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  • FIRST POST
    • Kylet63b
    • By Kylet63b 9th Jul 18, 6:49 PM
    • 9Posts
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    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. Im 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 2
    • Zero Sum
    • By Zero Sum 10th Jul 18, 10:36 PM
    • 408 Posts
    • 316 Thanks
    Zero Sum
    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)
    Originally posted by swindiff

    Ahh right, i see what you've done.
    Thought you got the 47 from the 45% tax & 2% NI which someone on 150k would pay.
    • Kylet63b
    • By Kylet63b 11th Jul 18, 12:18 AM
    • 9 Posts
    • 2 Thanks
    Kylet63b
    I want to explore different types of investing options, would it be sensible to open an account with vanguard? I was looking online and could see there is option such as p2p investing, is this something anyone has done on here?
    • MallyGirl
    • By MallyGirl 11th Jul 18, 7:25 AM
    • 2,820 Posts
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    MallyGirl
    P2P is higher risk. If the stock market crashes it will eventually recover if you don't panic and wait it out. If a P2P borrower defaults then that money is almost certainly gone - some providers have some sort of provision fund to help with this but it is not guaranteed.

    I'd walk before you try to run
    • MallyGirl
    • By MallyGirl 11th Jul 18, 7:29 AM
    • 2,820 Posts
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    MallyGirl
    If you decide that a Vanguard fund is the way to go then it would be cheaper to operate this through a Vanguard ISA but that limits you to only investing in Vanguard products. There are thousands of products out there.

    Do investigate a S&S LISA as the 25% government bonus is good news if you are definitely going to buy a house
    • macman
    • By macman 11th Jul 18, 10:29 AM
    • 42,022 Posts
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    macman
    OP< what is your attitude to risk? S&S ISA's or P2P lending carry the risk that you will lose your entire investment. Cash ISA's and LISA's are protected and offer a fixed rate, plus the tax-free bonus. If you are hoping to buy a house in the next 1-5 years, a LISA really is a no-brainer.
    Any stock market investments offering the possibility of double-digit returns will be high-risk.
    No free lunch, and no free laptop
    • steampowered
    • By steampowered 11th Jul 18, 2:58 PM
    • 2,675 Posts
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    steampowered
    I want to explore different types of investing options, would it be sensible to open an account with vanguard? I was looking online and could see there is option such as p2p investing, is this something anyone has done on here?
    Originally posted by Kylet63b
    You don't have to open your account through vanguard. You could open an account through almost any online broker, and buy vanguard funds through those accounts.

    I would recommend The Share Centre (www.share.com) as their interface is very easy to use.

    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.
    Originally posted by Terry Towelling
    We also need to take into account that the Op may need to live at home for a long period while he saves up a deposit. The average age of a first time buyer in the UK is 30 because people can't afford a deposit. "Shortfall risk" is just as much of a risk as stock market "investment risk" when it comes to buying a house.

    At the Op's current saving rate of 500 pm it will take him 5 years to reach the average first time buyer deposit of c. 30k, so he has plenty of time to ride out any stock market slumps. It is very unlikely the Op would be behind over a 5 year period assuming the Op chooses to reinvest his dividends.

    OP< what is your attitude to risk? S&S ISA's or P2P lending carry the risk that you will lose your entire investment.
    Originally posted by macman
    There is no risk of losing your entire investment with a S&S ISA - assuming the Op chooses to invest in a balanced fund rather than selecting just one or two individual shares.

    The worst experience people who make balanced investments in stock markets could have would be losing about half of it, which is what would have happened had they invested at the very top of the peak in 2008 immediately before the last major stock market crash. Even then, by waiting just 4 years, the capital losses would have been recovered plus the benefit of dividends paid in the meantime.

    P2P does indeed carry the risk of losing everything. Which is why I think P2P is a bad idea - greater risk than stock markets and lower potential returns.
    Last edited by steampowered; 11-07-2018 at 3:01 PM.
    • kinger101
    • By kinger101 11th Jul 18, 5:28 PM
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    kinger101
    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)
    Originally posted by swindiff
    You've completely ignored the fact that pensions are taxable income.
    • ValiantSon
    • By ValiantSon 11th Jul 18, 6:02 PM
    • 2,251 Posts
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    ValiantSon
    You don't have to open your account through vanguard. You could open an account through almost any online broker, and buy vanguard funds through those accounts.

