From poverty to £1000 net savings pcm

Vietnam

I'm in my late thirties and have only minimal investments, and just want to chat with more experienced, clever and of course good-looking people about how to go about things with this situation. My new job allows me to save £1k per month. Currently my portfolio is made up of roughly 10 thousand pounds, some in Fundsmith, some in p2p loans, the rest in pensions, shares, ISAs, and crypto in order of amount. I have no debt and no assets worth above £200. 

I understand this is poor and want to know what kind of attitude to have with getting on with things so late. My first priority is shares, because picking good ones is pretty easy. Then FS, because it's performed so well. My next priority is my ISA and pension. Finally I'd like to spread over many crypto coins, like £1 in every coin to start with, since the crypto market is so unpredictable, and move minimal amounts of cash with the intention of catching a lucrative trend. 

Is this a bad idea, i.e. too risky, and would it be more sensible to concentrate on the pensions and ISA due to my age, and putting less in the higher interest earners. And what age would I need to start banking on the safest options such as savings accounts and bonds as opposed to investing. I have a lifetime ISA too but no plans to buy a house, it's a novelty investment from last year when I couldn't afford a car let alone a house. 

My goals are torn between having a more decent quality of life, such as things like furniture, some nice clothes, a holiday, a nice camera and so on, between investing as much as possible because of how well paying it is. Given how late in the day things are, what is the right mentality to take with my finances and how do I stay realistic.

El_Torro

Vietnam said:

just want to chat with more experienced, clever and of course good-looking people

I fit all 3 criteria (especially the most important one, the 3rd) so I'll have a go at replying:

My first thought is that your idea of saving / investing doesn't tend to follow with the way most people on this forum would address it. Some would say our way is the right way, opinions vary of course.

For example you say you want to buy shares first and focus on your ISA and pension later. Why don't you just buy shares within an ISA or pension? This is an option and the best way to buy individual shares.Personally I put my faith in funds rather than individual shares, though if you know what you're doing and are willing to put in the due diligence it is an option. What concerns me is that you say that picking the right shares is easy, it's really not. If it was then we'd all be rich.

Paying lots into a pension could be beneficial, especially if your pension is currently small or non existent. If you're a higher rate tax pay then the benefits are pretty big at the moment. Do you have an employer? If so then joining or contributing more to their pension scheme is often a good move.

Don't forget that it's worth keeping some money in readily accessible cash. Between 3 and 6 months worth of expenses is considered good, though your needs and personality will dictate what is the right number for you.

You're asking some pretty broad questions and my reply is also pretty broad and general. Might be worth focusing on specifics for you to get the most out of this thread.

Alexland

Vietnam said:

My goals are torn between having a more decent quality of life, such as things like furniture, some nice clothes, a holiday, a nice camera and so on, between investing as much as possible because of how well paying it is.

Try to think of investing as ensuring you have a decent quality of life across your entire life including hard times and old age. Some small tolerable well planned sacrifices now could provided much needed support later.
It's hard when starting to invest with small account valuations as the gains seem insignificant and market movements can quickly push you into overall loss positions which make you wonder why you bothered. But over enough years with regular contributions, discipline and the resulting investment growth a powerful and large snowball can accumulate.

Apodemus

Vietnam said:

Currently my portfolio is made up of roughly 10 thousand pounds...  I have ... no assets worth above £200. 

Yes you do, you have financial assets worth more than £200.

Or do you mean no individual holding within your portfolio is worth more than £200?  In which case you might be well advised to rationalise down from your 50+ holdings.

Nebulous2

Despite getting a decent payrise you may quickly find that you do not have £1000 to invest a month. Expenditure tends to rise with income, and you will need to be very disciplined to maintain your outgoings where they were / are. 

You say you have no assets worth more than £200 and talk about buying nicer clothes, furniture etc. Have you any ambitions to get any more expensive assets, such as a car? You say you have no plans to buy a house, is that no plans now, or never? These  bigger items will need planned for and budgeted for. 

Do you have an emergency fund? Setting something aside for that might be a good idea.

