Allocating Savings and Investments and what risks to take depending on tolerance

Ch1ll1Phlakes

jokerml1 said:

Ch1ll1Phlakes said:

As said above. How you split your money is up to you. 

For me, as someone relatively new to investing, I only assign a small portion of my funds to investments at the moment (roughly 2-4%) though I aim to increase this as I get more comfortable with the terms and working of investments. With this in mind I have no absolutely high risk investments such as crypto. My long term goals are for a healthy retirement so investing with definitely be a long term strategy but not until I have my housing situation sorted.

On the other hand, I'm very comfortable with savings and am always moving my cash savings to higher interest rate accounts, whether that be regular savers or a new easy access account after a rate reduction. I have many accounts on the go at all times but I actually enjoy managing my funds across different providers.

You seem relatively well versed compared to the vast majority of the public so against the choice is yours. If your want to keep things simple stick to a few providers or if you're happy with the work of maintaining multiple accounts to get the best offers and interest rates on your cash or try out different investment platforms feel free. 

As mentioned above by @Coldiron , your personal situation is key. Your age, salary, housing situation etc. will all play a role in how your split your money. All the best with your financial journey.

Thanks for this reply! Appreciate the honesty, have you ever looked at high-yield accounts?

As I told @ColdironI'm 32, single, no kids, Self Employed, Renting

I wonder if you'd get in to something more risky for a higher yield? 

I have contemplated small investments in startups through CrowdCube once or twice but only in companies I either have already used or have already heard of. These would be deemed high risk investments but again the risk at the moment is holding me back as I'm hopefully lining up a house purchase in the next five years. Though with that in mind I could afford to risk £100 here or there on something I feel comfortable with.

jaypers

Much of what I would say has already been covered, but essentially you kind of need some sort of life financial project plan, such as…….

1) How much extra cash over normal income are you expecting to need over next 1-3 years? You could tailor some of your cash savings based on this between Easy Access and maybe 1-2 year fixed.
2) Keep a separate emergency fund.
3) Anything left over, look at investments, but ensure you understand what you are investing in so read up well. This type of ‘saving’ shouldn’t be looked upon as short term. Get your head around ‘Accumulation’ Vs ‘Income’ type investments too. Personally, I’ve got a blend of both as it suits me around everything else financially.
4) Make the most of ISA allowances, particularly for investments as capital gains tax kicks in at £3k now, and obviously any profits on investments in an ISA wrapper won’t be affected.

kempiejon

jokerml1 said:

kempiejon said:

The idea of a percent split between different assets classes is often seen as a way of spreading the risk.
What percentages and which assets is personal. Each individual will be different and annoyingly those individuals might well not know their own risk tolerances and when faced with the practicalities of market risk are stressed.
The well worn adage is you need to able to sleep at night.

Well said! Entirely up to the person then 

Out of interest, what is the riskiest investment you have? 

I've always been a risk taker in life not just investments. When I started building my pot I was near enough 100% equities after an emergency buffer or a few months. I've invested in individual shares, a poster upthread said this is risky, I even hold foreign ones. I have precious metal ETCs which I will admit to not totally understanding the underlying counter party risk and replication methods.
I borrow to invest this is seen as risky even by those with mortgages.

Albermarle

jokerml1 said:

Eyeful said:

Follow the KISS (Keep It Simple Stupid) method.

1. Any money needed within 5 years should be in a savings account or Premium Bonds.
2. Use tax shelters wherever possible ( Pension, Cash ISA, Stocks & Shares ISA)
3. Have an emergency savings account, which will cover household bills for 1 year 
4. For money you will not touch for at least 10 years, consider putting into either
(a) Passive Low Cost Global Index Tracking Fund or ETF 
(b) Low Cost Multi Asset Fund with a share/bond split that suites your own risk tolerance.
5. Never invest in something you do not understand.
6. Investing in single shares is very risky. Better to keep to funds or ETF's.

Remember
Investing means putting your money at risk
The correct share/bond/other split, is what will allow you to sleep at night and not worry about 

Wow this is some great info! I wonder how you learned all this? 

Appreciate the detail - How do you feel about higher yield savings accounts and Crypto?

Where do you participate in ETFs and how much do you pay in Fees? 

Any thoughts would be great : ) 

For higher yield savings accounts, you normally have to look at Regular Savers, which limit how much you can add.
Sometimes you can find high yield accounts that are advertised as paying more than you can get with a regular savings provider. These are inevitably scams/high risk.

Where do you participate in ETFs and how much do you pay in Fees? 

It would be a good idea for you to spend some time reading through the forum, as you will lots of useful info on investing etc

Eyeful

jokerml1 said:

Eyeful said:

Follow the KISS (Keep It Simple Stupid) method.

1. Any money needed within 5 years should be in a savings account or Premium Bonds.
2. Use tax shelters wherever possible ( Pension, Cash ISA, Stocks & Shares ISA)
3. Have an emergency savings account, which will cover household bills for 1 year 
4. For money you will not touch for at least 10 years, consider putting into either
(a) Passive Low Cost Global Index Tracking Fund or ETF 
(b) Low Cost Multi Asset Fund with a share/bond split that suites your own risk tolerance.
5. Never invest in something you do not understand.
6. Investing in single shares is very risky. Better to keep to funds or ETF's.

Remember
Investing means putting your money at risk
The correct share/bond/other split, is what will allow you to sleep at night and not worry about 

Wow this is some great info! I wonder how you learned all this? 

Appreciate the detail - How do you feel about higher yield savings accounts and Crypto?

Where do you participate in ETFs and how much do you pay in Fees? 

Any thoughts would be great : ) 

1. Reading and listening to those that know more than me.

2. Cryoto
Is just a very long number on someone else's computer with no assets backing it.
It's at the very high end of the risk spectrum! 
Once you buy it, you hope to find a bigger fool to buy it off you otherwise you are stuck with just that very long number.
The price of it go's up & down like a Yo-Yo.
Unless you are an expert on the different types of Crypto, I suggest you stay away from it.
Do not confuse "Crypto" with "Block Chain" the latter is useful.

3. Regular savings accounts paying higher interest rates from banks & building societies are great.
(a) https://moneyfactscompare.co.uk/savings-accounts/regular-savings-accounts/
Best savings accounts
(b) https://moneyfactscompare.co.uk/savings-accounts/

4. ETF's
(a) https://monevator.com/how-to-buy-and-sell-etfs/
(b) https://www.justetf.com/en/news/etf/msci-vs-ftse-which-etf-provider-is-the-best-index-provider.html
(c) https://monevator.com/best-global-tracker-funds/
(d) https://monevator.com/passive-fund-of-funds-the-rivals/

5. Fees, pay as little as you can. That mean "passive" & "low cost" funds or ETF,s.
(a) https://larrybates.ca/t-rex-score/
(b) https://monevator.com/compare-uk-cheapest-online-brokers/

6. Just remember there is no such thing as a "free lunch" someone, somewhere has to pay for it.