    I would recommend The Share Centre (www.share.com) as their interface is very easy to use.
    Originally posted by steampowered
    The Share Centre is more expensive than Vanguard Investor. In fact, it is one of the more expensive platforms, unless you have a large investment. For someone starting out with nothing, and investing 500 per month it would work out at 90 for the first year, while using Vanguard Investor would work out at roughly 5 (allowing for a little growth), so The Share Centre is approximately 1,700% more! That's a hell of a premium for customer service/a nice website, and Vanguard's customer service (and website) is also excellent.

    If the OP were investing a large sum in multiple funds then using a different platform would make sense, but on a planned 500 per month regular investment, then only one multi-asset fund makes sense (yes choosing a raft of different index trackers may be slightly cheaper, but not advisable for the inexperienced investor). If Vanguard are that chosen fund house then Vanguard Investor is the perfect platform, charging the lowest possible 0.15% platform fee with no other charges at all, not even a transfer fee if they choose to move platforms at a later date to take advantage of other funds. It really is a no-brainer.


    We also need to take into account that the Op may need to live at home for a long period while he saves up a deposit. The average age of a first time buyer in the UK is 30 because people can't afford a deposit. "Shortfall risk" is just as much of a risk as stock market "investment risk" when it comes to buying a house.

    At the Op's current saving rate of 500 pm it will take him 5 years to reach the average first time buyer deposit of c. 30k, so he has plenty of time to ride out any stock market slumps. It is very unlikely the Op would be behind over a 5 year period assuming the Op chooses to reinvest his dividends.
    Originally posted by steampowered
    Really? Over a five year period there is a pretty high risk of cashing out at a loss. This is only half of an economic cycle, and less than one-fifth will have been invested for the full time.

    If the OP is intending to use the money for a house deposit, then they really are better off with savings, and the LISA is, again, a no-brainer (but in its cash form).


    There is no risk of losing your entire investment with a S&S ISA - assuming the Op chooses to invest in a balanced fund rather than selecting just one or two individual shares.

    The worst experience people who make balanced investments in stock markets could have would be losing about half of it, which is what would have happened had they invested at the very top of the peak in 2008 immediately before the last major stock market crash. Even then, by waiting just 4 years, the capital losses would have been recovered plus the benefit of dividends paid in the meantime.
    Originally posted by steampowered
    True enough, but on a five year timescale it still isn't a good bet. It's also worth noting that each crash and recovery is unique, so what happened during and subsequent to 2008 may well not be replicated when the next crash comes.
    Last edited by ValiantSon; 11-07-2018 at 6:50 PM. Reason: Typo
    • Kylet63b
    • By Kylet63b 11th Jul 18, 6:20 PM
    • 9 Posts
    • 2 Thanks
    Kylet63b
    Has anyone used evestor or Cavendish? i see these on the isa page of this website. Thanks for the advice on p2p sounds like it would be better to steer clear of that for now.
    • kinger101
    • By kinger101 11th Jul 18, 6:45 PM
    • 4,385 Posts
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    kinger101
    Stocks are probably not appropriate if you need the cash in the next five years. Skipton do a cash LISA. Only 0.75%, but it's 25.75% in the first year as you get 25% from the government.
    • enthusiasticsaver
    • By enthusiasticsaver 11th Jul 18, 6:51 PM
    • 6,733 Posts
    • 14,333 Thanks
    enthusiasticsaver
    When I started investing I used Cavendish as they were among the cheapest for small investors. I think Charles Stanley were comparable. Go on to comparemyplatform to decide which one suits you best. Cavendish used Fidelity Funds Network which was ok but not the most usable system out there. I am now with Halifax Share Dealing and I like them better but they are a fixed fee so might not be best for you if you are starting off small.

    As others have said you should decide whether you want to save or invest. If you may need the money in the next few years saving in a high interest current account or regular savers may be better or HTB or LISA. Long term investing is done best through a pension for the tax relief.

    If you decide you want to invest at least some of the 500 per month the usual way for people to start investing is in funds. There are passive ones which follow indexes as trackers and these are the cheapest. Active funds charge management fees and there is ongoing debate as to whether they are better than passive ones but they are certainly more expensive and usually less diversified so can be riskier. Deciding on your appetite to risk and your ability to do without the money should the market fall and you need to ride out a market cycle for a year or two until it recovers is important. Your age would normally dictate that you have many years ahead of you to recoup losses but if you will panic and sell if your investment drops by 25% over a few weeks may mean investing is not for you or if it is stick to well diversified multi asset funds which are not quite as volatile as they contain bonds as well as equities.

