What should I do with an extra monthly £1015 (1305 US dollars)?

ExoticHaha
ExoticHaha Posts: 6 Forumite
in Savings & investments
Good day,
So I am a 19 year old and currently earning £1015 monthly (1304 US dollars) for doing nothing, no job or anything, and I will continue getting this money for the next 4 years. There are no strings attached to this money, I have no bills to pay as I am living at home and I will not need to pay this money back at any point. What can I do with this money to increase it? For example I could deposit it into something monthly, however I m not sure into what? I would love some help on what to do with it. I have no knowledge of investments, savings, etc. however I am a quick learner and would appreciate any tips.

Thank you
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Comments

  • eskbanker
    eskbanker Posts: 31,033 Forumite
    First Anniversary Name Dropper Photogenic First Post
    See https://www.moneysavingexpert.com/savings/which-saving-account/ and https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/ for info about savings accounts, which are likely to be the best bet, initially at least, for building up a deposit on a property if that's the direction you're likely to head in, and/or an emergency rainy day fund that we should all have.

    There are numerous longer term options once you've put enough away for either or both of those, if you're happy to lock it away for a long time, such as investments or pensions, but walk before you run!

    And ignore anyone who jumps in and recommends bitcoin, etc....
  • ExoticHaha
    ExoticHaha Posts: 6 Forumite
    eskbanker wrote: »
    -clip-

    (before I say anything don't worry, I'm not putting any money into BTC :p )
    Thanks alot for your reply! Yeah I don't mind the longer investment option as I am not a big spender, if I do spend money it's on the occasional piece of clothing here and there or a new game. I understand how investments work, however how should I start doing it? Are there any recommended websites I should look at for tips or what to invest in etc.?

    Thank you :)
  • eskbanker
    eskbanker Posts: 31,033 Forumite
    First Anniversary Name Dropper Photogenic First Post
    I'd still strongly recommend staying well away from investment at this stage, until you've built up a decent buffer of readily-accessible cash savings. Investment is generally considered appropriate for money you won't need for at least seven years and, at the risk of a massive and patronising generalisation, most 19 year olds aren't planning over that sort of horizon and think of long term as the week after next ;)

    However, for research purposes, you can start reading up on investing at:

    https://www.moneysavingexpert.com/investments/
    http://www.monevator.com
    http://diyinvestoruk.blogspot.com/
    https://www.moneyadviceservice.org.uk/en

    Another golden rule is diversification, ensuring that your eggs are spread across as many baskets as possible. That doesn't mean buying loads of shares as individual transactions - there are various global multi-asset funds that provide an ideal one stop shop for the small to medium investor, such as HSBC Global Strategy, Vanguard's LifeStrategy, Blackrock Consensus and L&G Multi-Index, and these are mentioned frequently on here, so read up on some of the newbie investing threads too.
  • ExoticHaha
    ExoticHaha Posts: 6 Forumite
    eskbanker wrote: »
    CLIP
    Thank you very much for the information! Yep I understand what you mean by me jumping too far ahead :) I will do my research and try and see what I can do for the future. So do you think instead of putting money right now straight into investments, I should rather put money into savings and consider investments in the next years to come when I have a more steady income? And thanks alot for the links I will check them out :p
  • short_butt_sweet
    short_butt_sweet Posts: 333 Forumite
    the figures you give add up to nearly £50,000. at that level, i'd consider investing part of it. though perhaps not yet, if the cash you have now is much less.

    i started my first investment when i was 19. that was in an investment trust, which wasn't a bad idea at the time, but nowadays i'd agree with eskbanker that a more obvious place to start is a global multi-asset fund.

    i didn't get it all right. i bought an investment trust that invested just in UK companies; a global investment trust would have been a better approach. my point is: don't jump in too quickly.

    also, are you likely to use this cash any time soon as a deposit towards buying your own home? because investments work better if you can leave them for the longer term, i.e 5+ years, or ideally 10+ years.
  • ExoticHaha
    ExoticHaha Posts: 6 Forumite
    short_butt_sweet wrote: »
    the figures you give add up to nearly £50,000. at that level, i'd consider investing part of it. though perhaps not yet, if the cash you have now is much less.

    i started my first investment when i was 19. that was in an investment trust, which wasn't a bad idea at the time, but nowadays i'd agree with eskbanker that a more obvious place to start is a global multi-asset fund.

    i didn't get it all right. i bought an investment trust that invested just in UK companies; a global investment trust would have been a better approach. my point is: don't jump in too quickly.

    also, are you likely to use this cash any time soon as a deposit towards buying your own home? because investments work better if you can leave them for the longer term, i.e 5+ years, or ideally 10+ years.

    Not any time soon for a home, nope. What I was thinking since I will continue to receive this money for a few years to come, I was considering saving up £5000 just now and investing it into something and leaving that money to do its thing. However I wasn't sure what I can do effectively with the rest of the money that I will get.
    So I'm not too sure what a multi-asset fund is, however I will do research. Do you think it's the best thing for me to do just now then?

    Thanks alot :)
  • short_butt_sweet
    short_butt_sweet Posts: 333 Forumite
    a multi-asset fund is a fund which invests in both shares and bonds (and perhaps other things). shares have usually given higher returns overall, but can also fall in value in the short term; bonds are steadier. a multi-asset fund can still go up and down in value, but in the long run, you'd expect it to go up by more than you'd get from interest in savings accounts.

    putting something in a multi-asset fund, but also keeping some cash savings, has the advantage that you start to get used to investments (and how they sometimes go down in value).

    a couple of articles about Vanguard Lifestrategy (which is one multi-asset fund): https://monevator.com/using-vanguard-lifestrategy-funds-life/ https://monevator.com/vanguard-lifestrategy/

    you can also do a few things with cash savings to get slightly more interest. basic instant-access accounts pay up to about 1.5% now.

    you can get more (up to 5%) on some regular savings accounts, though they have limits on how much you can deposit each month. and then the account usually matures after a year, and drops down to a much lower rate. see other threads in this forum for details. this could be something to do with money coming in monthly; but then you need another plan after a year.

    some current accounts also pay higher rates of interest, but only on a limited balance (e.g. on the first £2,500).

    for less limited amounts, if you can tie part of your cash up for 1 year to 5 years, then there are fixed-rate accounts paying 2.x%.
  • Aliciamilford
    Aliciamilford Posts: 6 Forumite
    Save those for future.
  • ExoticHaha
    ExoticHaha Posts: 6 Forumite
    short_butt_sweet wrote: »
    -snip-
    Thank you for all the info, I will check out the links and do my research.

    Also, what do you guys think of forex? I understand it is very high risk and depends on if the user understands the market, but it can be rewarding right?
  • eskbanker
    eskbanker Posts: 31,033 Forumite
    First Anniversary Name Dropper Photogenic First Post
    ExoticHaha wrote: »
    Also, what do you guys think of forex? I understand it is very high risk and depends on if the user understands the market, but it can be rewarding right?
    You can make a small fortune from forex trading....




    ....but only if you're starting from a large fortune.

    It's best to treat it in much the same way as you would sticking all your money on red, or the 2:30 at Newmarket.
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