Investment direction for a 19 Year old

ManofLeisure_2

[QUOTE=AlexShizza

Could I ask if you personally were in my shoes and had to invest this money , not just save, what would you do?[/QUOTE]

Alex, I'm not sure as to why you are asking for advice because you certainly aren't listening to what is being said. Although £9000 may seem a lot of money, it really isn't. Actually it wouldn't even cover the bill I've just been presented with for my buy-to-let. However, I don't have a mortgage and am able to account for such eventualities. My concern for you is that with such a heavy burden of debt, problems which 'will' occur may prove too much. You have time on your side and my advice is to save until you have a larger sum to invest. Prices are extremely high at the moment and in my opinion it's not a good time to buy anyway.

colsten

ManofLeisure wrote: »

Actually it wouldn't even cover the bill I've just been presented with for my buy-to-let.

You are such a spoilsport, claiming there could be costs to BTLs. I have watched enough "Homes Under The Hammers" now to assure you it's all about buying cheap at auction, then slapping a bit of paint and some new kitchen doors on, and then sitting back and cashing in. Don't know where you went wrong, getting a bill for your BTL tz tz tz

Thrugelmir

colsten wrote: »

You are such a spoilsport, claiming there could be costs to BTLs. I have watched enough "Homes Under The Hammers" now to assure you it's all about buying cheap at auction, then slapping a bit of paint and some new kitchen doors on, and then sitting back and cashing in. Don't know where you went wrong, getting a bill for your BTL tz tz tz

What about those people that decline to appear...........:eek:

TCA

AlexShizza wrote: »

I want my money to make money, not just sat in savings account earning 2-3%!

Could I ask if you personally were in my shoes and had to invest this money, not just save, what would you do?

When I was 19 I also wouldn't have been thinking about pensions, but if I was you now, I'd consider it.

The government will gross up your contributions by 20%, up to certain limits. You can even pay in £2,880 if you don't pay tax and it'll be grossed up to £3,600. That's got to be worth considering.

Thrugelmir

TCA wrote: »

When I was 19 I also wouldn't have been thinking about pensions, but if I was you now, I'd consider it.

On my Dad's advice I started my first s226 pension policy when I was 17. At £10 a month was a whole 10% of my take home pay too. Now I have no regrets starting so early. 40 plus years of compounding adds up.

TCA

Thrugelmir wrote: »

On my Dad's advice I started my first s226 pension policy when I was 17. At £10 a month was a whole 10% of my take home pay too. Now I have no regrets starting so early. 40 plus years of compounding adds up.

I'm digressing, but I think schools should teach "financial savvy-ness". Pretty sure I did read something about it being discussed, but learning about money management, saving/investing and pensions, would be far more usual than trigonometry. I'd like to know the percentage of people who understand pensions, or even just their own pension. I bet it's not much. I was as guilty as anyone, just ticking a box and forgetting about mine, without even understanding it in the first place.

Archi_Bald

TCA wrote: »

I'm digressing, but I think schools should teach "financial savvy-ness".

Agree 100%. Trouble is you first have to teach the teachers. That would be a fantastic first step though.

[Deleted User]

AlexShizza wrote: »

I appreciate that, I am determined to but if there is a something that can give me a return on my money I'm all for it but I cannot find anything that fits the need, if I were to BTL the costs would be tough to keep up with if things did go wrong but I have the family backing to support me if money was too stretched, also as you probably know the bank require 125% of the mortgage payment to cover costs when things go wrong, If the boiler goes this won't cover it but it will help. I want my money to make money, not just sat in savings account earning 2-3%!

What do you think the yield is on a BTL property? 20%? 30%? 40%? You're looking at less than double what you could find through proper current account structuring (this article from May has valuable insight). 7%! All that risk for 7%! Crazy.

A BTL property is not a pure investment, it's a business that requires investment. The worst case scenario when you invest £10,000 in a super-risky startup is you lose every penny... the worst case scenario with property is you lose every penny that you put in and then you have to shovel more money in just to keep your business afloat. You can't "just sell" a house at the price you bought it! Oh and don't forget opportunity cost too!

BTL can be a very good business if you're the right person in the right place with the right business plan. BTL is not a good idea if you're someone with limited capital, who doesn't have the resources to run a business on life support, and has no diversification. You're proposing that you invest every single penny you have to your name in a single asset, not even a single asset class, just one single asset! You said above that you're risk averse, putting all your eggs in one basket couldn't be any less risk averse!

AlexShizza wrote: »

Could I ask if you personally were in my shoes and had to invest this money , not just save, what would you do?

I am in your shoes (well, almost, I'm 22) and I have done the sensible thing and started a pension (in which my investments have gained over 10% in the last year! Not to mention the 40%+ gains I've made just from tax relief! And the 7% from my employer contribution!) and invested through tax advantaged accounts (S&S ISA) (and non tax-advantaged, boo ISA limits) and hold an emergency fund and even then I would be very weary about property as a business. Would I consider it? Perhaps if I had a viable business plan... would I liquidate my assets and invest every penny in it? Hell no.

If I was in your exact situation I would:

1. Put together an emergency fund of 6 months (your living costs per month * 6) and place it in a high interest current account
2. Purchase a bunch of books on investments (there's been some good recommendations in this thread already)
3. Open an S&S ISA with one of the providers (I use Hargreaves Lansdown)
4. Use your newly learned investment knowledge to pick fund(s)
5. Speak to your employer about their (possibly depending on size) legal requirement to offer a pension
6. (If available) start contributing to a pension enough to at least obtain the full match from your employer and tax relief

Then in a few years reconsider BTL as part of diversifying your portfolio...

BucksLady

Seems to me that financial institutions are still pretty slap-dash with their lending policies. Whilst it remains apparently so easy to borrow for such ventures, then I think there will be more and more people joining the buy-to-let bandwagon.

AlexShizza

hypothetically if i could get 40% ltv on a £100,000 property and paid the extra interest free 10% of the remaining mortgage each year, which would mean completing the mortgage in 7 years.

Would this be a good investment?