21, Need direction/help with money.

Jonny1875

Hi, long time lurker and find the site very useful so thought eventually I would join as I am thinking about investing some money/improving my finances.

I am 21 and currently earning around £300 per week. Im currently on the lookout for a better job so hopefully this improves in the next few months. I am a recent graduate and havent started paying my student loans back I believe I am eligible to do this from April if im earning over the threshold?

I currently bank with Nationwide and have a standard FlexAccount. I also have an Instant Access ISA with around 9k in it and a Help To Buy ISA with 2.2K, I add £200 every month although im not planning on buying a property for some years yet. I was thinking of investing around £1k in stocks and shares, having noticed many people reccomend this through Vanguard? Is this possible with already having an ISA with nationwide? I also currently live at home and have no major financial outgoings having recently purchased my car's insurance for the year and other major car related outgoings for the year hopefully.

So really just seeking some financial guidance on how I can improve my situation.

Thanks:beer:

Eco_Miser

Congratulations on thinking about your future so young.
You can have a S&S ISA with Vanguard (or any provider) even though you have a cash ISA with Nationwide.
Only invest money you don't expect to need for at least five years, preferably ten, as while the long term trend is upwards, in the short term prices could go anywhere, and you wouldn't want to be selling your ISA just after a 2007/8 style drop.

Look at getting a Flex Direct current account (and keeping £2500 in it, and paying at least £1000 a month into it), and saving £250 a month into the Flexclusive Regular Saver (both paying 5% for a year). (The RS is repeatable, the Flex Direct drops to 1%)
If your salary doesn't cover that much, it's almost certainly worth taking the shortfall from your cash ISA.

atush

What advice and help have your parents given you?

what is your degree?

JSCB

Hi Jonny,

As I'm only just about to turn 21, and new to the forums and investing myself, I'll keep away from the questions about investing for now and let others come along to offer that advice...

However, in terms of repaying your student loans you're right about not being eligible until April, having graduated only this year, but, incase you didn't know already, from April 6th the Student Loan repayment threshold rises to 25k pa from the current 21k, so if you don't earn above that next year, you still won't be repaying your student loan from April anyway.

On a side note, it's nice to see someone else my age on the forums with an interest in getting ahead! :beer: I don't think there's many of us about!

DrEskimo

Jonny1875 wrote: »

Hi, long time lurker and find the site very useful so thought eventually I would join as I am thinking about investing some money/improving my finances.

I am 21 and currently earning around £300 per week. Im currently on the lookout for a better job so hopefully this improves in the next few months. I am a recent graduate and havent started paying my student loans back I believe I am eligible to do this from April if im earning over the threshold?

I currently bank with Nationwide and have a standard FlexAccount. I also have an Instant Access ISA with around 9k in it and a Help To Buy ISA with 2.2K, I add £200 every month although im not planning on buying a property for some years yet. I was thinking of investing around £1k in stocks and shares, having noticed many people reccomend this through Vanguard? Is this possible with already having an ISA with nationwide? I also currently live at home and have no major financial outgoings having recently purchased my car's insurance for the year and other major car related outgoings for the year hopefully.

So really just seeking some financial guidance on how I can improve my situation.

Thanks:beer:

As above, I won't try to give you advice on investment, as I know relatively little, and your queries about the student loan have been addressed to.

But if I read your post correctly, I understand that you have about £9k in a cash ISA? I would wonder if that's a bit on the heavy side given your current circumstances? Most aim to have around 3-6months of expenses in easy access savings accounts for emergencies, but I would look at moving it into other higher rate savings accounts with equally easy access (I imagine you are getting very little interest on it?), as Eco Miser suggests.

You can decide how much you think you need to keep in there (some for an emergency fund, and some for large expenses in the near future that aren't related to the house), but perhaps it is worth thinking about moving some to your H2B ISA to make sure you are maximising your gains from that each financial year?

