18 year old with £100 per month to invest

AnotherJoe · 21 April 2019 at 10:21AM

Afraid_of_Kittens wrote: »

They just want to have a certain amount of spare money put to one side as savings that will grow. Some of it will be easy access such as the gold and premium bonds that they can sell at short notice.

The gold might be "easy access" but you are starting off about 40% down from its market value and if you need to sell, maybe if its in a dip at that point, you could easily have lost 50% of your input value straight off.

If you are buying something where you take close to a 40% upfront hit you'd better be holding it for the very long term.

Alice_Holt · 21 April 2019 at 10:57AM

Why a Help to Buy ISA and not a LISA for help with future house purchase?
https://www.moneysavingexpert.com/savings/lifetime-isas/
See Para 6.

Surely an 18 year old earning £25k would have more than £100 a month spare!

There are more straightforward and efficient options for him, i.e.

For short term savings - regular saver to build up a cash reserve.

Medium Term - LISA (and 25% uplift) for house purchase.

Longer Term - S&S ISA say, Vanguard LS80 using the Vanguard platform - 0.37% costs.

Retirement Funds - ensure individual pension contribution is sufficient to attract the maximum employer contribution.

You are looking at this from the wrong end of the telescope. Rather than look at specific (and expensive) products, look at the overall investment landscape. Identify his most pressing needs, then look for the most tax efficient and minimum cost product / wrapper that achieves the objective with the smallest risk.

Share dealing will not be a good option - very easy to lose money with individual shares.
An interesting hobby when older, settled, and well off, but really not at all suitable for someone in their early 20's with family life in front of them.
Better for the lad to:
a) Invest collectively via a low cost, tax efficient fund
https://monevator.com/what-should-a-new-investor-do/

b) join an investment club and learn about individual shares
https://www.investopedia.com/articles/01/062001.asp

Afraid_of_Kittens · 21 April 2019 at 11:32AM

Alice_Holt wrote: »

Why a Help to Buy ISA and not a LISA for help with future house purchase?
https://www.moneysavingexpert.com/savings/lifetime-isas/
See Para 6.

Surely an 18 year old earning £25k would have more than £100 a month spare!

There are more straightforward and efficient options for him, i.e.

For short term savings - regular saver to build up a cash reserve.

Medium Term - LISA (and 25% uplift) for house purchase.

Longer Term - S&S ISA say, Vanguard LS80 using the Vanguard platform - 0.37% costs.

Retirement Funds - ensure individual pension contribution is sufficient to attract the maximum employer contribution.

You are looking at this from the wrong end of the telescope. Rather than look at specific (and expensive) products, look at the overall investment landscape. Identify his most pressing needs, then look for the most tax efficient and minimum cost product / wrapper that achieves the objective with the smallest risk.

Share dealing will not be a good option - very easy to lose money with individual shares.
An interesting hobby when older, settled, and well off, but really not at all suitable for someone in their early 20's with family life in front of them.
Better for the lad to:
a) Invest collectively via a low cost, tax efficient fund
https://monevator.com/what-should-a-new-investor-do/

b) join an investment club and learn about individual shares
https://www.investopedia.com/articles/01/062001.asp

Yes they have more than £100 spare cash but this is the small amount they want to spread amongst various investments for the long term (10+). Basically pay it in and forget about it. It won't be money they will miss.

Alice_Holt · 21 April 2019 at 1:31PM

Afraid_of_Kittens wrote: »

Yes they have more than £100 spare cash but this is the small amount they want to spread amongst various investments for the long term (10+). Basically pay it in and forget about it. It won't be money they will miss.

In which case:

a) Premium Bonds are likely to be a poor choice over 10 yrs. It is likely they will decline in real terms (goggle inflation risk);
b) Royal Mint - as other posters pointed out "Royal Mint - a .33% buy premium, .5% +VAT storage fee and 1% sell premium make it expensive to buy, expensive to hold and expensive to sell."
c) HBOS Share Building account - moving in the right direction but why pick a platform without a tax-free wrapper? And with a £2 monthly fee for a monthly £25 contribution somewhat expensive, it would need outstanding fund performance to overcome that 8% drag.
d) HBOS ISA Investor - Better but more importantly what are the costs attached to a £25 monthly investment, and what fund does he intend to pick?

I would echo this point "Choose a multi asset index tracker fund rather than investing in HBOS share builder and HBOS Isa investor." by enthusaticsaver.
If he invests £100 a month into a broadly based low cost global passive fund on a low cost, tax efficient platform he is much more likely to accumulate a decent lump sum in 10 + years.
https://www.moneywise.co.uk/first-time-investor/investing/how-should-i-invest-100-month

System · 21 April 2019 at 1:53PM

Afraid_of_Kittens wrote: »

Yes they have more than £100 spare cash but this is the small amount they want to spread amongst various investments for the long term (10+). Basically pay it in and forget about it. It won't be money they will miss.

Easiest and one of the cheapest ways for fund and forget with a decent rate of return....

Open Stocks and Shares ISA with Vanguard.
Set up Monthly Direct Debit
Purchase Vanguard Lifestrategy 80 or 100 or one of the Vanguard Global funds with it.

18 year old with £100 per month to invest

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