When do you start Investing?

Cotta

Hi All,

As someone with only a small amount of savings which I want to build more, I wondered how to people know when to start investing?

Alexland

...as soon as you have money you can put aside for the long term?

melbury

All I can say is that I started investing way too late (in my 40's)

If you can afford to start young then go for it.

Fatbritabroad

It has to be right for you don't compare it'll drive you mad. Technically if you've been paying into a pension since 18 you've already been investing dont forget. After that I'd personally get any mortgage down to 65% or less ltv to get the best deal snd build up a 6 month emergency fund. After that put away as much as you can afford to that you aren't going to need short term

chockydavid1983

Fatbritabroad wrote: »

After that I'd personally get any mortgage down to 65% or less ltv to get the best deal and build up a 6 month emergency fund. After that put away as much as you can afford to that you aren't going to need short term

Precisely what I did :-).

kidmugsy

The advice of the famous investor Ben Graham (mentor to Warren Buffet) was apparently that you should invest when you have spare funds AND shares aren't lousy value.

So if you believe they are lousy value stick to cash earning 5%. If you think they are a bit pricey, or OK value, or good value or superb value you could consider investing. It would perhaps be wise to start from the base Fatbrit recommended.

In case of doubt: it is probably unwise for the beginner to buy individual shares. Collective investments would be the thing e.g. investment trusts, or "tracker" funds, or "tracker" ETFs.

DrEskimo

I'm quite young at 30, and I find it quite difficult getting the balance between mortgage, pension, short term savings in high interest accounts, long-term savings in investments and then just everyday money for things you want...!

My proportions are probably not quite right at the moment, with about 23% of my salary on mortgage overpayments, 21% on savings accounts, 5% on investment in multi-asset global funds, and 9% on pension (8% is compulsory as I'm on a DB scheme, 1% is to a DC pension to take advantage of a 1% match from my employer), but it's easy to get swept up in wanting to invest a lot of your income, and neglecting any money for the short-term, on what is probably admittedly unnecessary luxuries...! But I guess you have to have some enjoyment in life!

Biggest problem I have is that my emergency fund is what I consider funded, but then I don't want to take money out of my high interest savers as I want to maximise the interest from them...! So it's like I have short-term money in my current account that I look to spend in the immediate future, medium term money in high interest savings (probably include mortgage overpayments here), long-term money in S&S ISA, and very long-term money in pensions.

Not sure if this is the right way to look at it though...!

My mortgage is quite high at ~£300k, but then my LTV is 53%, with a rate of just 2.74%. Overpayments now are probably not very wise, but when I renew my product and get the rate down 1.39% I will probably stop overpaying and look to reallocate to the other categories. Most likely to increase my S&S ISA contributions.

kidmugsy

DrEskimo wrote: »

about 23% of my salary on mortgage overpayments, 21% on savings accounts, 5% on investment in multi-asset global funds and 9% on pension (8% is compulsory as I'm on a DB scheme, 1% is to a DC pension to take advantage of a 1% match from my employer)

DB, eh? Is it USS? Anyway, bagging the extra 1% is wise. And if your DB is paid by salary sacrifice you are in a fine position. So it's pretty clear that there is no strong case for contributing more to pensions unless avoiding 40% tax becomes an issue.

Your use of money at the moment is very conservative. That might work out well. Maybe the end of QE will lead to a great market crash. Then your policy will probably be to divert money into equities. Long term you can look on your DB rights, and eventual state pension, as bond-like. So you'll be looking for opportunities to invest in something equity-like, in addition to your equity-like house.

DrEskimo wrote: »

but it's easy to get swept up in wanting to invest a lot of your income, and neglecting any money for the short-term, on what is probably admittedly unnecessary luxuries...! But I guess you have to have some enjoyment in life!

Enjoyment yes, unnecessary luxuries no! What would you deeply enjoy? How about learning to fly? Mastering fly-fishing or deer-stalking? Collecting stamps, classic cars, or wine? Do something that would give you deep satisfaction. Just don't waste money on silly bling like new cars.

DrEskimo wrote: »

Biggest problem I have is that my emergency fund is what I consider funded, but then I don't want to take money out of my high interest savers as I want to maximise the interest from them...! So it's like I have short-term money in my current account that I look to spend in the immediate future, medium term money in high interest savings (probably include mortgage overpayments here), long-term money in S&S ISA, and very long-term money in pensions.

It sounds pretty rational to me. Keep your powder dry and invest when the opportunity is attractive. Heavens, overpaying a mortgage at 2.74% beats CPI inflation at the moment.

atush

Cotta wrote: »

Hi All,

As someone with only a small amount of savings which I want to build more, I wondered how to people know when to start investing?

You start investing when you start working, by joining the employers pension scheme.

You invest again once you have saved a cash emergency pot. You can start a S&Sisa if the money you are saving wont be needed for 8-10 years or more.

atush

with about 23% of my salary on mortgage overpayments,

What is your mtg rate? LTV?

As said above you are very conservative, so i'd consider cutting back the overpayments and upping that 5% of investments. is it in a S&Sisa?

DrEskimo

kidmugsy wrote: »

DB, eh? Is it USS? Anyway, bagging the extra 1% is wise. And if your DB is paid by salary sacrifice you are in a fine position. So it's pretty clear that there is no strong case for contributing more to pensions unless avoiding 40% tax becomes an issue.

The very same. I did go over into HRT last year, and might do again this year, so could look at additional contributions. My employment salary is under the threshold, but I do self-employment too, and depending on the amount I could go into the HRT again.

Overall, I am pretty light on my pension due to only small contributions during my twenties though...

kidmugsy wrote: »

Enjoyment yes, unnecessary luxuries no! What would you deeply enjoy? How about learning to fly? Mastering fly-fishing or deer-stalking? Collecting stamps, classic cars, or wine? Do something that would give you deep satisfaction. Just don't waste money on silly bling like new cars.

Unfortunately I did one of those daft PCP's on a stupidly expensive car a few years ago...still regret it..but it wasn't a massive impact financially, and come out much wiser (I hope..)..no car now and all my money goes to a rail company for my commute...

kidmugsy wrote: »

It sounds pretty rational to me. Keep your powder dry and invest when the opportunity is attractive. Heavens, overpaying a mortgage at 2.74% beats CPI inflation at the moment.

Yea that's true. It's only relatively high rate due to my mortgage being split into two parts. 1/3 was on a 2-yr fix that ended in March, and 2/3 is on a 2-yr fixed ending in November. I'm fed up of paying two mortgage products fees, so I've let the 1/3 run to a SVR of 3.99% (was the cheapest option when looking at ERC's).

Will address the overpayment when I renew my mortgage in November this year, as I'm hoping to lock in the current rates on offer. Santander at 1.39% seems to be the lowest I can find, and I know I can get better returns than 1.39%...!