21 Year Old trying to save for retirement.. Opinion?

Dead_Eye_Jones

yep earlier the better, no criticism ther. What else ya gonna spend ya money on? Its refreshing to read such a post as normally we have people in your position moaning about how impossible it is to have a home, save, live, breath etc.

An ISA seems a good start but also look at setting up a pension. You get ya tax given back to you so should be better than the ISA alone.

However it is certainly prudent to have an instant access rainy day fund, but I prefer that the pension is untouchable - no temptation!

I was recommended 10% of my income per year - im lucky that my employer pays this! Else I pump my savings into my mortgage. I figure that if you own your house outright come retirement you dont need the same level of income you have now. Of course you dont want to underestimate though...

GL!

emmaur1

My emergency fund is in a high interest instant access savings account.

I fogot to mention that the £2000 is in the stocks & shares part of my ISA and i pay £250 per month into this.

However i also pay £100 per month into my cash ISA. (There is currently £600 in there)

Is this a good way to do this?

I know what you mean by people moaning how difficult it is to live on their wage, cannot afford a house etc. I'm sick of all my friends moaning on about it too!

I still manage to have a life while saving and always managed to get on holiday once a year (To keep me sane!)

emmaur1

Just wondering if there was any more thoughts on if this is a good idea and any suggestions on better/more efficient uses of my money?

Thanks

Andy

dunstonh

Are your funds all from the same fund house or are they spread?

If you want a bit of an eye opener on the tracker funds, take a look at the UK All comapanies sector and see where your tracker funds come out in that table. You may be surprised with the outcome and it may prompt you to alter your investment choice.

emmaur1

The tracker funds come out at the middle (average) which i where i would expect them to come out.

Once i get a bit more experienced and maybe get some help in the right direction of where to look i will diversify more.

Any ideas where i should start anyone?

EdInvestor

You can investigate the best funds with long term consistent performance here:

http://www.citywire.co.uk/Funds/Home.aspx

Choose "IMA" funds, the "ABI" ones are for pensions.

Look at the top 10 of each sector over 10,5,3 and 1 year to see which funds pop up as good performers over all time periods.

That soon weeds out the also-rans.

emmaur1

Well this is how they ranked (over 3 years)


UK Growth Fund - 243 out of 291
UK Equity Fund - 44 out of 78
UK FTSE 100 Tracking Fund - 249 out of 291
Corporate Bond Fund - 11 out of 102
UK FTSE All Share Tracking Fund - 160 out of 291
International Growth Fund - 77 out of 166

So nothing fantastic but still (unbelievably!) better than some actively managed funds

I've noticed by looking on there that New Star seem to be top on a lot of sectors.

Are these any good what are your thoughts on them?

emma396

u seem to have it all sorted emmaur1, i wish i were in your position. i don't really know what i'm talking about, but i'd suggest u got a will. that's what the man at the bank told me to do, to avoid prolonging the suffering of my loved ones in the event of my death as i have more than £15k in savings

emmaur1

Thanks Emma

Im sure you will get there if you really want to. Just set yourself goals - this is a very important part of the overall jigsaw.

Still wondering if anyone had any thoughts on New Star? Has anyone else out there invested with them?

Thanks

Andy

jamesd

emmaur1, I suggest that you read Ok then - How do I choose a S&S ISA and the discussions linked from it to get an idea of what a sector allocation is. There are also many excellent funds listed in that discussion, though they do tend to be at the higher risk end, reflecting the interests of those who were commenting. Choose the sector allocation first, then the funds within the sectors.

Ideally you'd be using high risk at your age because you've many years before you need the money when it's for retirement. But ideal also requires you being able to sleep well, so that may require a lower risk level.

I have 12 funds in my ISA investments, from 10 different fund managers. No fund management company is universally good.