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  • FIRST POST
    • Jonny1875
    • By Jonny1875 13th Jan 18, 10:04 PM
    • 6Posts
    • 2Thanks
    Jonny1875
    21, Need direction/help with money.
    • #1
    • 13th Jan 18, 10:04 PM
    21, Need direction/help with money. 13th Jan 18 at 10:04 PM
    Hi, long time lurker and find the site very useful so thought eventually I would join as I am thinking about investing some money/improving my finances.

    I am 21 and currently earning around 300 per week. Im currently on the lookout for a better job so hopefully this improves in the next few months. I am a recent graduate and havent started paying my student loans back I believe I am eligible to do this from April if im earning over the threshold?

    I currently bank with Nationwide and have a standard FlexAccount. I also have an Instant Access ISA with around 9k in it and a Help To Buy ISA with 2.2K, I add 200 every month although im not planning on buying a property for some years yet. I was thinking of investing around 1k in stocks and shares, having noticed many people reccomend this through Vanguard? Is this possible with already having an ISA with nationwide? I also currently live at home and have no major financial outgoings having recently purchased my car's insurance for the year and other major car related outgoings for the year hopefully.

    So really just seeking some financial guidance on how I can improve my situation.

    Thanks
Page 1
    • Eco Miser
    • By Eco Miser 13th Jan 18, 10:28 PM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    • #2
    • 13th Jan 18, 10:28 PM
    • #2
    • 13th Jan 18, 10:28 PM
    Congratulations on thinking about your future so young.
    You can have a S&S ISA with Vanguard (or any provider) even though you have a cash ISA with Nationwide.
    Only invest money you don't expect to need for at least five years, preferably ten, as while the long term trend is upwards, in the short term prices could go anywhere, and you wouldn't want to be selling your ISA just after a 2007/8 style drop.

    Look at getting a Flex Direct current account (and keeping 2500 in it, and paying at least 1000 a month into it), and saving 250 a month into the Flexclusive Regular Saver (both paying 5% for a year). (The RS is repeatable, the Flex Direct drops to 1%)
    If your salary doesn't cover that much, it's almost certainly worth taking the shortfall from your cash ISA.
    Eco Miser
    Saving money for well over half a century
    • atush
    • By atush 13th Jan 18, 10:40 PM
    • 16,811 Posts
    • 10,489 Thanks
    atush
    • #3
    • 13th Jan 18, 10:40 PM
    • #3
    • 13th Jan 18, 10:40 PM
    What advice and help have your parents given you?

    what is your degree?
    • JSCB
    • By JSCB 13th Jan 18, 10:50 PM
    • 44 Posts
    • 12 Thanks
    JSCB
    • #4
    • 13th Jan 18, 10:50 PM
    • #4
    • 13th Jan 18, 10:50 PM
    Hi Jonny,

    As I'm only just about to turn 21, and new to the forums and investing myself, I'll keep away from the questions about investing for now and let others come along to offer that advice...

    However, in terms of repaying your student loans you're right about not being eligible until April, having graduated only this year, but, incase you didn't know already, from April 6th the Student Loan repayment threshold rises to 25k pa from the current 21k, so if you don't earn above that next year, you still won't be repaying your student loan from April anyway.

    On a side note, it's nice to see someone else my age on the forums with an interest in getting ahead! I don't think there's many of us about!
    Last edited by JSCB; 13-01-2018 at 10:53 PM.
    • DrEskimo
    • By DrEskimo 13th Jan 18, 11:28 PM
    • 79 Posts
    • 60 Thanks
    DrEskimo
    • #5
    • 13th Jan 18, 11:28 PM
    • #5
    • 13th Jan 18, 11:28 PM
    Hi, long time lurker and find the site very useful so thought eventually I would join as I am thinking about investing some money/improving my finances.

    I am 21 and currently earning around 300 per week. Im currently on the lookout for a better job so hopefully this improves in the next few months. I am a recent graduate and havent started paying my student loans back I believe I am eligible to do this from April if im earning over the threshold?

    I currently bank with Nationwide and have a standard FlexAccount. I also have an Instant Access ISA with around 9k in it and a Help To Buy ISA with 2.2K, I add 200 every month although im not planning on buying a property for some years yet. I was thinking of investing around 1k in stocks and shares, having noticed many people reccomend this through Vanguard? Is this possible with already having an ISA with nationwide? I also currently live at home and have no major financial outgoings having recently purchased my car's insurance for the year and other major car related outgoings for the year hopefully.

