Opened a Trading212 S&S ISA

BrotherUuurgh

Having been on the forum for a few months with my head mostly in the right place, I've come across a large number of posts and people who've a S&S ISA. So I thought, "what the hell, I'll open one up and see what the fuss is about". So I've done just that. I often see Vanguard S&P 500 come up in conversation, so I placed a small amount of money into that.

I'm very new to this side of things, so I guess my question is: Do I need to "do" anything? Is this effectively the same as my Nationwide ISA, where I just deposit money and (try to) forget about it for a while? Do I need to keep an eye on anything? I'm a complete new-guy to anything of this sort.

I'm going to be doing a bit more reading and video-watching specifically about Trading212 and this kind of behaviour with money, but just wanted to get my thoughts out anyway. Apologies if a bit incoherent, but thanks anyway for reading.

eskbanker

You're certainly not alone in choosing to invest in the S&P 500 but as you should have seen on the other threads, it's usually pointed out that focusing on one specific market at the expense of others is generally best avoided, unless you've done plenty of due diligence to support that deliberate management decision, i.e. it typically makes more sense to be properly diversified across all/most major markets and sectors rather than hoping that one specific US one will continue to do better than others for the foreseeable future (when such things are often cyclical).

Albermarle

I'm going to be doing a bit more reading and video-watching specifically about Trading212

You do not really need to research an S&S ISA provider, you need to research the best type of investment for you to hold within the ISA, which is the important bit.

BrotherUuurgh

This is what I mean, I can't even get the terminology right. Complete newb. 

When I say I've deposited a small amount of money, I mean small, so at this new stage I'm not concerned about diversifying. I do however understand the general idea of diversifying, and the why's and when's when larger sums are involved.

By type of investment, do you mean like high or low risk? I think I understand those - the former being more volatile than the latter, but both overall tend to grow over long time scales? 

Alexland

The most important thing is to consider your investing objectives (early retirement, helping kids with uni, etc) and then select appropriate account types, investments, contribution rates and providers that will help you get there.

For example if you are aiming for a good retirement you may find there are several other account types and contribution methods that would be more advantageous than adding to a basic S&S ISA 

BrotherUuurgh

I dare say my goal would be to just grow a large pot to supplement retirement, whenever that may be, but that's part of a larger question which I'm still pondering. I've no kids to worry about, no other real commitments other than to make the best of the money and time I have available. 

Great stuff though so far for my short thoughts, thanks all

Alexland

BrotherUuurgh said:

I dare say my goal would be to just grow a large pot to supplement retirement, whenever that may be, but that's part of a larger question which I'm still pondering.

Have you considered if increased pension or S&S Lifetime ISA contributions would be better for your objective than a S&S ISA. Pensions can be a particularly efficient way to invest for retirement depending on your circumstances.

BrotherUuurgh

@Alexland - OK so, on the whole, I'm not sure if Homeownership and a healthy (as in 2/3rds etc) pension are realistic or feasible for me at this point in my life. I think I might be able to do one or the other, and could probably commit quite well to either. This has me thinking: Would a LISA or equivalent, as you mentioned, be the best long term strategy toward one or the other (or both???? who knows)? With a LISA type product, I could pay in the maximum, get the maximum bonus, and it could be for either a house or pension. If it turns out a house isn't going to be doable, it'll still be useful to contribute into as it will form a pension of sorts, right? This is the thinking that I've been doing, and continue to do.

At this point, I'm still in moderate debt and am making a good effort toward clearing it, target being before Christmas. I've been doing studies and surveys to earn a bit extra and popping that into a savings account. I've started an emergency fund with my wife, and despite paying out more per month than I have for a few years now, I'm going to be making it to payday with money to spare, so I felt comfortable to start to explore a little, so that when the day comes that I'm debt free, I might be in a more informed position to just get on with it without wasting time. 

That's an overview of my position right now.

Alexland

BrotherUuurgh said:

That's an overview of my position right now.

Sounds like you have a few competing objectives going on.

