Investing at a young age

BrandonGriggs

Hi,

I'm currently in my early 20s. I completed uni and have ~60k worth of debt. I live in the uk.

I own a business which earns ~7k a month, to which I am the only employee. I pay myself 1.5k a month. The business has no other expenses, minus an accountant. After being paid by the company and paying my expenses, I as an individual have about 500 left to save/spend.

I would like to start investing for my future, however I am not sure how to go about it. As shown above, most of the money is kept in the business, so ideally I would like to invest from the business and not have to pay myself and invest through myself. This would also avoid the 9% student loans tax.

Thank you.

xylophone

Start a pension?

Just for information

https://www.pensionbee.com/pensions-explained/pension-contributions/contributing-to-your-pension-from-your-limited-company

but you have a wide choice of pension providers- a simple stakeholder might do for a start.

https://www.cavendishonline.co.uk/stakeholder-pension

BrandonGriggs

Hi, thanks for the link.

I saw pensionbee and my ignorant opinion was that it was mainly for those who were not knowledgeable of investing. However, I do like their simplicity and will check out the other option you posted.

I would appreciate your opinion on this:

- Given my age, would it be better to get a state pension compared to a private pension?
- Should I get a financial adviser? Or can I do reasonably well without one?
- Also looking at ISAs, Is there such a thing as a "high risk" ISA ?

Albermarle

Should I get a financial adviser? Or can I do reasonably well without one?

A topic debated endlessly on this forum ! I would say as you have only just started saving/investing the cost of an IFA would be prohibitive and unnecessary. Some self education about these issues would be more beneficial. There is a lot of info on the internet and even on this site

Also looking at ISAs, Is there such a thing as a "high risk" ISA ?

There are lots of different types of ISA's : cash ISA's; help to buy ISA's ; Lifetime ISA's , Innovative finance ISA's and Stocks and shares ISA's . For the latter the risk depends on what funds you choose to invest in inside the ISA . Also the Innovative isa's could be classified as medium to high risk, again depending on what investments you choose to use the ISA for .

I saw pensionbee and my ignorant opinion was that it was mainly for those who were not knowledgeable of investing.

Mainly they are for novice investors who want simplicity , like you ?

I would like to start investing for my future, however I am not sure how to go about it.

cloud_dog

If you don't already own a property you may want to consider a LISA in addition to a pension.

atush

Given my age, would it be better to get a state pension compared to a private pension?

Are you paying Nics? If you are, and you should be, then you are getting credits towards your state pension. And yes, you should have a pension your company pays into on our behalf.

El_Torro

I would say that you need to have a think about what your goals are.


Starting early with pensions is great, though if you're paying so much into a pension that you can't later afford to buy a property (assuming you want to buy a property) is a bit counter intuitive.


You're going to have to take some money out of your business eventually anyway so taking it out piecemeal and investing in ISAs isn't a bad way to go.


Just remember that if you're planning on buying a property soon investing isn't necessarily the best place to put your deposit. Investing should really be for 10 years or more, you don't want to sell your shares when they're low to fund a deposit.


Make sure you don't ignore your pension either

BrandonGriggs

Albermarle wrote: »

A topic debated endlessly on this forum ! I would say as you have only just started saving/investing the cost of an IFA would be prohibitive and unnecessary. Some self education about these issues would be more beneficial. There is a lot of info on the internet and even on this site

There are lots of different types of ISA's : cash ISA's; help to buy ISA's ; Lifetime ISA's , Innovative finance ISA's and Stocks and shares ISA's . For the latter the risk depends on what funds you choose to invest in inside the ISA . Also the Innovative isa's could be classified as medium to high risk, again depending on what investments you choose to use the ISA for .


Mainly they are for novice investors who want simplicity , like you ?

Yep, so there would be a cost to having a simple interface. I am not sure what it is, maybe higher fees or something. Ideally, I would like to invest using a platform for the long-term investor under reasonable fees. Not claiming that their fees are not reasonable, I just don't know. If you know of any better platforms, please let me know

After reading a bit, it seems that having a LISA, an innovative ISA and a cash ISA along with a pension may be beneficial to me.

Albermarle

Yep, so there would be a cost to having a simple interface. I am not sure what it is, maybe higher fees or some

There are lots of pension platforms . Some will be cheaper but have a more complicated interface and too much choice of funds for a new investor.
Charges have come down in recent years and to begin with I would worry less about paying a fraction of a % less in charges and more about just getting started with a simple scheme. As the fund builds up then you can shop around and transfer it at later date , in which time you can learn more about investing/funds/pensions etc

BrandonGriggs

El_Torro wrote: »

I would say that you need to have a think about what your goals are.


Starting early with pensions is great, though if you're paying so much into a pension that you can't later afford to buy a property (assuming you want to buy a property) is a bit counter intuitive.


You're going to have to take some money out of your business eventually anyway so taking it out piecemeal and investing in ISAs isn't a bad way to go.


Just remember that if you're planning on buying a property soon investing isn't necessarily the best place to put your deposit. Investing should really be for 10 years or more, you don't want to sell your shares when they're low to fund a deposit.


Make sure you don't ignore your pension either

I live in the city, where property is in the millions. I am not sure I would be able to afford it, although I would like to. I am not fond of mortgages either.

Is there no way to pay the ISA from the companies account?

I like your note about pensions being for the long-term. It is my intention to leave it in there for the next 30 years. On a tangent, I ideally would like other short term investment ideas that would allow my money to work for me.

BrandonGriggs

Albermarle wrote: »

There are lots of pension platforms . Some will be cheaper but have a more complicated interface and too much choice of funds for a new investor.
Charges have come down in recent years and to begin with I would worry less about paying a fraction of a % less in charges and more about just getting started with a simple scheme. As the fund builds up then you can shop around and transfer it at later date , in which time you can learn more about investing/funds/pensions etc

Is it possible for a pension platform to lock me into their platform, unintentionally by the choice of products or intentionally?