    So really just seeking some financial guidance on how I can improve my situation.

    Thanks
    Originally posted by Jonny1875
    As above, I won't try to give you advice on investment, as I know relatively little, and your queries about the student loan have been addressed to.

    But if I read your post correctly, I understand that you have about 9k in a cash ISA? I would wonder if that's a bit on the heavy side given your current circumstances? Most aim to have around 3-6months of expenses in easy access savings accounts for emergencies, but I would look at moving it into other higher rate savings accounts with equally easy access (I imagine you are getting very little interest on it?), as Eco Miser suggests.

    You can decide how much you think you need to keep in there (some for an emergency fund, and some for large expenses in the near future that aren't related to the house), but perhaps it is worth thinking about moving some to your H2B ISA to make sure you are maximising your gains from that each financial year?
    • JSCB
    • By JSCB 14th Jan 18, 12:10 AM
    • 44 Posts
    • 12 Thanks
    JSCB
    • #6
    • 14th Jan 18, 12:10 AM
    • #6
    • 14th Jan 18, 12:10 AM
    You can decide how much you think you need to keep in there (some for an emergency fund, and some for large expenses in the near future that aren't related to the house), but perhaps it is worth thinking about moving some to your H2B ISA to make sure you are maximising your gains from that each financial year?
    Originally posted by DrEskimo
    Having read Dr Eskimo's advice above, it sparked another thought... have you looked into the Lifetime ISA's and the benefits and drawbacks over a Help to Buy ISA?

    At the moment the only cash provider, Skipton, are offering a 0.75% interest rate, not the best compared to the 2% you can get for HTB ISA's, but you can put 4k per year into a Lifetime ISA (as apposed to just 2.4k in a HTB, perhaps making the most of the spare excess DrEskimo potentially identified in your normal cash ISA?) meaning you can earn the bonus on an extra 1.6k per year, and can maintain this account for as long as you like unlike a HTB which you'll max within 3-4 years.

    Only downside with the lifetime for me really is the fact that you can't withdraw back from it if need be without penalties, which while I think is right to deter people from spending their savings, is bad if you were to change plans and buy at Auction or move abroad instead for example.

    Something to think about though, financially worth doing and if you opened one in the next month you could transfer your current HTB's balance into it in this tax year, as well as adding this years 4k allowance minus what you've put into the HTB this tax year so far, and then still another 4k again April 6th onwards.
    • PEHsaver
    • By PEHsaver 14th Jan 18, 1:19 AM
    • 13 Posts
    • 7 Thanks
    PEHsaver
    • #7
    • 14th Jan 18, 1:19 AM
    • #7
    • 14th Jan 18, 1:19 AM
    It sounds like you are doing great with your saving and have a solid foundation to build from. its great you have started some serious saving at your age, but with property prices as they are and rising, this is important. I would save as much as you possibly can whilst you have the opportunity!

    If I was in your position my priority would be saving for a deposit on a property which at 21 I would do through a lifetime / help to buy ISA as you already are.

    at 28 myself I am doing OK financially. I bought my first property 12 months ago age 27. I had managed to save 35,000 before doing so. I put down a 14,000 deposit keeping back 21,000 capital 6,000 of which was used for furnishing.

    From the leftover 15,000 I have drip fed 5,000 into stocks to cost average leaving myself with a 10,000 (6 month) emergency fund in available cash.

    I have only just started investing and wish I knew about the power of compound interest 10 years ago as could of built significantly more wealth.

    I will now roll around 650 a month into funds to compound over the next 30 - 40 years leading into retirement. 300 saved monthly into a fund returning 8% per year over a period of 40 years would compound to over 1 Million. Not bad eh!

    check out an online calculator for compounding

    My Advice
    1. Save for a property using a lifetime / help to buy ISA and get on the property ladder asap
    2. Build up an emergency fund of 3 - 6 months salary and keep this in available funds
    3. Invest into workplace pension
    4. Invest what you can afford into a low cost tracker fund / S&S ISA and compound the Interest
    5.Retire a Millionaire

