Should I be investing more?

krish123

Hi All,


as per thread title do you think I should be investing a larger amount into my S&S ISA?


Here is my current situation:


Age:25


S&S ISA with Charles Stanley investing in VLS 80% Fund, Currently put in £2450 and is up around 16 odd % so worth around £2800 atm (Started investing in this fund Oct 2014 I believe. I invest currently £50 pm via direct debit however when I can I lump some extra in.


Company Pension: I contribute 5% which is max and employer contributes 5%, Currently around 4K sitting in there.


Current account with Santander 123, currently 15.5K sitting in there, aim is to max this out to the 20K.


For the VLS 80 Fund this is going to be part of my retirement pot and I would like to reach a pot value of 100K if I can.


Do you think I should be putting more of my money into this fund given my situation?


I currently live at home with parents and am slowly building for a house purchase too however this wont be anytime soon.


I also have a HTB ISA with £2800 currently sitting in there too.


I just really want to maximise the potential of the VLS 80 returns and sometimes feel I could be putting more into this, what do you guys think?

masonic

It depends how relaxed you are about the timescale for buying a house and whether diverting some money into the S&S ISA will push that back significantly. The further away from buying you think you are, the more realistic investing your house deposit becomes, but it also comes with the risk of having to delay for a few years if the markets fall near when you want to buy.

It looks like you are managing to contribute a little over £1,000 per year including lump sum contributions and if you keep on at that rate (increasing your contributions by inflation), £100k in today's money does not look like an unreasonable target by your 60s.

krish123

hi Masonic, I would say house purchase would be in around 3 to 4 years, however that may change.


I don't want to use any of the money in the VLS 80 to fund the house deposit etc, I don't really want to touch this money for as long as possible tbh.

masonic

If your aim is to buy in 3-4 years, then that wouldn't be long enough to consider investing the money anyway.

So, in about 3-4 years you will need to have the cash for a deposit, plus a little extra so that buying doesn't completely wipe out your cash reserves. You could consider that your saving goal. If you can meet that goal easily and have surplus income that you aren't spending, then that could be diverted towards VLS 80 in order to help you achieve your long term investment goal more quickly. It will probably make sense to make use of a LISA when these are available, which will give your investments an extra boost. Depending on how exactly they work, you could end up with your deposit money in there held as cash, alongside some retirement investments.

george4064

Hi krish123,

Reading your thread sounds very similar to my situation!

I am also 25 years old, looking to buy a house/flat in the next few years.

Got a lot of my money in S&S ISA, which I'm reluctant to sell to buy a house... I'm considering carrying on saving in cash and leaving the S&S ISA alone which is growing nicely..

chockydavid1983

When I was saving hard for a house (took about 5 years after starting full time work but started many years before that), I would look to simply max out interest bearing current accounts to build up as much deposit as possible.
Once I got my house a couple of years ago, I started investing in VLS 100.
If you can afford to start putting in more into the VLS now without compromising your house ambition I would do it.

enthusiasticsaver

This depends on so many variables.

If your main goal in the next 3-4 years is to buy a house then this is what I would be focusing on. How much mortgage can you get, what is the average ftb house price in your area and are you aiming for a 10% or 20% deposit to get a better rate?

If you live in a cheaper property area then you may already be at or near your goal with your £15k in Santander and your H2B account but if you live in the south of the UK you may still have a way to go. If you reckon you can easily save what you need for a house, including fees and emergency fund then by all means put more in your S and S ISA.

Basically the rule is don't put anything into stocks and shares which you may need to access in the next 5-10 years. Without knowing your income or your goals it is difficult to make a blanket decision as to how much of your savings you should tie up.

I would suggest you do an analysis of costs for your proposed house purchase, increase it by 10%, decide on whether you want it to be 3,4 years or longer and make that your goal. Only you can know if you will have enough spare to put more in your S and S ISA.

darkidoe

Ahh the dilemma of saving for a deposit these days. I am pretty much in the same situation, maxed out my S&S ISA and planning to do so for every subsequent year. But the thing is the yearly contribution would virtually wipe out most of my cash reserves. The only alternative is to work extra shifts or source alternative sources of income to cover up and build some sort of deposit.

But then again reading the arguments for and against buying a property, and the story of Buffett's Folly, buying might not always be the most logical or 'right' choice. It's a difficult one to make. It shall the great internal debate for me for the next few years. Painful truths.

hutman

I would be tempted to invest the savings into stocks as well. Despite the implied volatility of stocks, the fund you mention has a decent performance record.

I fail to understand the proverbial wisdom here to invest only for the long term. In fact I tested this as much in case I've been missing something substantial. I put in £100 in week one, it went up to £102 in week 2; i cashed out my 2% gain. So why can’t you do the same? Considering the above, the opportunity cost of ignoring short term investing (not trading) means losing out.

eskbanker

hutman wrote: »

I fail to understand the proverbial wisdom here to invest only for the long term. In fact I tested this as much in case I've been missing something substantial. I put in £100 in week one, it went up to £102 in week 2; i cashed out my 2% gain. So why can’t you do the same? Considering the above, the opportunity cost of ignoring short term investing (not trading) means losing out.

What you describe is trading or gambling rather than investing - your £100 could just as easily have reduced to £98 (or even £60) in other random weeks and the transaction costs would often obliterate any such minor short term gains. Yes, over some short time periods you may be able to achieve and realise a gain but that in itself isn't evidence of this being a valid approach to take given the downside risk that you might happen not to have experienced in your little one-off 'experiment'....

krish123

george4064 wrote: »

Hi krish123,

Reading your thread sounds very similar to my situation!

I am also 25 years old, looking to buy a house/flat in the next few years.

Got a lot of my money in S&S ISA, which I'm reluctant to sell to buy a house... I'm considering carrying on saving in cash and leaving the S&S ISA alone which is growing nicely..

Well done on piling into yout S&S ISA, what are you investing in and how much have you currently got in there?


I think the idea is to not touch the fund as you do not want to destroy the growth that is occurring in there, easier said than done though!