Is this a solitary effort, or are there dependents, a partner? If there are, do their ideas align with yours? 

The tax rate and any existing pension are probably the key to your long-term future. Paying into a pension is beneficial for most people, if you are a higher rate tax payer then even more so. 

Investing is a long-term thing with different timescales quoted, some people will say you should be looking at 5 years minimum, others 10. For money you will need in the short to medium-term (for a house deposit for instance) you should keep it in cash, or near cash. 

I think you are being tempted by high risk investments, because you feel you are behind where you should be. You are in a fortunate place that you have been given an opportunity to catch up, but slow and steady may be better than taking big risks and then regretting it. 

I'd start with a pension, set a level you can sustain, possibly £2-300 per month, a global tracker would be a reasonable approach rather than individual shares. You can still invest in Fundsmith or other funds through a pension, and benefit from the tax relief.

The rest could go into a savings account, to build up an emergency fund whilst you sketch out a plan for your future. 

grumiofoundation

Vietnam said:

I'm in my late thirties and have only minimal investments, and just want to chat with more experienced, clever and of course good-looking people about how to go about things with this situation. 

Only 1/3 I think but I will try...
- Younger
- I like to think I am clever (have various academic qualifications but I would question the value of some of them...)
- Even (or maybe especially) my wife probably wouldn't agree on the last one.
I would say that being good-looking will over the long term harm your investment returns. Various grooming products, nice clothes etc
I am rather proud of the dragged through a hedge backwards, second hand clothes look that I have been carefully cultivating !

My new job allows me to save £1k per month. Currently my portfolio is made up of roughly 10 thousand pounds, some in Fundsmith, some in p2p loans, the rest in pensions, shares, ISAs, and crypto in order of amount. I have no debt and no assets worth above £200. 

As said above do you mean no individual assets above £200? Meaning you have 50+ assets. 

What are the ISAs and pensions invested in (as below make sure you don't opt out of employers pension). 

I understand this is poor and want to know what kind of attitude to have with getting on with things so late. My first priority is shares, because picking good ones is pretty easy. Then FS, because it's performed so well. My next priority is my ISA and pension. Finally I'd like to spread over many crypto coins, like £1 in every coin to start with, since the crypto market is so unpredictable, and move minimal amounts of cash with the intention of catching a lucrative trend. 

Is picking good shares easy? Why can't all the well paid fund managers do it? How much have your shares returned compared to a bog standard global tracker?

e.g. https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-all-world-index-class-c-accumulation

Are you contributing to your workplace pension? If not start now - at a minimum make sure you are maximising employer contributions - this is free money. 

There are currently over 6,000 cryptos so are you really looking to put £1 in each? 

It does seem that you are investing in high-risk investing, possibly chasing high returns and taking a lot of risks. 

The common suggestion given on these forums is to look at multi asset funds (or global tracker for 100% equities see links above) as opposed to individual shares or even more risky investments (cryptos). Link is a couple of years old now and some new funds e.g. Mymap but gives a good overview.

https://monevator.com/passive-fund-of-funds-the-rivals

Is this a bad idea, i.e. too risky, and would it be more sensible to concentrate on the pensions and ISA due to my age, and putting less in the higher interest earners. And what age would I need to start banking on the safest options such as savings accounts and bonds as opposed to investing. I have a lifetime ISA too but no plans to buy a house, it's a novelty investment from last year when I couldn't afford a car let alone a house. 

ISA and pension don't have inherent returns. The returns are governed by what you invest in. The advantage of ISA and pension is both are more tax efficient. (ISA no tax on way out, pension tax relief on way in, 25% tac-free on way out rest taxable). 

If you can save £1000 a month the that is £13k a year (inc. LISA bonus) that could go towards a deposit. In 5 years thats 65k. 

Is LISA cash or stocks and shares?

My goals are torn between having a more decent quality of life, such as things like furniture, some nice clothes, a holiday, a nice camera and so on, between investing as much as possible because of how well paying it is. Given how late in the day things are, what is the right mentality to take with my finances and how do I stay realistic.

