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  • FIRST POST
    • Kylet63b
    • By Kylet63b 9th Jul 18, 6:49 PM
    • 9Posts
    • 2Thanks
    Kylet63b
    19 and have £500pm to invest, what to do?
    • #1
    • 9th Jul 18, 6:49 PM
    19 and have £500pm to invest, what to do? 9th Jul 18 at 6:49 PM
    Hi i am quite young and am currently working full time and able to put away £500 a month that I hope to invest. Iím not entirely sure what to do? I want to explore different avenues and different ways I can invest but not sure what companies or what ways to do this effectively and also to minimise charges, any advice would be greatly appreciated. Thanks
Page 1
    • kinger101
    • By kinger101 9th Jul 18, 7:09 PM
    • 4,382 Posts
    • 6,071 Thanks
    kinger101
    • #2
    • 9th Jul 18, 7:09 PM
    • #2
    • 9th Jul 18, 7:09 PM
    What are your goals. Buying a house? Pension?

    I'd do the following anyway as it's free money

    (a) make sure you're maxing out the contribution you get from your employer's pension.
    (b) stick up to £4,000 pa into a lifetime ISA - government will add another £1,000

    Other than that, aim for 3-6 months take home pay as a cash buffer in your bank account.
    • ValiantSon
    • By ValiantSon 9th Jul 18, 7:57 PM
    • 2,209 Posts
    • 2,086 Thanks
    ValiantSon
    • #3
    • 9th Jul 18, 7:57 PM
    • #3
    • 9th Jul 18, 7:57 PM
    If you are happy locking it away until retirement then put it into a pension (maximise employer contribution matching and then explore SIPPs) to benefit from the tax relief. If you don't want to lock it up for that long, then use an S&S ISA.

    AN S&S LISA is also worth considering, but be aware that you can only access the money for a first house purchase or at 60.

    Look at multi -asset index funds like Vanguard LifeStrategy; HSBC Global Strategy; Blackrock Consensus; or L&G Multi Index. These will give you good diversification at low cost. You should still be looking at a minimum of 10 years, and longer would be better.

    Platform costs vary, so have a look here: http://www.monevator.com/compare-cheapest-uk-brokerswhich compares them all.
    Last edited by ValiantSon; 09-07-2018 at 8:03 PM.
    • Terry Towelling
    • By Terry Towelling 9th Jul 18, 8:19 PM
    • 210 Posts
    • 107 Thanks
    Terry Towelling
    • #4
    • 9th Jul 18, 8:19 PM
    • #4
    • 9th Jul 18, 8:19 PM
    You say you are 'currently' working full-time; does that mean it is only a temporary thing and may change soon?

    Do you mean 'invest' or just 'save'?

    Do you live at home, in a rented place or what? Do you plan to buy a house at some point? If you live in your own place you should make sure you have an emergency fund (6 months bills covered minimum) before doing anything else.

    Are you allowing yourself some cash to enjoy life?

    As Kinger101 said it may be a good idea to establish some goals in life before you can know the best way to save/invest your cash.
    • Thrugelmir
    • By Thrugelmir 9th Jul 18, 8:28 PM
    • 59,252 Posts
    • 52,623 Thanks
    Thrugelmir
    • #5
    • 9th Jul 18, 8:28 PM
    • #5
    • 9th Jul 18, 8:28 PM
    Your objectives should be the overriding factor when saving/investing money. What's the best use of the money at the current time.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • macman
    • By macman 9th Jul 18, 10:21 PM
    • 42,022 Posts
    • 17,467 Thanks
    macman
    • #6
    • 9th Jul 18, 10:21 PM
    • #6
    • 9th Jul 18, 10:21 PM
    I'd second the LISA: nothing else is paying 25% tax-free at present!
    No free lunch, and no free laptop
    • AndyPK
    • By AndyPK 9th Jul 18, 10:27 PM
    • 2,957 Posts
    • 829 Thanks
    AndyPK
    • #7
    • 9th Jul 18, 10:27 PM
    • #7
    • 9th Jul 18, 10:27 PM
    you could get a couple of 5% regular savers.
    Won't make you a fortune, but good if you want the money in 12 months time
    • swindiff
    • By swindiff 10th Jul 18, 8:54 AM
    • 326 Posts
    • 132 Thanks
    swindiff
    • #8
    • 10th Jul 18, 8:54 AM
    • #8
    • 10th Jul 18, 8:54 AM
    I'd second the LISA: nothing else is paying 25% tax-free at present!
    Originally posted by macman
    Salary sacrifice pension contributions are, 47%
    • atush
    • By atush 10th Jul 18, 9:02 AM
    • 16,880 Posts
    • 10,534 Thanks
    atush
    • #9
    • 10th Jul 18, 9:02 AM
    • #9
    • 10th Jul 18, 9:02 AM
    What are your goals. Buying a house? Pension?

    I'd do the following anyway as it's free money

    (a) make sure you're maxing out the contribution you get from your employer's pension.
    (b) stick up to £4,000 pa into a lifetime ISA - government will add another £1,000

    Other than that, aim for 3-6 months take home pay as a cash buffer in your bank account.
    Originally posted by kinger101
    What he said
    • Kylet63b
    • By Kylet63b 10th Jul 18, 5:05 PM
    • 9 Posts
    • 2 Thanks
    Kylet63b
    Iím permanently working full time, I would like to save for a house just now, Iím currently still living at home so I donít have a lot of costs per month so I am able to put £500 away while still having some money aside for myself
    • Kylet63b
    • By Kylet63b 10th Jul 18, 5:25 PM
    • 9 Posts
    • 2 Thanks
    Kylet63b
    Look at multi -asset index funds like Vanguard LifeStrategy; HSBC Global Strategy; Blackrock Consensus; or L&G Multi Index.
    • Kylet63b
    • By Kylet63b 10th Jul 18, 5:29 PM
    • 9 Posts
    • 2 Thanks
    Kylet63b
    I was looking at stocks and shares ISAís which company is good to go with and is it something I would set up my own portfolio for or have a pre made one? Do stock and share ISAís let you invest in the stock market or is it just different funds?
    • MallyGirl
    • By MallyGirl 10th Jul 18, 6:27 PM
    • 2,820 Posts
    • 7,825 Thanks
    MallyGirl
    I suggest you do a bit of reading which will help you answer your initial questions - you shouldn't invest in something you don't understand.