    Read up lots on monevator, trustnet or even investing for dummies. You need to understand where your money is before you go ahead and be clear in your own mind what your investing objectives are.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • ValiantSon
    • By ValiantSon 11th Jul 18, 6:51 PM
    • 2,251 Posts
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    ValiantSon
    Stocks are probably not appropriate if you need the cash in the next five years. Skipton do a cash LISA. Only 0.75%, but it's 25.75% in the first year as you get 25% from the government.
    Originally posted by kinger101
    And 25% bonus every year on that year's deposits.
    • Flobberchops
    • By Flobberchops 11th Jul 18, 7:14 PM
    • 773 Posts
    • 553 Thanks
    Flobberchops
    Here's my crazy idea.

    200 per month to HTB ISA. Current best buy is Barclays at 2.53%.
    200 per month to either a First Direct, M&S, Santander or Nationwide regular saver - all of the aforementioned pay 5%. On maturity each year the balance (2465ish) dumped into a Lifetime ISA.
    100 per month to your choice of a Stocks and Shares ISA buying a single cheap, diversifed fund OR an Innovative Finance ISA - my personal pick would be with Ablrate. Beware, you could lose everything, etc etc.

    For simplicity let's say you're due to turn 20 any moment now. In 10 year, when you're 30, the above strategy would produce:

    60,000 total deposited giving
    27,334 in the HTB ISA (growth of 3,334)
    30,812+ in the LISA (growth of 6,162 plus whatever interest the account pays)

    Plus whatever the 12,000 in S&S/IFISA generates. Nightmare scenario: negative 12,000. Favourable scenario (assume 10% P2P); that's over 8,000 growth.

    The logic here is to give you the option of keeping some cash instantly accessible (LISA money has a penalty if you withdraw early), with decent growth, all completely within ISA wrappers.

    Please do plenty of homework before committing to shares and particularly P2P.
    Last edited by Flobberchops; 11-07-2018 at 7:26 PM.
    I work for a UK bank, but any comments made on this forum are solely my personal opinion. Caveat Emptor!
    • steampowered
    • By steampowered 11th Jul 18, 7:27 PM
    • 2,675 Posts
    • 2,608 Thanks
    steampowered
    The Share Centre is more expensive than Vanguard Investor. In fact, it is one of the more expensive platforms, unless you have a large investment. For someone starting out with nothing, and investing 500 per month it would work out at 90 for the first year, while using Vanguard Investor would work out at roughly 5 (allowing for a little growth), so The Share Centre is approximately 1,700% more! That's a hell of a premium for customer service/a nice website, and Vanguard's customer service (and website) is also excellent.
    Originally posted by ValiantSon
    That fee would only apply if the Op logged each month as a separate trade. If the Op used The Share Centre's regular investing option, he would pay 0.5% commission (1 pm on a 500 pm investment).

    Really? Over a five year period there is a pretty high risk of cashing out at a loss. This is only half of an economic cycle, and less than one-fifth will have been invested for the full time.
    You don't need to wait a 'full economic cycle'. If you are unlucky enough to invest immediately before a crash, you only need to wait for recovery - not for the whole economic cycle to complete and reach the next crash.

    Looking at the FTSE 100 max graph on google, it appears that there has never in history been a 5 year period over which one would have made a capital loss if remaining invested in a FTSE 100 tracker (even ignoring dividends) - I can't see that a recovery has ever taken more than about 5 years in the history of that market.

    If the OP is intending to use the money for a house deposit, then they really are better off with savings, and the LISA is, again, a no-brainer (but in its cash form).
    If the Op wants to buy a house, their greatest concern will be raising enough for a deposit.

    That is a moving target. House prices are likely to increase faster than the interest paid on cash savings. If the Op keeps his money in cash, instead of the "risk" of making a loss on his investment he will take the 100% certainty of taking a real loss on the value of his 500pm.

    When people give very conservative advice in relation to achieving a savings goal which is a moving target that increases with inflation - such as buying a house or retiring - they miss the wood (the shortfall risk of not being able to afford a house or retirement) for focussing on the trees (the investment risk of markets going the wrong way).

    Taking a modest amount of investment risk over a period of a few years seems a no-brainer to me.
    • ValiantSon
    • By ValiantSon 11th Jul 18, 7:55 PM
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    ValiantSon
    That fee would only apply if the Op logged each month as a separate trade. If the Op used The Share Centre's regular investing option, he would pay 0.5% commission (1 pm on a 500 pm investment).
    Originally posted by steampowered
    So still more than Vanguard Investor, then!