JSCB

DrEskimo wrote: »

You can decide how much you think you need to keep in there (some for an emergency fund, and some for large expenses in the near future that aren't related to the house), but perhaps it is worth thinking about moving some to your H2B ISA to make sure you are maximising your gains from that each financial year?

Having read Dr Eskimo's advice above, it sparked another thought... have you looked into the Lifetime ISA's and the benefits and drawbacks over a Help to Buy ISA?

At the moment the only cash provider, Skipton, are offering a 0.75% interest rate, not the best compared to the 2% you can get for HTB ISA's, but you can put £4k per year into a Lifetime ISA (as apposed to just 2.4k in a HTB, perhaps making the most of the spare excess DrEskimo potentially identified in your normal cash ISA?) meaning you can earn the bonus on an extra 1.6k per year, and can maintain this account for as long as you like unlike a HTB which you'll max within 3-4 years.

Only downside with the lifetime for me really is the fact that you can't withdraw back from it if need be without penalties, which while I think is right to deter people from spending their savings, is bad if you were to change plans and buy at Auction or move abroad instead for example.

Something to think about though, financially worth doing and if you opened one in the next month you could transfer your current HTB's balance into it in this tax year, as well as adding this years 4k allowance minus what you've put into the HTB this tax year so far, and then still another 4k again April 6th onwards.

PEHsaver

It sounds like you are doing great with your saving and have a solid foundation to build from. its great you have started some serious saving at your age, but with property prices as they are and rising, this is important. I would save as much as you possibly can whilst you have the opportunity!

If I was in your position my priority would be saving for a deposit on a property which at 21 I would do through a lifetime / help to buy ISA as you already are.

at 28 myself I am doing OK financially. I bought my first property 12 months ago age 27. I had managed to save £35,000 before doing so. I put down a £14,000 deposit keeping back £21,000 capital £6,000 of which was used for furnishing.

From the leftover £15,000 I have drip fed £5,000 into stocks to cost average leaving myself with a £10,000 (6 month) emergency fund in available cash.

I have only just started investing and wish I knew about the power of compound interest 10 years ago as could of built significantly more wealth.

I will now roll around £650 a month into funds to compound over the next 30 - 40 years leading into retirement. £300 saved monthly into a fund returning 8% per year over a period of 40 years would compound to over £1 Million. Not bad eh!

check out an online calculator for compounding

My Advice
1. Save for a property using a lifetime / help to buy ISA and get on the property ladder asap
2. Build up an emergency fund of 3 - 6 months salary and keep this in available funds
3. Invest into workplace pension
4. Invest what you can afford into a low cost tracker fund / S&S ISA and compound the Interest
5.Retire a Millionaire

:j

Sarastro

I agree with PEHsaver although I'd forget number 4 for now and throw that money at getting a house.

Jonny1875

Thanks for all the replies, very helpful!
It seems like a common suggestion is to make more use or better use of the 9K I have in my Instant Access Isa, I was thinking therefore should I transfer £200 every month from this to my Help To Buy Isa instead of adding to both simultaneously? and do this until my Instant Access Isa is at a level where it is simply an emergancy fund?
It seems like the Help to Buy ISA is the right move for helping myself to get on the property ladder in the next 3-5 years however i see the benefits suggested by JSCB in transferring this to a Lifetime Isa the only thing im wondering is if its worth this as ill no longer get the extra 25% bonus from the government if i were to purchase as a first time buyer.
I'm also interested in Dr Eskimo's suggestion of an alternative savings account as indeed my interest rate is low at 0.75% and still interested in perhaps investing around £1K in a low cost tracker fund/S&S Isa suggested by PEH saver although im unsure about how to go about this or how to compound the interest?

Jonny1875

atush wrote: »

What advice and help have your parents given you?

what is your degree?

History :rotfl:Doesnt seem very useful in todays job market unless I want to teach which I definitely dont!

savingpennies

Don't apologise for doing history. Employers are not always interested in what you studied but the brain you used to do the studying.