    John Edwards DIY Simple investing is nice and entry level.

    You need to think about your house buying timescales as investments should be something like 10 years commitment to ride out the peaks and troughs. You wouldn't want to be trying to get your money out to buy when the market is in a slump so you need to have flexibility - or stick to savings.
    • kidmugsy
    • By kidmugsy 10th Jul 18, 6:39 PM
    • 11,086 Posts
    • 7,644 Thanks
    kidmugsy
    If house-buying is on your mind look into LISAs and Help to Buy ISAs.

    If the house-buying would happen in the next few years don't plonk the money into investments - there's too great a risk that they will be "down" when you want the money.
    Free the dunston one next time too.
    • Zero Sum
    • By Zero Sum 10th Jul 18, 7:00 PM
    • 408 Posts
    • 315 Thanks
    Zero Sum
    Salary sacrifice pension contributions are, 47%
    Originally posted by swindiff
    Only if you're earning over £150k
    • swindiff
    • By swindiff 10th Jul 18, 7:10 PM
    • 326 Posts
    • 132 Thanks
    swindiff
    Well mine get a boost by 47% and I earn nowhere near that much lol

    Tax relief is 20% and national insurance is 12%. So for every £100 that goes into my pension it costs me £68.

    £68 + 47% is £100 (rounded to the nearest pound)
    • steampowered
    • By steampowered 10th Jul 18, 7:54 PM
    • 2,671 Posts
    • 2,604 Thanks
    steampowered
    I would put the money into a stocks & shares ISA.

    You have an enormous range of choice as to what you can invest in - whether that be specific shares or thousands of different funds. If you are not sure, choose a low cost tracker fund - Vanguard do good ones.

    Clearly, if you invest in stock funds there is a chance you'll get less back than you put in, if you need to get the money out in the short term. But it is far more likely you'll end up ahead - stock markets average returns of 8-10% a year over the long term.

    If you are planning to buy a house, you also need to balance this "investment risk" against "shortfall risk" - the risk of not being able to afford the required deposit. The investment returns you'd get on shares means accepting investment risk but mitigates shortfall risk - and shortfall risk is the real problem these days!!!

    Some of the advice you've been getting is ridiculously conservative IMHO. 6 months living expenses is not a sensible use of funds for a 19 year old. When you are young you should be prepared to take (sensible and calculated) investment risk.
    • Audaxer
    • By Audaxer 10th Jul 18, 8:04 PM
    • 1,166 Posts
    • 688 Thanks
    Audaxer
    Iím permanently working full time, I would like to save for a house just now, Iím currently still living at home so I donít have a lot of costs per month so I am able to put £500 away while still having some money aside for myself
    Originally posted by Kylet63b
    If you are saving for a house deposit, I assume it will be required within about 5 to 10 years at the most. In that case I wouldn't recommend investing your savings. It would be better to save the £500 per month in a Help to Buy ISA and the highest interest current/savings accounts.
    • Terry Towelling
    • By Terry Towelling 10th Jul 18, 9:33 PM
    • 210 Posts
    • 107 Thanks
    Terry Towelling
    Some of the advice you've been getting is ridiculously conservative IMHO. 6 months living expenses is not a sensible use of funds for a 19 year old. When you are young you should be prepared to take (sensible and calculated) investment risk.
    Originally posted by steampowered
    Two people suggested an 'emergency fund' (me included) and that was before we knew OP was still living at home. It is always good advice to be able to cover your bills in case you lose your job. Now we know OP is at home but looking to buy. What we now need to know is how soon. If the capacity to save £500 continues unabated for, say, 5 years (an eternity at 19) then that could be a useful deposit - especially if uplifted by government incentives in a LISA/H2B ISA.

    I've lost count of the number of times contributors advise people that market investments are for the longer term (10 years or so) so there must be some wisdom in that. If OP is happy to risk a potential deposit on investments then so be it. I guess they could carry on living at home (parents willing) should the market slump at the wrong time and they need to ride out the rough patch.

    Nobody knows what markets will do over 5 or 10 years and, yes, they will likely move more up than down - and nobody knows what OP will be doing in 5 or 10 years. Many things are unknown/unknowable so, to get off on the right foot, probably best to stick to something more certain whilst OP decides whether they 'would like to save for a house' or are determined to save for a house.
    • Audaxer
    • By Audaxer 10th Jul 18, 9:48 PM
    • 1,166 Posts
    • 688 Thanks
    Audaxer
    Nobody knows what markets will do over 5 or 10 years and, yes, they will likely move more up than down - and nobody knows what OP will be doing in 5 or 10 years. Many things are unknown/unknowable so, to get off on the right foot, probably best to stick to something more certain whilst OP decides whether they 'would like to save for a house' or are determined to save for a house.
    Originally posted by Terry Towelling
    You have rightly used the words 'save for a house' twice in the last sentence. I think it is much wiser to save for a house deposit rather than invest for a house deposit as there could be a market crash just when you need the money.
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