    You don't need to wait a 'full economic cycle'. If you are unlucky enough to invest immediately before a crash, you only need to wait for recovery - not for the whole economic cycle to complete and reach the next crash.

    Looking at the FTSE 100 max graph on google, it appears that there has never in history been a 5 year period over which one would have made a capital loss if remaining invested in a FTSE 100 tracker (even ignoring dividends) - I can't see that a recovery has ever taken more than about 5 years in the history of that market.
    Originally posted by steampowered
    You don't have to wait any length of time, but I am talking about what is sensible.

    The FTSE 100 is just one index, and not a particularly good one for investors to base their decisions on. I hope that you aren't basing all of your decisions on the FTSE 100, and that you aren't only invested in a FTSE 100 tracker!

    If the Op wants to buy a house, their greatest concern will be raising enough for a deposit.

    That is a moving target. House prices are likely to increase faster than the interest paid on cash savings. If the Op keeps his money in cash, instead of the "risk" of making a loss on his investment he will take the 100% certainty of taking a real loss on the value of his 500pm.
    Originally posted by steampowered
    Thanks for explaining the housing market to me; I'm not that experienced having only bought four houses and sold three in the last 18 years.

    As I've already said, a LISA will add 1,000 each year to their savings (assuming they max it) plus the interest earned. You'd need some pretty high risk investments to get that kind of return on the stockmarket!

    When people give very conservative advice in relation to achieving a savings goal which is a moving target that increases with inflation - such as buying a house or retiring - they miss the wood (the shortfall risk of not being able to afford a house or retirement) for focussing on the trees (the investment risk of markets going the wrong way).

    Taking a modest amount of investment risk over a period of a few years seems a no-brainer to me.
    Originally posted by steampowered
    When people give ill-informed advice about investments it makes me quite angry, because they are influencing others to make high risk decisions without being fully aware of the risks.

    You aren't an IFA - and it shows - so you are not authorised to give investment advice.
    • kinger101
    • By kinger101 11th Jul 18, 8:08 PM
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    kinger101
    Looking at the FTSE 100 max graph on google, it appears that there has never in history been a 5 year period over which one would have made a capital loss if remaining invested in a FTSE 100 tracker (even ignoring dividends)
    Originally posted by steampowered
    24 Dec 1999 - 6806.50
    28 Jan 2005 - 4854.19

    Considering RPI moved from 167.3 to 188.3 in that time, that's about one third wiped off the value.
    • steampowered
    • By steampowered 11th Jul 18, 10:02 PM
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    steampowered
    You aren't an IFA - and it shows - so you are not authorised to give investment advice.
    Originally posted by ValiantSon
    I don't claim to be an IFA. People don't need an IFA qualification to understand the advantages and disadvantages of keeping funds in cash versus investing them in stocks & shares. It ain't rocket science.

    As I've already said, a LISA will add 1,000 each year to their savings (assuming they max it) plus the interest earned. You'd need some pretty high risk investments to get that kind of return on the stockmarket!
    I agree with using a LISA. But remember that a LISA can be held in stocks and shares - it doesn't have to be held in cash.

    When people give ill-informed advice about investments it makes me quite angry, because they are influencing others to make high risk decisions without being fully aware of the risks.
    Likewise, it makes me angry when people give overly conservative investment suggesting that people should take zero risk with their capital. That makes no sense when someone is saving over a number of years towards a deposit - which is a moving target liable to increase over time.

    It is not just investment risk that is relevant. The Op also needs to consider shortfall risk (i.e. the difficulty of gathering a deposit together, given that house prices are likely to continuing rising at least in line with inflation) and inflation risk (i.e. the fact inflation will eat away at the real value of 500pm held in cash over time).

    The Op is an adult and is able to make his own decision as to how he would like to balance these competing considerations.
    Last edited by steampowered; 12-07-2018 at 12:00 AM.
    • kinger101
    • By kinger101 12th Jul 18, 12:09 AM
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    kinger101
    I don't claim to be an IFA.

    People don't need an IFA qualification to understand the advantages and disadvantages of keeping funds in cash versus investing them in stocks & shares. It isn't rocket science.


    I agree with using a LISA - but this is irrelevant to the question of whether the Op should be saving in cash or investing. A LISA can be held in stocks and shares.