    Last edited by PEHsaver; 14-01-2018 at 1:35 AM.
    • Sarastro
    • By Sarastro 14th Jan 18, 8:27 AM
    • 395 Posts
    • 342 Thanks
    Sarastro
    • #8
    • 14th Jan 18, 8:27 AM
    • #8
    • 14th Jan 18, 8:27 AM
    I agree with PEHsaver although I'd forget number 4 for now and throw that money at getting a house.
    Debt 1/1/17 - Credit Cards 17,280.23; overdrafts 3,777.24
    Debt 5/1/18 - Credit Cards 3,188; overdrafts 0
    • Jonny1875
    • By Jonny1875 14th Jan 18, 10:25 AM
    • 6 Posts
    • 2 Thanks
    Jonny1875
    • #9
    • 14th Jan 18, 10:25 AM
    • #9
    • 14th Jan 18, 10:25 AM
    Thanks for all the replies, very helpful!
    It seems like a common suggestion is to make more use or better use of the 9K I have in my Instant Access Isa, I was thinking therefore should I transfer 200 every month from this to my Help To Buy Isa instead of adding to both simultaneously? and do this until my Instant Access Isa is at a level where it is simply an emergancy fund?
    It seems like the Help to Buy ISA is the right move for helping myself to get on the property ladder in the next 3-5 years however i see the benefits suggested by JSCB in transferring this to a Lifetime Isa the only thing im wondering is if its worth this as ill no longer get the extra 25% bonus from the government if i were to purchase as a first time buyer.
    I'm also interested in Dr Eskimo's suggestion of an alternative savings account as indeed my interest rate is low at 0.75% and still interested in perhaps investing around 1K in a low cost tracker fund/S&S Isa suggested by PEH saver although im unsure about how to go about this or how to compound the interest?
    • Jonny1875
    • By Jonny1875 14th Jan 18, 10:28 AM
    • 6 Posts
    • 2 Thanks
    Jonny1875
    What advice and help have your parents given you?

    what is your degree?
    Originally posted by atush
    History Doesnt seem very useful in todays job market unless I want to teach which I definitely dont!
    • savingpennies
    • By savingpennies 14th Jan 18, 10:56 AM
    • 654 Posts
    • 4,216 Thanks
    savingpennies
    Don't apologise for doing history. Employers are not always interested in what you studied but the brain you used to do the studying.
    Books - the original virtual reality.

    2017 in 2017: 2198.89
    2018 in 2018: 52.98
    2018 2 savers club:46
    • TARDIS
    • By TARDIS 14th Jan 18, 11:18 AM
    • 111 Posts
    • 80 Thanks
    TARDIS
    Do you have access to a workplace pension and if so are you paying in enough to maximise your employers contributions? If not you're turning down free money!
    • Jonny1875
    • By Jonny1875 14th Jan 18, 11:49 AM
    • 6 Posts
    • 2 Thanks
    Jonny1875
    Do you have access to a workplace pension and if so are you paying in enough to maximise your employers contributions? If not you're turning down free money!
    Originally posted by TARDIS
    No unfortunately im on a temporary contract so have not started building a pension.

    I have been doing some research this morning and im very interested in investing some money in a VLS fund perhaps VLS60 would this be soemthing i should think about as I already have an emergancy fund sorted?
    • JohnRo
    • By JohnRo 14th Jan 18, 12:13 PM
    • 2,608 Posts
    • 2,421 Thanks
    JohnRo
    For someone your age a VLS 60 is quite a conservative (that's not to say low risk) choice imo, assuming that you're in it for the long haul and that you won't lose sleep or composure over what could (and probably will be at some point) double digit percentage losses.

    If you're likely to start panicking and sell out to preserve what's left when stock markets inevitably crashes, which would be the very worst outcome without years worth of gains to offset it, then you need to look at the potential losses of your chosen fund and just be honest with yourself about how you'd handle that scenario because it'll be too late to find out you can't when it's already happening.

    The problem is we've had years of almost uninterrupted year on year gains and there's a lot of over confidence and complacency imo which is understandable when almost every performance chart you look at resembles a climb to the top of Everest.

    That said, personally I'd be looking at something a little higher on the risk scale, 80 or even 100 given that you're going to be holding it for well over a decade. Ultimately you have to do what feels right for you and be comfortable with the decision.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • Jonny1875
    • By Jonny1875 14th Jan 18, 12:24 PM
    • 6 Posts
    • 2 Thanks
    Jonny1875
    For someone your age a VLS 60 is quite a conservative (that's not to say low risk) choice imo, assuming that you're in it for the long haul and that you won't lose sleep or composure over what could (and probably will be at some point) double digit percentage losses.

