£250 a month to save/invest

waggaroo

Hi

I am looking to put aside about £250 a month and am in the position to tie this money up long-term so was thinking a good option would be to invest it, possibly in a fund?

Is this a realistic option and if so, how do I go about doing that? I have looked at monevator and a couple of investment companies (charles stanley & TD Direct) but wanted to get some advice here as I'm not 100% sure about it all

Thanks!

maginot

Hi waggaroo
If you are regularly saving £250 a month, why not consider First Directs regular saver. This will pay 6% p.a. and much lower risk than investments.
This is paid for 12 months, and then open a new one. Upto £300 can be paid every month, I have been paying into 1 for the past 5 years.

Once you have a lump sum, e.g. After 12 months, then possibly look to invest?

Linton

Do you have a significant emergency fund in cash - say 6 months living expenses plus any known major expenditures in the next 5 years? You really need this before serious investing. The reason is that if you need money urgently, eg you lose your job, you dont want to have to sell investments at what may be a bad time.

With the emergency fund in place you can start investing. Its straight forward. Choose a platform. In principle either of those you mention or many others are fine. However you need to research the charging structure. With only small amounts in your portfolio you dont want a platform that charges a fixed fee when you can get one on a small % rate instead. Also you need the facility to drip feed investments or you may need to save up for 6 months and then spend it all. The reason is that without a drip feeding facility you are likely to have fixed costs - eg £10 that are a relatively high % of the amount invested.

Next job is to choose your funds. Best in my view to start with a general fund that invests in countries around the world.

And off you go.

jimjames

If it's for long term then cash is not the best option and regularly saving into investments will avoid the worry of investing at a market peak.

As suggested a fund or funds may be a good option. Many people use the Vanguard LS series which have a mix of shares and bonds depending on your risk profile.

Ebe_Scrooge

Googled Monevator, had a quick look but couldn't be ar$$ed to read through all the gumf. First impressions are that it looks well dodgy - a get-rich-quick scheme.

In general, if you want to invest in the stock market - yes, you can make money, and lots of it. Equally you can lose everything. It's a gamble, pure and simple. Even giants like Lehman Brothers get their fingers burnt.

A much safer option is to buy something like government bonds - for places like the UK, America, Germany, where the governments are stable and you're pretty much guaranteed to get your money back and make a little bit of interest. Less stable countries will offer much higher returns, in exchange for much higher risks.

But closer to home - do you have a mortgage ? You could do a lot worse than making overpayments to that ( if you're allowed to ). There's a calculator on this site that shows you the savings you'll make.

Otherwise, look at the interest-paying current accounts for the major high-street banks. Again, you'll not make a huge amount, but they're safe.

Finally, premium bonds. You're guaranteed not to lose anything, and you *might* make some money. But it's a zero-risk option, albeit potentially zero-gain.

It all comes down to your appetite for risk. Could you afford to lose this money ? If yes, then some of the higher-risk, higher-return options may be attractive. If no, then use it to pay off any debts and mortgage.

Just to reiterate - the stock market is a gamble, that's all. Some people make huge amounts, some lose huge amounts - after all, that's how investment banks work. No different than going down to the casino and punting the whole lot on the turn of a card. At the end of the day, it's your choice.

jimjames

Ebe_Scrooge wrote: »

Googled Monevator, had a quick look but couldn't be ar$$ed to read through all the gumf. First impressions are that it looks well dodgy - a get-rich-quick scheme.

In general, if you want to invest in the stock market - yes, you can make money, and lots of it. Equally you can lose everything. It's a gamble, pure and simple. Even giants like Lehman Brothers get their fingers burnt.


Just to reiterate - the stock market is a gamble, that's all. Some people make huge amounts, some lose huge amounts - after all, that's how investment banks work. No different than going down to the casino and punting the whole lot on the turn of a card. At the end of the day, it's your choice.

No it's not and its highly misleading to suggest that. You clearly have no idea of investments.

If the top 100 companies in the UK drop to zero value then you'll be wanting tinned food and guns not worrying about cash.

Monevator is a really useful resource if you actually spend some time understanding it and not selling anything so how can it be a get rich scam?

Ebe_Scrooge

jimjames wrote: »

No it's not and its highly misleading to suggest that.

What's not ? The stock market being a gamble ?

Archi_Bald

Ebe_Scrooge wrote: »

Googled Monevator, had a quick look but couldn't be ar$$ed to read through all the gumf. First impressions are that it looks well dodgy - a get-rich-quick scheme.

Perhaps you should be ar$$ed before you make any comments. monevator.com is anything but a get rich quick scheme, it is one of the most respected and credible sites regarding investments.

waggaroo

Thanks so much for all those speedy replies!!

This £250 a month is totally separate from any money we may need for daily expenses, emergencies, etc which is why I can leave it untouched long-term - I'm thinking 15-20 years, maybe longer

I'm not sure about the First Direct as at the end of the 12 months I get my £120 or whatever and then start again - great if I'm only saving short term but I feel I can do better as I can afford to tie it up for longer

It sounds like a fund may be a good option so will look at those two companies again, unless anyone can recommend any others?

jimjames

Ebe_Scrooge wrote: »

What's not ? The stock market being a gamble ?

Yes.

You're investing in real companies and share in their success. If you don't believe in capitalism then maybe not for you but investing across hundreds of companies is certainly not a gamble.

With gambling you are almost certain to lose your stake, invest properly and that is highly unlikely.

Archi_Bald

Ebe_Scrooge wrote: »

Finally, premium bonds. You're guaranteed not to lose anything, and you *might* make some money. But it's a zero-risk option, albeit potentially zero-gain.

Have you ever heard of inflation? Have you read up about likely returns from Premium Bonds? Even interest paying current accounts would statistically beat them.

Ebe_Scrooge wrote: »

What's not ? The stock market being a gamble ?

Funny that, coming from somebody who recommends Premium Bonds as a zero-risk investment option.