    Likewise, it makes me angry when people give overly conservative investment advice that results in people who want to be able to afford a property, an asset class that is likely to increase in price with inflation, having a lower chance of getting there.

    You wouldn't advise a prospective pensioner to switch their entire pension fund to cash up to 11 years before retirement (bearing in mind that the Op is 19 and the average age of a first time buyer is 30, or 32 in London).

    The Op is an adult and is able to make his own decision as to the level of investment risk he is willing to take on, and as to how he wants to balance that risk against the shortfall risk and inflation risk associated with keeping his savings in cash.
    Originally posted by steampowered
    While I agree that being too risk averse is a bad thing, I think you're basing your comments on recent history, i.e.,

    (a) fairly robust stock market growth over the last 10 years
    (b) steadily increasing house prices
    (c) poor performance of money market relative to the latter

    While the money market is still likely to be poor over for the foreseeable future, it's rather bullish to assume (a) and (b) will hold true as well.

    Personally, I take the view that anything I need in 5 years shouldn't be vested in stocks. Maybe OP can ride out a crash (particular as they'll be drip feeding), but there's no point backing yesterday's winners.
    • ValiantSon
    • By ValiantSon 12th Jul 18, 12:45 AM
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    ValiantSon
    I don't claim to be an IFA. People don't need an IFA qualification to understand the advantages and disadvantages of keeping funds in cash versus investing them in stocks & shares. It ain't rocket science.
    Originally posted by steampowered
    You specifically referred to giving advice on investments. This is something that you are not qualified to do, nor are you regulated in doing so. That was the point I was making.

    I agree with using a LISA. But remember that a LISA can be held in stocks and shares - it doesn't have to be held in cash.
    Originally posted by steampowered
    Yes, I know that LISAs can be S&S, but I have explained why that is a poor choice in the OP's circumstances.

    Likewise, it makes me angry when people give overly conservative investment suggesting that people should take zero risk with their capital. That makes no sense when someone is saving over a number of years towards a deposit - which is a moving target liable to increase over time.
    Originally posted by steampowered
    The suggestions for consideration I have made (not advice - I don't give advice because I am neither qualified to do so, nor regulated) are not, "overly conservative". They are appropriate to the OP's circumstances and aims for their money. Suggesting investments in their circumstances is, in my view, irresponsible. You will note, that I am not averse to investments, and in my first post in this thread (where I believed the OP was asking specifically about investing, as opposed to savinf) I offered some suggestions about how to do so.

    Taking risk with money that is intended to raise the deposit on a house is irresponsible.

    You keep going on about deposits being a moving target, but then you brush over the very real risk of capital loss that exists with investments. Capital would ot be lost in a savings account, and if it took one or two more years to reach the target then so be it.

    It is not just investment risk that is relevant. The Op also needs to consider shortfall risk (i.e. the difficulty of gathering a deposit together, given that house prices are likely to continuing rising at least in line with inflation) and inflation risk (i.e. the fact inflation will eat away at the real value of 500pm held in cash over time).
    Originally posted by steampowered
    Yes, you've said this previously. I understand, but the risk is considerably lower than the risk of losing value with investments (as I keep explaining). Your own figures for how investments have performed in the past are demonstrably wrong, and yet you persist.

    The Op is an adult and is able to make his own decision as to how he would like to balance these competing considerations.
    Originally posted by steampowered
    The OP is a very young adult who has no experience of investing, and, indeed, has only been able to take on debt for less than two year. Your "advice" lacks rigour and potentially leaves them at a disadvantage. You need to be much more circumspect.

    See the comments in this thread for another 19yo looking at an investment timeframe of 5-6 years, to see the caution raised by others for the same kind of issue (albeit where there is a lump sum): https://forums.moneysavingexpert.com/showthread.php?t=5867050. I am not alone in my view!

    You seem to be very gung-ho in your attitude, and that is absolutely fine for you, as long as you understand the risks, but it really isn't okay to be pushing a completely inexperienced potential investor down that route with the particular aims and timeframes that they have elucidated; you haven't even asked them about their attituded to risk, but are proposing a high risk strategy. This all comes back to the point I made about your lack of qualification to give financial advice.
    Last edited by ValiantSon; 12-07-2018 at 12:58 AM.
    • Kylet63b
    • By Kylet63b 12th Jul 18, 4:48 PM
    • 9 Posts
    • 2 Thanks
    Kylet63b
    I!!!8217;m going to look into opening a S&S ISA, is it better to be in a one with its own funds (eg. Vanguard) or somewhere like IG??
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