    If you're likely to start panicking and sell out to preserve what's left when stock markets inevitably crashes, which would be the very worst outcome without years worth of gains to offset it, then you need to look at the potential losses of your chosen fund and just be honest with yourself about how you'd handle that scenario because it'll be too late to find out you can't when it's already happening.


    The problem is we've had years of almost uninterrupted year on year gains and there's a lot of over confidence and complacency imo which is understandable when almost every performance chart you look at resembles a climb to the top of Everest.

    That said, personally I'd be looking at something a little higher on the risk scale, 80 or even 100 given that you're going to be holding it for well over a decade. Ultimately you have to do what feels right for you and be comfortable with the decision.
    Originally posted by JohnRo
    I personally was thinking of leaving it/building it for around ten years and see where I am in life then. It seems pretty easy to add to it if im so inclined and seems like with leaving it in for that length of time I should see decent returns unless i suffer from poor timing. The only questions I have are the account fees.... how do these work? I assume the account fees are taken anually out of my sum of money, vanguards seem very reasonable at 0.15%?

    Im also correct in believing i can still open one even though i have a Instant Access ISA with nationwide and a Help To Buy ISA?
    Last edited by Jonny1875; 14-01-2018 at 12:27 PM.
    • DrEskimo
    • By DrEskimo 14th Jan 18, 12:27 PM
    • 79 Posts
    • 60 Thanks
    DrEskimo
    No unfortunately im on a temporary contract so have not started building a pension.

    I have been doing some research this morning and im very interested in investing some money in a VLS fund perhaps VLS60 would this be soemthing i should think about as I already have an emergancy fund sorted?
    Originally posted by Jonny1875
    Do you have a particular goal for this 1000 you want to invest? Once you establish what you want to use it for, it gives it a timeline. Once you have a timeline, you can work out the best place for it to achieve that goal.

    Personally speaking, I am probably more in line with Sarastro....I would be throwing everything I have at getting the deposit for a house. Don't forget, a house can be a very worthwhile investment too...!
    Whilst I appreciate it's more risky than a well diversified portfolio invested over 20/30years, it is about the only typical asset that can not only serve as something extremely useful (i.e. gives you somewhere to live...!), but also has the ability to give extremely good returns on your money. As ever, solid research into where and what to buy will help you make a more informed (and hopefully less risky) decision.

    I think it's always worth bearing in mind that getting on the ladder as quick as possible is a very wise idea, as house prices continue to rise and out-compete wage growth. As an example, me and my partner bought our first property in 2012, and it sold it for about 50% more in 3yrs. If we were earning roughly the same salary and had the same deposit at the time we sold it (accounting for inflation), we wouldn't actually have been able to buy it...!

    As ever, past performance is not necessarily indicative of future trends, so it's up to you what you think is the best approach for you

    From what I've read of your posts, it would seem to me your immediate goals are to:
    • Increase your income by securing better employment
    • Saving for a deposit for a house

    Perhaps I would focus on these by making full use of the various government schemes (H2B ISA, LISA, etc.), and then think about longer term investment decisions with S&S ISA, pensions, etc.

    I'm afraid I don't know much about the H2B or LISA schemes, but maybe it's worth doing the necessary research and see if you would benefit from using that 1000 to maximise your benefits from these before thinking about S&S ISA's?

    Of course this was just my approach when I was your age. You do what you think is best for you
    • Jonny1875
    • By Jonny1875 14th Jan 18, 12:43 PM
    • 6 Posts
    • 2 Thanks
    Jonny1875
    Do you have a particular goal for this 1000 you want to invest? Once you establish what you want to use it for, it gives it a timeline. Once you have a timeline, you can work out the best place for it to achieve that goal.

    Personally speaking, I am probably more in line with Sarastro....I would be throwing everything I have at getting the deposit for a house. Don't forget, a house can be a very worthwhile investment too...!
    Whilst I appreciate it's more risky than a well diversified portfolio invested over 20/30years, it is about the only typical asset that can not only serve as something extremely useful (i.e. gives you somewhere to live...!), but also has the ability to give extremely good returns on your money. As ever, solid research into where and what to buy will help you make a more informed (and hopefully less risky) decision.

    I think it's always worth bearing in mind that getting on the ladder as quick as possible is a very wise idea, as house prices continue to rise and out-compete wage growth. As an example, me and my partner bought our first property in 2012, and it sold it for about 50% more in 3yrs. If we were earning roughly the same salary and had the same deposit at the time we sold it (accounting for inflation), we wouldn't actually have been able to buy it...!

