Recommendation’s for young people getting into investing.

Hi,

Im mid 20’s and at a stage in my life/career where disposable income is more available and a more frequent possibility and want to look at starting to invest this money into short or long term possibilities. 

If people could have there time again, or offer any advice, what option/options would you recommend a younger person at this age take, I know property was previously very lucrative in term’s of the rental route for an example, being an tradesman myself this would have been ideal, but believe thing’s have and are being put in place to make this less appealing now. 

Thanks in advance.
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  • Swipe
    Swipe Posts: 4,987
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    edited 9 November 2023 at 8:44AM
    If I were a tradesmen in my 20s I'd build up an easy access savings emergency fund, and if no workplace pension were available,  I'd open a SIPP with a low cost broker ( and also an ISA ) and make regular monthly contributions to a global index fund
  • Aminatidi
    Aminatidi Posts: 508
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    Have a think how long you really want to work for and have a play with this which will give you a rough idea what a seemingly small regular contribution can do over a long enough period of time.

    https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

    Don't think you're smarter than the markets as you're almost certainly not so pick a low cost fund that meets your appetite for risk and stick with it through thick and thin.

    Global trackers, Vanguard LifeStrategy, HSBC Global Strategy, that kind of thing.

    Use appropriate tax wrappers.
  • Linton
    Linton Posts: 17,014
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    It would be useful to know a bit about your circumstances.  The most important factor is whether you own a house, or rent. If your own your house is it in on a significant mortgage?  If you rent do you intend to buy, if so when.

    I would agree with @Swipe that the first thing is to ensure you have sufficient cash emergency cover for unexpected one-off expenses. Also you will need to be able to support yourself for a while (perhaps 6 months) if unable to work.

    It will be easier to make more specific suggestions when your housing situation is clear.

  • cloud_dog
    cloud_dog Posts: 5,994
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    Hi,

    Im mid 20’s and at a stage in my life/career where disposable income is more available and a more frequent possibility and want to look at starting to invest this money into short or long term possibilities. 

    If people could have there time again, or offer any advice, what option/options would you recommend a younger person at this age take, I know property was previously very lucrative in term’s of the rental route for an example, being an tradesman myself this would have been ideal, but believe thing’s have and are being put in place to make this less appealing now. 

    Thanks in advance.
    This is quite a useful flowchart to follow.

    https://ukpersonal.finance/flowchart/

    Whilst it may not cover every eventuality etc, it is a good basis for moving forward.

    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • Will_Do
    Will_Do Posts: 31
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    When I was young I fell slightly into the trap of being attracted to the promise of big returns from higher risk investments. I had a few friends who did similar and some who went way over the top. It seems to be a common flaw of the immature "investor" mindset. Don't go there. Understand the fine line that pushes investing more into the territory of gambling. Yes, safer low-risk investments are a bit boring and you're not going to double your money in a few months with big blue chip equities or funds that track major indices. However, you're not going to lose it all either and over the long term, and factoring in compound growth, your portfolio should grow healthily in value if you err on the conservative side. Ignore all the pundits, influencers and sellers of get-rich-quick systems trying to convince you that you can make a fortune with things like crypto, forex trading, penny shares, fine wines, foreign property clubs or whatever. You're as likely to win the lottery.

    Aside from that, map out a strategy for yourself, as other have already suggested, so that you are accounting for your  short, medium and long-term needs and goals. Also be very aware of things like tax benefits, dealing and management costs when selecting investment vehicles as things like that can often have a bigger influence on the outcome than the actual performance of the underlying assets.
  • Linton said:
    It would be useful to know a bit about your circumstances.  The most important factor is whether you own a house, or rent. If your own your house is it in on a significant mortgage?  If you rent do you intend to buy, if so when.

    I would agree with @Swipe that the first thing is to ensure you have sufficient cash emergency cover for unexpected one-off expenses. Also you will need to be able to support yourself for a while (perhaps 6 months) if unable to work.

    It will be easier to make more specific suggestions when your housing situation is clear.

    Hi,

    I currently live with parents still, no aspiration’s to own a house as of yet due to paying bill’s etc just seem’s an unnecessary expense and more than happy at home currently until I eventually need to move out with a serious partner etc. 

    Currently now working my way up the engineering ladder and doing a degree in that and have left site work so I’m employed full time and pay the minimum I have to into a pension to get the maximum off them so I’m covered in that sense, purely just advice on what to do with excess income instead of leaving it in the bank doing nothing basically, getting into property etc has always interested me especially with my skill set’s in term’s of cost on a renovation I’d save etc, but lot’s i people I work with have numerous rental properties and say it isn’t what it used to be and thing’s are tightening up, hence wondering if this is the best path to go down potentially.

    thanks
  • Aminatidi said:
    Have a think how long you really want to work for and have a play with this which will give you a rough idea what a seemingly small regular contribution can do over a long enough period of time.

    https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

    Don't think you're smarter than the markets as you're almost certainly not so pick a low cost fund that meets your appetite for risk and stick with it through thick and thin.

