earn. I have been doing this for a while and have so far saved £2100 that I do not need. I know that it is best to invest these savings due to inflation & to take advantage of compounded growth.

I have never made an investment before but I have done a fair amount of research and read a couple of books and now believe I have a decent understanding of stocks and shares. I have made an account with an online UK stock broker and am at the point where I am ready to invest.

I now need to decide which individual shares to go for and how many companies I should invest in considering dealing costs etc. Or whether to go the fund route? I will be using the UK stock market only for now.

Any advice that you guys can offer will be very appreciated, Thankyou.

Drp8713

Avoid individual shares if you don't have a lot to invest as you won't be able to diversify without wasting loads of money in dealing fees.


Why UK only?


Have a look in Mixed Investment 40-85% fund group on you platform, may be a good place to start as you can find a globally diversified fund which is not all in equities.


You could also look at Investment Trusts.

xylophone

Do you have an emergency fund? Where do you hold your current account?

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

When you begin to invest, and remember this should be for the longer term, you might find some assistance here http://monevator.com/

Use your ISA allowance and choose the cheapest on line service.

maxlovell2

I would be dealing through a stocks & shares ISA so it would be easier to stick with UK things im assuming to stay tax free?

Yes I do have an emergency fund, the £2100 is to be invested.

maxlovell2

If the advice is to go with a fund...

Do I go for a mutual or Index fund?

Would Buying an index/tracker fund in the FTSE 100 be a good idea?

Archi_Bald

You should first have an emergency fund in cash, some 6-12 months living expenses is a good cash fund to have. When that is in place, start investing.

You can put your cash into good interest paying current accounts, such as TSB Plus and Club Lloyds.

Read up about investments, e.g. "Smarter Investing" by Tim Hales, and monevator.com. Stay clear of individual shares until you have at least £50K, better £100K in your investments pot; invest in tracker funds in the meantime. Putting the lot into an S&S ISA rather than keeping it unwrapped is a no brainer.

Does your employer have a pension scheme? How much are you paying into that? You should fully exploit the employer contribution to your pension fund.

Archi_Bald

maxlovell2 wrote: »

If the advice is to go with a fund...

Do I go for a mutual or Index fund?

Would Buying an index/tracker fund in the FTSE 100 be a good idea?

Check out the portfolio suggestions on monevator

http://monevator.com/category/investing/passive-investing-investing/

Archi_Bald

maxlovell2 wrote: »

I would be dealing through a stocks & shares ISA so it would be easier to stick with UK things im assuming to stay tax free?

Anything and everything in an ISA is tax free, even non-UK "things". The ISA provider will ensure you aren't investing in anything that is excluded from ISAs.

maxlovell2

Thanks for all the advice guys.

Ive been researching on Monevator and this option appears to suit my situation.


Domestic equity 60% Vanguard FTSE UK Equity Index

Developed world 30% Vanguard FTSE Dev World ex-UK Equity Index.

Government bonds (Gilts) 10% Vanguard UK Government Bond Index

Thoughts?

jimjames

Or get the Vanguard LifeStrategy range that already has bonds build into the mix.

But given your age you may not want to bother holding bonds if you are aware of the risks. I'm substantially older than you and started when I was around 25. I previously held no bonds but even now am only at around 1% bonds in my portfolio

maxlovell2 wrote: »

If the advice is to go with a fund...

Do I go for a mutual or Index fund?

Mutual funds are a US term but an index tracker is purely a type of fund. Much the same as saying shall I buy a car or a Ford Focus.

maxlovell2

jimjames wrote: »

Or get the Vanguard LifeStrategy range that already has bonds build into the mix.

But given your age you may not want to bother holding bonds if you are aware of the risks. I'm substantially older than you and started when I was around 25. I previously held no bonds but even now am only at around 1% bonds in my portfolio



Mutual funds are a US term but an index tracker is purely a type of fund. Much the same as saying shall I buy a car or a Ford Focus.

What % Equity would you recommend to go for?