    As ever, past performance is not necessarily indicative of future trends, so it's up to you what you think is the best approach for you

    From what I've read of your posts, it would seem to me your immediate goals are to:
    • Increase your income by securing better employment
    • Saving for a deposit for a house

    Perhaps I would focus on these by making full use of the various government schemes (H2B ISA, LISA, etc.), and then think about longer term investment decisions with S&S ISA, pensions, etc.

    I'm afraid I don't know much about the H2B or LISA schemes, but maybe it's worth doing the necessary research and see if you would benefit from using that 1000 to maximise your benefits from these before thinking about S&S ISA's?

    Of course this was just my approach when I was your age. You do what you think is best for you
    Originally posted by DrEskimo
    Thanks for your advice!
    Those are definitely my two immiediate goals, i'm glad now i know to focus on adding to my Help To Buy ISA as I already have an established emergancy fund.

    I think my reasoning for wanting to invest 1000 is the length of time it'll take to reach a sizeable house deposit maximising the use of the Help To Buy ISA. I cant help but feel i have an oppurtunity for something else to be running in the background given that im in a strong position of already having an emergancy fund. I can add to my Help To Buy ISA for the next year using spare money from my Instant Access ISA/ emergancy fund therefore leaving me with a spare 1k+ i could do somthing with in the meantime for my long term future and therefore I have become interested in a S&S ISA.Touch wood i should also have money coming in from employment obviousily.
    • TARDIS
    • By TARDIS 14th Jan 18, 1:04 PM
    • 111 Posts
    • 80 Thanks
    TARDIS
    The only questions I have are the account fees.... how do these work? I assume the account fees are taken anually out of my sum of money, vanguards seem very reasonable at 0.15%?

    Im also correct in believing i can still open one even though i have a Instant Access ISA with nationwide and a Help To Buy ISA?
    Originally posted by Jonny1875
    I think most take fees quarterly. Vanguards platform certainly does and is likely to be the cheapest for you with a small sum. It has a limited number of funds available, which may or may not appeal to you.
    Yes you can have a S&S ISA too. You can put max 20K total in this year across all types of ISA.
    • DrEskimo
    • By DrEskimo 14th Jan 18, 1:04 PM
    • 79 Posts
    • 60 Thanks
    DrEskimo
    Thanks for your advice!
    Those are definitely my two immiediate goals, i'm glad now i know to focus on adding to my Help To Buy ISA as I already have an established emergancy fund.

    I think my reasoning for wanting to invest 1000 is the length of time it'll take to reach a sizeable house deposit maximising the use of the Help To Buy ISA. I cant help but feel i have an oppurtunity for something else to be running in the background given that im in a strong position of already having an emergancy fund. I can add to my Help To Buy ISA for the next year using spare money from my Instant Access ISA/ emergancy fund therefore leaving me with a spare 1k+ i could do somthing with in the meantime for my long term future and therefore I have become interested in a S&S ISA.Touch wood i should also have money coming in from employment obviousily.
    Originally posted by Jonny1875
    Yup that makes total sense!

    Sorry I wasn't sure with all the figures flying around (and not being that clued up on the various ISA's for FTB's) whether you were comfortably maximising all those schemes or not. That was really what I was getting at. Sounds as if you are so I see no harm in starting a S&S ISA with other spare cash if that's what you are interested in.

    As above, just be sure you know exactly what it entails (and whether it might impact on your yearly ISA allowance too!).
    • ValiantSon
    • By ValiantSon 14th Jan 18, 1:26 PM
    • 2,013 Posts
    • 1,863 Thanks
    ValiantSon
    I personally was thinking of leaving it/building it for around ten years and see where I am in life then. It seems pretty easy to add to it if im so inclined and seems like with leaving it in for that length of time I should see decent returns unless i suffer from poor timing. The only questions I have are the account fees.... how do these work? I assume the account fees are taken anually out of my sum of money, vanguards seem very reasonable at 0.15%?
    Originally posted by Jonny1875
    Vanguard will work out as the cheapest platform for you at 0.15% platform fee, but don't forget that there is also an OCF for the fund, which is 0.22%, so the total cost is 0.37%.

    Vanguard charge you quarterly for the fees. You can pay out of the investments in the account, but this isn't a great idea because it means selling some of the units you hold in the fund to do so. Instead, Vanguard allow you to set up a direct debit from your current account to pay the fees (a much better option). They will notify you in advance what the fees are for the quarter, and when they will be debited.
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