What would you do as 21 year old investor?

enthusiasticsaver

Gabby97 said:

Hi guys, I am a new investor and I have started to take interest in this field. I have been using Wombat app as it is super nice for a newbie. However I am not so sure yet where to invest my spare £800. I have invested small amounts in couple funds, however I am holding back a little for now as I am trying to make a smart move for my future. Any suggestions?

There is nothing wrong with investing for the future from a  fairly young age but have you covered the basics before going down this route?
Firstly do you have debt, especially debt you are paying interest on?  If so, paying that off before investing is sensible. 
Do you have emergency savings?  Having an emergency fund is the most critical thing you need as investing is not liquid funds so having some backup cash in an instant access savings account should be placed above investing. 
Are you researching investing in an ISA or a SIPP?  Do you have an occupational pension and are you maximising the advantages of that both from a  tax point of  view and employers contributions. 
Before you invest you need to do some research and ascertain your risk profile. Read up on articles on monevator about newbie investors.  Time taken to educate yourself first will be well worth it rather than you investing past your risk level and being tempted to withdraw the first time you suffer a drop  in value which will be several times.  I am glad to see you are talking about funds rather than shares as diversification is paramount. 

Bobziz

My first employer set up a pension for me when I was 16. I left the job after 6 years having contributed about £2000 to the pot. I made no further contributions to that pension and today, 30 odd years later, it's worth £35k. It feels like free money, and I only wish I'd contributed more back then rather than blowing what money I had on 'fast' cars.

Retireby40

Dont know if anyone previous has said it but one great investment you can make is on yourself. In terms of up skilling.

That obviously depends on your line of work but if you work in an industry by investing some time and money doing extra courses like part time degrees or other things you may see a decent increase in salary if by doing that you gain promotion.

Bravepants

Diplodicus said:

Forget about it. 

Act your age.
Counting money is an old person’s consolation.

If you want to spend your life working for "The Man", then sure, blow your wad on crap!

mooneysaver

Can't really add much that others haven't, so I'll just reiterate that gold is the most sensible investment.

mcooke999

If I could go back and visit my 21 year old self, I would show him/me this table (attached). The message is that you're most valuable asset you've got is time and if you can start investing early enough then you don't really need to be 'rich' to set yourself up for life thanks to the benefits of compound interest.

There are two main things you should be doing at your age (financially speaking): 1) educating yourself about investing and 2) Starting investing ASAP!

As a 21 year old, I would open up a SIPP or S&S ISA and just invest whatever money you can afford to in a simple low cost global index tracker such as VWRL or all-in-one fund such as the VLS range. Obviously don't forget to live a little but it's also just as important to take care of your future self too.

RyanHello

As others have said. Investing in precious metals (gold) is a good starting point. Considering Martin Lewis is a "money expert" he never ever mentions investing on his TV show. He always pushes lousy bank accounts with a laughable 1.5%

burner03

mcooke999 said:

If I could go back and visit my 21 year old self, I would show him/me this table (attached). The message is that you're most valuable asset you've got is time and if you can start investing early enough then you don't really need to be 'rich' to set yourself up for life thanks to the benefits of compound interest.

There are two main things you should be doing at your age (financially speaking): 1) educating yourself about investing and 2) Starting investing ASAP!

As a 21 year old, I would open up a SIPP or S&S ISA and just invest whatever money you can afford to in a simple low cost global index tracker such as VWRL or all-in-one fund such as the VLS range. Obviously don't forget to live a little but it's also just as important to take care of your future self too.

10% return would be nice!
What would the difference be if it was a realistic post inflation return of say 1%? 

Prism

burner03 said:

mcooke999 said:

If I could go back and visit my 21 year old self, I would show him/me this table (attached). The message is that you're most valuable asset you've got is time and if you can start investing early enough then you don't really need to be 'rich' to set yourself up for life thanks to the benefits of compound interest.

There are two main things you should be doing at your age (financially speaking): 1) educating yourself about investing and 2) Starting investing ASAP!

As a 21 year old, I would open up a SIPP or S&S ISA and just invest whatever money you can afford to in a simple low cost global index tracker such as VWRL or all-in-one fund such as the VLS range. Obviously don't forget to live a little but it's also just as important to take care of your future self too.

10% return would be nice!
What would the difference be if it was a realistic post inflation return of say 1%? 

I usually assume around 5% after inflation, which is what I have gained over the years. You can plug the numbers into an internet compound interest calculator to see the effects
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

mcooke999

burner03 said:

mcooke999 said:

If I could go back and visit my 21 year old self, I would show him/me this table (attached). The message is that you're most valuable asset you've got is time and if you can start investing early enough then you don't really need to be 'rich' to set yourself up for life thanks to the benefits of compound interest.

There are two main things you should be doing at your age (financially speaking): 1) educating yourself about investing and 2) Starting investing ASAP!

As a 21 year old, I would open up a SIPP or S&S ISA and just invest whatever money you can afford to in a simple low cost global index tracker such as VWRL or all-in-one fund such as the VLS range. Obviously don't forget to live a little but it's also just as important to take care of your future self too.

10% return would be nice!
What would the difference be if it was a realistic post inflation return of say 1%? 

Yes but you're missing the point of the table... It's there to show the powerful difference between starting investing early, compared to starting later. The final numbers are irrelevant.

But as you've mentioned it, the S&P 500 has averaged a total return of 10.98% between 1871 & 2019 (http://www.moneychimp.com/features/market_cagr.htm) and there's no reason why this won't continue over the next 40/50/60 years. Technological development & population growth aren't going to go away any time soon.