19 and have £500pm to invest, what to do?

Kylet63b

I was looking at stocks and shares ISA’s which company is good to go with and is it something I would set up my own portfolio for or have a pre made one? Do stock and share ISA’s let you invest in the stock market or is it just different funds?

MallyGirl

I suggest you do a bit of reading which will help you answer your initial questions - you shouldn't invest in something you don't understand.

John Edwards DIY Simple investing is nice and entry level.

You need to think about your house buying timescales as investments should be something like 10 years commitment to ride out the peaks and troughs. You wouldn't want to be trying to get your money out to buy when the market is in a slump so you need to have flexibility - or stick to savings.

kidmugsy

If house-buying is on your mind look into LISAs and Help to Buy ISAs.

If the house-buying would happen in the next few years don't plonk the money into investments - there's too great a risk that they will be "down" when you want the money.

Zero_Sum

swindiff wrote: »

Salary sacrifice pension contributions are, 47% :T

Only if you're earning over £150k

swindiff

Well mine get a boost by 47% and I earn nowhere near that much lol

Tax relief is 20% and national insurance is 12%. So for every £100 that goes into my pension it costs me £68.

£68 + 47% is £100 (rounded to the nearest pound)

steampowered

I would put the money into a stocks & shares ISA.

You have an enormous range of choice as to what you can invest in - whether that be specific shares or thousands of different funds. If you are not sure, choose a low cost tracker fund - Vanguard do good ones.

Clearly, if you invest in stock funds there is a chance you'll get less back than you put in, if you need to get the money out in the short term. But it is far more likely you'll end up ahead - stock markets average returns of 8-10% a year over the long term.

If you are planning to buy a house, you also need to balance this "investment risk" against "shortfall risk" - the risk of not being able to afford the required deposit. The investment returns you'd get on shares means accepting investment risk but mitigates shortfall risk - and shortfall risk is the real problem these days!!!

Some of the advice you've been getting is ridiculously conservative IMHO. 6 months living expenses is not a sensible use of funds for a 19 year old. When you are young you should be prepared to take (sensible and calculated) investment risk.

Audaxer

Kylet63b wrote: »

I’m permanently working full time, I would like to save for a house just now, I’m currently still living at home so I don’t have a lot of costs per month so I am able to put £500 away while still having some money aside for myself

If you are saving for a house deposit, I assume it will be required within about 5 to 10 years at the most. In that case I wouldn't recommend investing your savings. It would be better to save the £500 per month in a Help to Buy ISA and the highest interest current/savings accounts.

Terry_Towelling

steampowered wrote: »

Some of the advice you've been getting is ridiculously conservative IMHO. 6 months living expenses is not a sensible use of funds for a 19 year old. When you are young you should be prepared to take (sensible and calculated) investment risk.

Two people suggested an 'emergency fund' (me included) and that was before we knew OP was still living at home. It is always good advice to be able to cover your bills in case you lose your job. Now we know OP is at home but looking to buy. What we now need to know is how soon. If the capacity to save £500 continues unabated for, say, 5 years (an eternity at 19) then that could be a useful deposit - especially if uplifted by government incentives in a LISA/H2B ISA.

I've lost count of the number of times contributors advise people that market investments are for the longer term (10 years or so) so there must be some wisdom in that. If OP is happy to risk a potential deposit on investments then so be it. I guess they could carry on living at home (parents willing) should the market slump at the wrong time and they need to ride out the rough patch.

Nobody knows what markets will do over 5 or 10 years and, yes, they will likely move more up than down - and nobody knows what OP will be doing in 5 or 10 years. Many things are unknown/unknowable so, to get off on the right foot, probably best to stick to something more certain whilst OP decides whether they 'would like to save for a house' or are determined to save for a house.

Audaxer

Terry_Towelling wrote: »

Nobody knows what markets will do over 5 or 10 years and, yes, they will likely move more up than down - and nobody knows what OP will be doing in 5 or 10 years. Many things are unknown/unknowable so, to get off on the right foot, probably best to stick to something more certain whilst OP decides whether they 'would like to save for a house' or are determined to save for a house.

You have rightly used the words 'save for a house' twice in the last sentence. I think it is much wiser to save for a house deposit rather than invest for a house deposit as there could be a market crash just when you need the money.

Zero_Sum

swindiff wrote: »

Well mine get a boost by 47% and I earn nowhere near that much lol

Tax relief is 20% and national insurance is 12%. So for every £100 that goes into my pension it costs me £68.

£68 + 47% is £100 (rounded to the nearest pound)

Ahh right, i see what you've done.
Thought you got the 47 from the 45% tax & 2% NI which someone on £150k would pay.