    Global trackers, Vanguard LifeStrategy, HSBC Global Strategy, that kind of thing.

    Use appropriate tax wrappers.

    Can you expand on the global tracker’s etc please? And what you mean by using the appropriate tax wrapper’s? 

    Thanks mate
  • Will_Do said:
    When I was young I fell slightly into the trap of being attracted to the promise of big returns from higher risk investments. I had a few friends who did similar and some who went way over the top. It seems to be a common flaw of the immature "investor" mindset. Don't go there. Understand the fine line that pushes investing more into the territory of gambling. Yes, safer low-risk investments are a bit boring and you're not going to double your money in a few months with big blue chip equities or funds that track major indices. However, you're not going to lose it all either and over the long term, and factoring in compound growth, your portfolio should grow healthily in value if you err on the conservative side. Ignore all the pundits, influencers and sellers of get-rich-quick systems trying to convince you that you can make a fortune with things like crypto, forex trading, penny shares, fine wines, foreign property clubs or whatever. You're as likely to win the lottery.

    Aside from that, map out a strategy for yourself, as other have already suggested, so that you are accounting for your  short, medium and long-term needs and goals. Also be very aware of things like tax benefits, dealing and management costs when selecting investment vehicles as things like that can often have a bigger influence on the outcome than the actual performance of the underlying assets.

    Brilliant thanks, 

    I’ve answered a previous reply above so may give you more of an insight into my circumstances. 

    Agreed in that I’d like to think I’m a bit more switched on than getting dragged into the promised lands of crypto currencies stock and shares etc you see advertised as I don’t gamble in general so for that reason alone I’ve always stayed away as I see these exactly as that. 

    Do you have any options you’d personally would recommend in my position? More just trying to invest my money wisely to hopefully be in a wealthier position one day than if I’d just purely been to work all my life with a good job and spend the excess on luxuries. 

    Cheers
  • Aminatidi
    Aminatidi Posts: 508
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    Aminatidi said:
    Have a think how long you really want to work for and have a play with this which will give you a rough idea what a seemingly small regular contribution can do over a long enough period of time.

    https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

    Don't think you're smarter than the markets as you're almost certainly not so pick a low cost fund that meets your appetite for risk and stick with it through thick and thin.

    Global trackers, Vanguard LifeStrategy, HSBC Global Strategy, that kind of thing.

    Use appropriate tax wrappers.

    Can you expand on the global tracker’s etc please? And what you mean by using the appropriate tax wrapper’s? 

    Thanks mate
    Vanguard FTSE Global All Cap for example.  It's a global tracker that gives you pretty much the whole world by market cap.

    But because it's entirely stocks it can be more volatile than a mixture of stocks and bonds which is where your appetite for risk and the suggestion of looking at multi asset funds like LifeStrategy or Global Strategy comes into it.

    And wrappers would be things like using your ISA allowance or looking at a SIPP (pension wrapper) or similar.
  • Albermarle
    Albermarle Posts: 21,015
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    Aminatidi said:
    Have a think how long you really want to work for and have a play with this which will give you a rough idea what a seemingly small regular contribution can do over a long enough period of time.

    https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

    Don't think you're smarter than the markets as you're almost certainly not so pick a low cost fund that meets your appetite for risk and stick with it through thick and thin.

    Global trackers, Vanguard LifeStrategy, HSBC Global Strategy, that kind of thing.

    Use appropriate tax wrappers.

    Can you expand on the global tracker’s etc please? And what you mean by using the appropriate tax wrapper’s? 

    Thanks mate
    Global tracker is an investment that simply tracks the global stock market movements. There is no attempt to second guess the markets or pick winners, it just blindly follows the market movements.

    A tax wrapper is somewhere you can put your investment(s) where it is most tax beneficial.
    For example if you buy Investments within a Stocks and shares ISA ( as opposed to outside an ISA) you do not have to worry about any possible taxes on gains or dividends. However there are limits as to how much you can add to an ISA.
    A pension is also a way to invest with tax benefits.
    Pensions: Everything you need to know for retirement - MSE (moneysavingexpert.com)
    Stocks & shares ISAs: find the best platform - MSE (moneysavingexpert.com)
    How to invest in a stocks and shares Isa: The quick and easy guide | This is Money
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