So I have 30k or so on hand now, albeit I need to do some withdrawing
Any ideas of what I should do with it? Otherwise as my odds with premium bonds aren’t bad now I might have a crack with it, at least over the next decade or so they should fill themselves out to the max 50k and I can use any further revenue from it as just tax-free income?
What is going to give you most pleasure?
I would say at your age, as boring as it is, think about a pension.
If you can invest it wisely, then you could be looking at retiring at a reasonable age and while still young enough to be able to enjoy life.
an irregular, semi-stable or stable (preferably) tax-free income that means I can work part-time when I feel like rather than needing to hold a job
I want to build businesses in my life and have relative freedom to innovate/complete in an industry I care about, not have to worry about money
It’s why I thought Premium Bonds would be a good one to max out first, a relatively good “first goal”, will eventually max itself out and afterwards every payment I get from it is bonus cash to the investment pile which will feed into compounding and eventually a better salary for me. Also gives me the best odds of gaining the top prizes from it as I’ll have “longer in the system” (I doubt many 20-22 y/o have it filled out to £10k let alone 30/50k) (I don’t mean that the odds get better, just that I will be in more draws in my lifetime)
Do you think it’s better to get one through work? Since my field is relatively well paid I was planning to just invest heavily in pension (basically up to what my employer would match) once my salary is decent, although I imagine I’ll be dead far before I can touch it
*im not working in my industry right now so any pension contributions wouldn’t be matched or even part-paid into + some other boring stuff
Also considered ignoring pension and just investing in companies myself and using those to form an eventual salary (20-40 years of compounding should make a damn good one?)
After working full time for almost 35 years now, I can look back and recommend 2 things - start a good pension and invest in property. I did one, the pension, so that’s sorted. But one of my regrets is not investing in property (good houses for rental) - you can make a lot of money with good property choices.
PBs are very much down to luck. Both my mother and I have maxed them out - I win something almost every month (although I haven’t won more than £75 yet) but she can go months without winning anything.
My thing is I don’t see the need for a pension if you already have a good income from everything else under the sun (dividends from stocks & property)
But yes, I am planning on purchasing some houses as I’m older in middle class areas with primary/secondary schools and maybe some accommodation around university areas
I might hit the 1m jackpot on the daily then, my luck is quite good for some reason
Property is a good investment and will generally return a profit over time. Premium Bonds are only worth it if you have better than average luck. R-
Will move into property as I discover the average / higher than average of my salary in industry
Right now I don’t think I could get one with my funds on hand
Index funds. Buy accumulation funds while you’re young, switch them to income funds when you want to start drawing them down.
Vanguard’s a good place to start - start with the Lifestrategy or another well-diversified fund and just keep hurling money at it.
Doesn’t it just make more sense to get income funds and just use dividend reinvestment?
Vanguard is for non-U.K. residents? I don’t plan on living here
You mean Vanguard Asset Management | Personal Investing in the UK (vanguardinvestor.co.uk)?
However, you can buy Vanguard funds on most fund platforms these days.
Well, it depends whether you are using an ISA or not. If you are using an ISA then it doesn’t matter too much providing you keep reinvesting the dividends. Outside an ISA and you’ll need to declare the income if it goes over your annual allowance. However, accumulation funds trade at a higher price than income funds, because the price includes those reinvested dividends, so you can buy more units when you switch over. I like to just let it do its thing, but horses for courses I guess.
I actually mean in general, I know I won’t be able to utilise my ISA allowance outside of Britain (thankfully dividends don’t count to ISA allowance) but I’d like to keep my general investments domiciled in the U.K. for benefit of the political stability here that is just unrivalled outside of France/Germany
So I guess someone like Hargreaves would let me keep those open while I’m outside of the U.K.
I guess what I’m seeking is a form of investment (aside from keeping an active shell company to hold everything) that I can retain full control over but remain in the U.K.
Im in IT in finance and the pensions can vary wildly, right now I get essentially the minimum 4+4%, previously I was getting 10% employer + 5% employee. But I also get paid more at this company i’m with now.
I top up my SIPP with a little extra as 8% isn’t enough.
Keep in mind the longer you leave it the more you need to save. You could though consider saving into an ISA instead while you’re in eduction / not in industry. Same rule applies imo, the earlier the better. The obvious benefit is if you do hit things right, you can obviously access the ISA at any time, where you pension is specifically for later life funds.
Investing in companies yourself via an ISA presumably? This is a good idea if you have some spare cash (but don’t have nothing left for fun), but not in place of a pension imo, you get free money from you’re employer (unless your self employed then you have to give yourself that popup via your business).
ISA + pension is what I do
Definitely, want to start young. I’m acutely aware at 20 that I’m actually only 20-30 years off my decline, maybe 40 at a push, before I can’t do things that I want to do with the same ability I can now
So I am aiming to be in a position where I can retire early.
Yep, that’s the plan. Took out my ISA savings (~5k) to pour into AMC for my recent gamble and paid it off. Downside is I’m 25% through my allowance this year which is a pickle, otherwise I’d consider finishing it off haha
Are you sure? I need to work out at the math but if I assumed a 1.5% average dividend being reinvested into an ETF that grows at 3-5% over a year averaged out for the next 30 years I reckon I would have w salary at the end of it maxing out my ISA every year for near enough 3 decades
That and directing some money towards real estate and renting (maybe even something like half/half short-term letting where the money comes a lot easier quicker and rentals which are more consistent)
I think I could get away without a pension, providing my job pays well (60k+ / year) especially since I plan to have some side revenue from other ventures
At minimum you essentially double your money right off the bat with a pension due to employer contributions, in turn increasing your long term returns even more.
What I mean is that I wouldn’t not contribute to a pension when you can, as no matter what size it is you can use it towards your overall retirement plan. Once you hit your pension age you don’t need to use as much of your isa for example
Keep in mind the tax as well. You get tax back going in, and you can maximise efficiency via a pension by balancing how much you take vs other sources potentially getting tax back going in and paying no tax coming out which has only served to increase your overall wealth in the long term even more
Isn’t a pension like minimum withdrawable at age 55? Probably to be something like 60 by the time I’m eligible if not 65-70. Furthermore, at that point haven’t you missed golden years where the money would actually be a lot nicer? Thought the pension was just to sustain your life as it deteriorated and needed to be a cushion rather than this massive sum to increase your net wealth
Also not sure about how easily it is to draw down abroad, but I get the premise in general
Nice to know that I’m deteriorating now that I’ve taken early retirement. You do write some strange things, @Recchan
sorry to hear that you’re deteriorating
for legal reasons this was a joke
But yeah, I don’t get the point of funds I can’t access for the next 3.5 decades minimum (even more, if the minimum age rises)
Chances are you won’t be dead by 60 and you’ll have another 20 years to fund at a minimum. How do you plan to fund it?
A pension can help maximise that funding, as I said, you get tax back going in unlike an ISA so that’s an extra 20-40%, plus employer contributions which is an extra 100% to the amount you’re investing.