Absolute beginner on investing- where to start?

Namnoms

So I'm at that point in my life where I'm planning to get married in the next year, I'm saving up for a deposit, plan for a baby in next couple years, etc.

Me and my partner each earn a couple grand above the national average wage at the moment. We have normal outgoings- food, rent, bills, small car, that's pretty much it. Neither of us have parents or other family members who can help financially at all, or know anyone with good financial knowledge.

I grew up around some quite privileged people and are aware lots of them at my age have money from investments, shares and other things I have absolutely no clue about. I've tried to Google and teach myself what this means and how to start, as if I had parents passing this knowledge down, but am none the wiser.

I know there are smarter ways to invest than just putting a certain amount of cash in a bank savings account each month, but I haven't got a clue where to start, and the things we have to save for our future just seem insurmountable right now. I'd love to educate myself so that our money can go further and we can get our first house, start a family, etc.

Any advice at all for a newbie? Links, books, etc? Thanks in advance!

Albermarle

No doubt some other posters will send you links etc .In the meantime you could spend some time looking through the board for similar threads as someone asks the same /similar question on an almost daily basis ( and the answers are usually the same )

eskbanker

The first thing is to appreciate the difference between saving and investing - the former involves keeping your money somewhere where it's protected and you won't lose any of it, whereas investment entails the possibility of losses, but potentially/probably better gains in good times, provided you can wait long enough.

Generally it doesn't make any sense to consider investing unless you have adequate cash and/or cashflow for your anticipated requirements over the next five years plus, so in your shoes it would be sensible to stick to saving for deposit, family, etc, and leave investing until later on.

There are a couple of schemes to assist with saving for a deposit, namely Help to Buy ISA and Lifetime ISA, which earn 25% bonuses from the government, and one of these would almost definitely help each of you.

This, and plenty of other ideas, are covered in the quick link above titled 'how to start saving', so that's a good point at which to start your research....

Alexland

Also worth ensuring you are opted in to your workplace pension and making a big enough employee contribution to get the maximum employer contribution.

Unfortunately knowing about savings and investments won't make you rich. It takes many years of disciplined contributions to get the compounding to work it's magic.

Alex

short_butt_sweet

Alexland wrote: »

Unfortunately knowing about savings and investments won't make you rich. It takes many years of disciplined contributions to get the compounding to work it's magic.

or (let's be realistic) being showered with money by your family

but on the bright side, starting with more money is the only major advantage more privileged people have in investing. you don't need to learn a lot to get the same sort of return (on whatever you can put aside to invest) as they do.

to get a simple idea how to invest (and in investing, the simple approach is often the best), look at monevator.com, especially lars kroijer's articles, e.g. this article or these videos.

investing works better over the longer term - perhaps 5+ years, or even 10+ years, because your investments make money in some years, but lose it in others. so it may not be suitable for money that might be used for a house deposit relatively soon.

the help to buy ISA or lifetime ISA (already mentioned) may make more sense for deposit money: a 25% boost to your money (subject to various conditions), with no risk.

putting enough in workplace pensions to get maximum employer contributions usually gives a even higher return: e.g. it's a 100% boost if the matching is 1:1.

compared to those figures, investing is likely to give relatively modest returns. after putting the gains in some years and losses in other years together, the most you might hope for might be compound returns of inflation + 5% per year. but that may be over-optimistic; some would say you should expect not much more than keeping up with inflation.

5% on top of inflation (which may be too much to expect) would double the real value (spending power) of your money in about 14 years. which would be pretty good. but that is the kind of timescale you're talking about to expect to see much return.

but double what? it all depends what you can put aside in the first place.

you say you have "normal" outgoings. but that can mean very different things to different people. if you look into your spending in detail, you may find there are things you could cut out and wouldn't miss, giving you more to save (towards a deposit, or for longer-term investments).

BLB53

Any advice at all for a newbie? Links, books, etc?

I couple of free sites I recommend would be Monevator
http://monevator.com/category/investing/passive-investing-investing/

and DIY Investor
http://diyinvestoruk.blogspot.com/p/basics.html

These are mainly about investing but if you are saving for a deposit for a first house then investing may not be appropriate as they are mainly for long term money i.e. more than 5 yrs.

Cash savings in a building society or something like funding circle may be more suitable.

Either way it is important to review all of your spending to see whether it is possible to save more and spend less on stuff which is not really needed.

zippygeorgeandben

As somebody interested in this thread, thanks to all the responders to the OP.

Peelerfart

Also, try to keep three months of income as liquid savings before investing anything.

Just to cover rent, utilities etc if something happens on the income front

bostonerimus

The basics are: save 6 month's cash into an emergency fund; pay off all your high interest debt; and contribute to your workplace pension. Get all the pension plan information and read it carefully and then ask questions. Once you understand the benefits of tax deferred growth and how you can use investment funds for long term financial gain you will have more knowledge than a lot of people. Get the pension started and then look into and ISA.

maxie014

When i got married and bought a house i started a regular savings plan into f&c investment trust,only £50 a month,the intention was to pay the mortgage off early with it.
Easy enough to set something like this up,when we had 3 young kids a mortgage and only me working the mrs used to hate that £50 coming out the bank, but i just ignored her complaints lol.
I ended up cashing it in and using it to pay off the mortgage,was stupid really but was on an endowment mortgage and been through high interest rates etc.
Think just starting investings the hardest part.

badger09

For a very basic introduction to all things financial - have a look here

https://www.moneyadviceservice.org.uk/en