Obviously this is more personal and no-one can tell you what you should or shouldn't do. As Alexland says above making small sacrifices now will help a lot later. 

You have to find a balance you are happy with and won't regret in the future. And that is aligned with your goals (should have put this first as is most important). 
Obviously sacrificing everything now to save for the future is likely to make you miserable, but spending everything and not saving/investing for the future will also make you miserable and regretful at some point. 

You have to decide what you can and can't live without and also what you actually want to have. For example I have no interest in 'nice' clothes so not spending money on that is not a sacrifice. Whereas I wouldn't have been willing to sacrifice overseas holidays (when they are back in the game) even if this would have meant having wait another year or so to buy a house. 


Echo advice in previous posts re emergency fund, pension, aligning goals (e.g. house).

DiamondLil

Vietnam said:

My goals are torn between having a more decent quality of life, such as things like furniture, some nice clothes, a holiday, a nice camera and so on, between investing as much as possible because of how well paying it is. Given how late in the day things are, what is the right mentality to take with my finances and how do I stay realistic.

I started investing in my mid forties; I began by investing into a PEP, and, later, into an ISA.

I am very, very glad that I did.

Decent quality of life isn't just important when young, it makes a huge difference in later life too. An extra income stream is very useful.

MaxiRobriguez

Vietnam said:

Currently my portfolio is made up of roughly 10 thousand pounds, some in Fundsmith, some in p2p loans, the rest in pensions, shares, ISAs, and crypto in order of amount. I have no debt and no assets worth above £200. 

I understand this is poor

That puts you around the 50th percentile for your age. It is certainly not "poor", so don't do yourself down, or panic because you are behind.

Others have given you good advice on what you can do. My advice to you is to remind yourself there is plenty of time for you to build more wealth in a sustainable way, without needing to chase highly speculative gains.

For example, A fairly bog standard cheap global index tracker which you pump £1k a month into and do nothing else with will likely give you almost half a million quid in today's money after 20 years.

Eco_Miser

I'm in my late thirties... getting on with things so late

Still got plenty of time to catch up, especially with £1000 a month surplus income.

I have no debt and no assets worth above £200.

Do you mean no phones, cameras, cars, fridges, furniture individually over £200, or over £200 in total? Because you obviously have financial assets over £200.

And what age would I need to start banking on the safest options such as savings accounts and bonds as opposed to investing

Firstly, bonds are investing.
Secondly, there is no age at which you should get out of equity investing, and no age at which you should not have savings accounts.
There should be enough in the savings accounts to at least cover emergencies. What an emergency is depends on how well you can cover it. For some it's a domestic appliance breaking down, for others it's job loss, for nearly everybody it would be life-restricting injury.

Any planned spending in the next five years should be saved for in savings accounts, not risky assets. After that split between equities, bonds, other assets in a ratio to suit your risk profile - how willing are you to see a loss?

Don't go high risk because you think you are short of time, you are not.

My goals are torn between having a more decent quality of life, such as things like furniture, some nice clothes, a holiday, a nice camera and so on, between investing as much as possible because of how well paying it is

The purpose of investing is to have a nice life later, and that's important, but you shouldn't have a miserable life now to pay for it. Decide what's really important to you, and buy it, but don't buy the other stuff temptingly available all around.

kuratowski

Vietnam said:

 I have a lifetime ISA too but no plans to buy a house

This is a savings and investments forum and we're all very keen on financial products (especially pensions and ISAs) but don't overlook the benefits of owning your own home.  At your age it's in no way too late, and should be achievable too if you have that amount of disposable income today, after paying rent.  Owning your own place takes lot of pressure off your income requirement in retirement.

Scottex99

Nice one with the new incomings, looks like you’ll need to do more research though.

I don’t really buy stocks but know picking them to out perform other things is far from “easy”.

Putting a quid into various cryptos is a waste of time, you’d be better off buying lottery tickets. Say a coin does 100x price rise from where you bought it (rare but can happen), you now have 100 quid. Now what? That’s a tenth of what you have for saving anyway