First time investor - is £800 per month too much?

McBainUK

Hi Everyone! I've been a long time user of this website but up until now I've been looking at short term saving goals. Now the mortgage is paid off I'd like to start with long-term savings (10-20 yrs).

Reading the info on here regarding S&S ISAs, all the guides and forum posts seem to only discuss <£50 per month investments.

I plan to invest £800 per month and the substancial difference is causing a little concern for me...

• Is this a bad thing to do?
• Does the savings advice change if the amounts invested this much more than the guides/examples?

kidmugsy

... Now the mortgage is paid off I'd like to start with long-term savings (10-20 yrs).

...

I plan to invest £800 per month

Good for you.  If you are under forty consider a LISA for part of your money.  If you are a higher rate taxpayer consider a making pension contributions.  

If you pay basic rate tax still consider pension contributions especially if (i) you can use salary sacrifice, or (ii) you expect to draw pension income in future that could exploit your Personal Allowance against income tax or (iii) you expect that your estate might face inheritance tax.

The one thing that's not a worry is the £800 per month.  In fact the larger sum may make it easier for you to diversify your investments.

Albermarle

Reading the info on here regarding S&S ISAs, all the guides and forum posts seem to only discuss <£50 per month investments.

Not quite sure where you got this <£50 a month idea from . There are a number of active posts regarding transferring tens of thousands from cash ISA to S& S ISA . In this case there is a worry that markets could drop the day after the investment, but £800 a month sounds a good way forward.

takesyourchances

£800 a month is a great target, in time you will see your investment potential hopefully grow quicker towards your long term goals than smaller amounts of £50 or £100 a month for example. Good luck with it all.

Notepad_Phil

McBainUK said:

I plan to invest £800 per month and the substancial difference is causing a little concern for me...

• Is this a bad thing to do?
• Does the savings advice change if the amounts invested this much more than the guides/examples?

Definitely a good thing provided you won't need the money at some point in the near future and you are investing in sensible funds for your risk profile - investing should ideally be with money that you won't need to touch for for at least 5 years and preferably 10 and you should invest into funds which you understand and are comfortable with. The one thing I would say is that it may prove advantageous for you to invest at least some of that money via a pension - had you considered that at all?

And as per Albermarle there are plenty of people on here who invest much more than £50 per month.

DrSyn

Before investing you should have
(a) No large debts that need to be paid off
(b) Pension
(c) An emergency fund
(d) be happy to invest for at least 10 years
(e) be comfortable with the risk that goes with investing.

What exactly is causing you concern in investing your £800 per month? If the concern is just the amount. Then you could start of with a smaller amount each month, then slowly build up to £800 month.

gary83

that’s like asking how long a piece of string is £800 might be too much for some people but a drop in the ocean for others, it’s all relative to how much you have & can afford 

george4064

If you can afford to invest £800 per momth then it isn’t too much. For others that amount might be too much, whilst others it might not be enough.

maxsteam

No. It's not too much but, as a first-time investor, you should make a particular effort to direct most of the funds towards safer investments. There's nothing wrong with buying some shares in a small, high risk company if that is what you want to do but something risky like this should only make up a very small part of your portfolio.

McBainUK

Thank you all for the valuable replies. I will try to answer some of the points questions raised:

What exactly is causing you concern in investing your £800 per month? If the concern is just the amount. Then you could start of with a smaller amount each month, then slowly build up to £800 month.

The amount is not a concern as £800 is affordable for me. My concern was that I didn't want to be "far from the crowd" as I perceived it. As Albermarle pointed out others are investing comparable and even greater sums a month this is good.

If you are under forty consider a LISA for part of your money. If you are a higher rate taxpayer consider making pension contributions. 

The one thing I would say is that it may prove advantageous for you to invest at least some of that money via a pension - had you considered that at all?

I am young enough for a LISA at 37, but ruled them out as I will soon be nudged in to the high-rate tax bracket due to the 5yr freezing of the personal allowance. I make 10% employer + 6.5% employee pension contributions, via salary sacrifice.

Putting away 16.5% of my salary into the pension feels enough for now (do others agree with this?). However I was thinking I could increase my contribution within the next few years if it means I can avoid the high-rate tax bracket for a little while longer.

you should invest into funds which you understand and are comfortable with.

as a first-time investor, you should make a particular effort to direct most of the funds towards safer investments

Thankyou Notepad_Phil, that phrase "understand and are comfortable with" should be part of the MSE guide as it's so concise yet memorable. I will look at funds options in detail and pick the safer ones for sure.

MaxiRobriguez

People invest what they can afford.

Those chucking in £50 aren't cautious, and are those whacking in many thousands aren't cavalier. There is very little to read into appropriateness or intellect based on the amount people are investing.

As others have said, ensure you have an emergency fund in place and then make sure you check other routes for investment which may be more suitable for your money to go into. Most people start their investment journey within their pension wrapper given the tax benefits of doing so, but I'd argue it's also good as your choice of investments is limited by the platform so it's harder to go wrong.

Edit: I see you've responded briefly on pensions. The general rule of thumb for pension provision is you need to put in half your age when you start, so 16% isn't a huge amount if you're 37 - if anything it might be on the shy side. You will inevitably be putting in more than most of your friends with such an amount, but that's not because yours would be enough, more than your friends will have a very big problem on their hands later down the line. 

I think if it was me I'd use most of the ringfenced £800 to increase pension provisions - especially if you're in a salary sacrifice scheme.