Best Way To Invest Money At 21

sam9

Hello,

Could anyone give me some advice please?

I'm 21 years old looking to find the best way of investing my money. I currently have around £30k saved, although most of it's in NS&I Premium Bonds and every month I have £200 going into my ISA with Barclays. The truth is, I don't know a lot about the best ways to invest money, hence why most of it's in Premium Bonds. As I say, I'm 21 still living at home with my parents and I don't have any plans to move out to find my own place anytime soon, so leaving my money somewhere to grow for 3,4 or 5+ years shouldn't be a problem.

I've heard a lot of different routes I can take, including buying and renting out my own property, to investing my money with low, medium and high risk investments. I don't think buying property at this time in my life would work, as I'm quite busy with work and outside of work as it is, so finding the time to buy and do up a place and sell it wouldn't be practical. A close relative of mine works at St. James's Place and asked if I wanted to share my money with them, I wasn't too sure as the entry fee is 5%.

What does everyone recommend I should do? Sorry if this seems a vague question, I thought I'd ask on here so everyone can share their views what the best way forward is.

Thank you for reading my post

Sam

Alistair31

Sam, 
Even if you do nothing else, avoid St James Place like it is the Coronavirus.

colsten

If you want to buy a property at some stage in the next 5-10 years, you should be looking into a LISA. Your Barclays ISA probably pays a derisory rate of interest, so you could consider ditching it in favour of a LISA.

You should also read the Premium Bonds article, and the introduction to savings article. If you can lock up some of your money for 7-10 years, you can look into investments, and particularly into your pension. Even though retirement seems ages away for you, you should always be investing as much as you can into your pension, and make sure you get the maximum contribution from your employer.


I echo what Alistair31 said: whatever you do, stay clear of St James Place. And never put all your eggs into the same basket.

MaxiRobriguez

Look into your company pension as well as these schemes mean you can avoid income (and potentially NI) tax at the point of entry which'll give you a 20%+ boost on your investments. I wouldn't recommend maxing this out like a lot of us do as you'll still want to consider building a separate pot for moving into a new house over the next few years, but definitely *start* on the pension if it's available to you and get in the habit of contributing early on. You'll thank yourself in ten years time when you've got a big head start on your peers.

Congratulations on getting £30k saved up already by the way, quite impressive at 21. 

Albermarle

In addition to the links above , these are two government website .https://www.pensionsadvisoryservice.org.uk/
https://www.moneyadviceservice.org.uk/en
I think that your decision not to go down the buy to let route is the right one. Previously there were some good tax advantages available as a buy to let landlord, but these have now largely disappeared. It is also time consuming being a landlord and can be a lot of hassle with dodgy tenants and repairs etc .
So as above- keep up a good level of pension contributions for the long term ( and due to your age better to have higher risk investments within the pension) possibly a LISA to take advantage of more free government money and make sure your cash savings are in the best interest paying accounts ( have no loyalty to existing bank etc ) 
After that you may consider a Stocks and shares ISA but think in terms of more than a 5 year timeframe , preferably >10  
Finally avoid St James Place  In reality you do not really need a financial advisor at all at this stage, if you read and absorb the info in the links. 

steampowered

Well done - it sounds like you a great savings pot for someone of your age!

A Lifetime ISA is a good option, because when you use it to buy a home worth less than £450k you get a 25% top-up from the government. 

A stocks & shares ISA is another good option. It's a great time to invest right now as stock markets have dropped. The average return historically generated by stock markets is about 7-8% per year. With stocks & shares you will see the value of your investment fluctuate over time, and it is possible that your investment might drop over the short term, but the long term trend is up.

As a young person with a modest pot of capital you are in an excellent position to take a sensible level of risk, and it's a perfect time to learn the basics of investing which will set you up to make better choices with your money for the rest of your life. If you choose to invest, please do it through a conventional broker (I like share.com) and invest into a diversified passive fund (such as a Vanguard fund).

Don't do it through St James Place - with them you'll pay through the nose in unnecessary fees. I doubt you'd qualify to be a client of SJP with £30k anyway.

dunstonh

A close relative of mine works at St. James's Place and asked if I wanted to share my money with them, I wasn't too sure as the entry fee is 5%.

And SJP fees are so high that you really would be sharing your money with them.

benbay001

Unless your parents have a massive house, i really dont think they are going to want to living there when youre in your late 20s.
Id focus upon getting ready to move. As said, get a LISA.

Zorillo

I agree, get a cash LISA and maximise employer  pension contributions. Put the rest of the money in fixed rate savings or even leave it in PBs.

I see no sense in a S&S ISA until you've got a long term plan. In a few years when you've either bought a house or ruled out buying a house for some reason, that would be the time to embark on S&S.

Alistair31

benbay001 said:

Unless your parents have a massive house, i really dont think they are going to want to living there when youre in your late 20s.
Id focus upon getting ready to move. As said, get a LISA.

And no matter how big your parents house is, not having your own and staying with parents becomes embarrassing as you get older. 

I flew the nest at 21 and have never looked back. 

steampowered

benbay001 said:

Unless your parents have a massive house, i really dont think they are going to want to living there when youre in your late 20s.
Id focus upon getting ready to move. As said, get a LISA.

benbay001 said:

And no matter how big your parents house is, not having your own and staying with parents becomes embarrassing as you get older.
I flew the nest at 21 and have never looked back. 

I don't know why people are suggesting trying to buy a house in your early twenties. Your first property  outside the parental nest should be a rental !!!! 

Owning a house with a mortgage makes it much more difficult to pursue study, travel or work opportunities. When you are young there's a massive economic opportunity cost to that.   

As a young graduate entering the job market there is a very high chance that you'll need to move to access the best graduate job opportunities. You might also decide you want to pursue further study elsewhere in the country, or spend some time travelling or working overseas. 

Only buy once you are confident that you will be staying in the area for an extended period of time, know what you want and have a decent deposit together !