Firstly on the debt side you probably already know this but consider the interest rate(s) and try and get it onto a 0% by shopping around. If you have access to a workplace pension consider if you are getting maximum employer matching as that's free money for only a small reduction to your take home pay. It's also worth doing bank account switching and harvesting signup bonuses on trying out financial products (where the cashback exceeds the cost) as those together can earn you each a few grand a year.

In terms of the LISA yes it can be used for either a qualifying property purchase (up to £450k, etc) or as a pot of money you can access without penalty from age 60 (not technically a pension). Most people saving for a property deposit are likely to use a Cash LISA as their timescales tend to be too short to recover from a market crash whereas people contributing towards age 60+ can go with a sensible S&S asset allocation for a long term result that is eventually likely to outperform cash rates.

In the short term you may want to prioritise the house deposit above making pension contributions (other than those that get employer matching) but don't leave it too long to increase your pension contributions once you get the house as it can be hard to catchup later and the money that gets invested earlier has the most potential to grow.

In terms of getting debt free, well the house will probably come with a mortgage and a bit of leverage in your portfolio of appreciating assets is generally a good thing if it's affordable so you might find it advantageous to maintain some low cost debt until you retire. We often find that people overpaying their mortgages are missing out on the tax advantages and increased growth opportunity of making higher pension contributions.

Finally one of the best investments you can make is in yourself doing exams etc to increase your earning potential.

eskbanker

BrotherUuurgh said:

At this point, I'm still in moderate debt and am making a good effort toward clearing it, target being before Christmas.

Worth mentioning earlier - clearing debt really ought to take precedence over even saving, but certainly investing, unless it's at a very low interest rate?

BrotherUuurgh

Consider the saving/investing as me treating myself for making the changes that have found me in this position. It's just something to get me engaging in something positive, and as a bit of a carrot.

I'll try to answer you, @Alexland, in point form:

- As far as debt goes, about half of it is 0% and I'm starting to make overpayments on the interest bearing accounts. It's about the best I can do. I don't want any more searches on my file, not that I'm really being offered any low(er) interest loans to consolidate these high interest ones I have. I am happy with my plan/target and current position - well on track.

- My workplace contribute 3% and I, 5%. At least, that's what it will be after my third pay. I don't know much more than that, other than I/we will start to contribute after month 3 of my employment (I'm new and on probation).

- The thought of switching banks is too much of a headache for me at the moment. I don't want to split my DDs between NW and a donor account and keep moving things. Just not for me, not yet.

Thanks for the info otherwise. The big question I'm facing is, as I say, house or pension/LISA, or both? It's too early for me to be able to gauge whether or not both would be possible. Currently my gut says it's going to be pension/LISA. Short of winning the lottery that I never play, or some sort of inheritance, I just don't think I could get a deposit together which wouldn't be detriment to "the other" in some way. I'm happy with the thought of maintaining a level of debt, whatever that might be for - we like to travel so I would like a credit card for airline points at some point in the future, but only that - no loans or anything else. 

As far as investing in myself.... yeeeah. I mean, if you want it, go get it, right? Trouble is, it's almost like golden handcuffs I've got myself into. I would LOVE to be an aircraft mechanic on the big jets, A330s to 777s, anything like that. I am signed up for notifications when new apprenticeships become available for this sort of thing, but even then, how do I provide for my wife and I on apprentice wages? That's another tricky subject! At the very least, there is plenty of OT up for grabs at my new job, and it really makes a difference. My basic is just over £35k, but with OT (that won't lead to burnout) I can take that to around the £45k-£48k mark.

This should probably all be in my diary, or a life improvement thread of some kind. People asking me questions is what gets the answers out of me. I don't know how to deliver information that I don't even know I have. I'm weird. Somewhere on the spectrum for sure. Back to Trading212 - I guess I'll just leave that little bit of money in there for the foreseeable and just observe and try to learn. Once I've learned a bit I could target more appropriate products, once I'm a bit closer to a single goal of course.