32 years old...investment advice?

[Sissa92]

Morning all!

I turn 32 in a few weeks, and am seeking advice on how best to make my money work for me, not just for retirement but for life events.

Now, my situation is as follows;
1) i am not from a financial background.
2) ive recently started an ISA & Pension accounts with SJP (please dont be too harsh on me, i know that SJP is controversial).
3) on reflection im not convinced SJP is the best place for my money long term. I'm hearing things that are concerning me.
4) we all make decisions we reflect upon and want to alter so this is mine!
5) i want to invest money (perhaps £1k - 1.5k a month) into both a pension pot and also ISA. I want some of my money to still be accessible to me as I've yet to get married (still working on that one!) And to buy our house together.
6) im a contractor and earn near 6 figures. A fair amount of disposable income at the moment, but not always guaranteed.

So, I suppose my question is, what would you suggest for my stage of life? I need to invest in pension, yet still have accessible money.

Any advice appreciated!!

[ukmtk]

Cancel SJP. Consider a SIPP with AJBell.
Relatively low cost but plenty to chose from.

The simplest investment I would recommend newbies is V3AB (I buy it myself).
It is great for monthly savings in a SIPP (has low unit costs).
As is pointed out it is an ESG variant world tracker.
You don't have to worry about dividend reinvestment as it happens automatically (the dividend variant is V3AM).

I'll let others recommend something for your ISA.
You should also consider just pure cash savings (ISA?).

DYOR

[tjh290633]

I concur, ditch SJP. Anywhere else is preferable, but you may find lowest costs in the Halifax variants.

As you are a contractor, SIPP and ISA make sense. The investments in the SIPP are tied up until you reach the permissible age, but the ISA is available any time you need it. Having both cash and share ISAs gives you flexibility, avoiding the need to sell shares if you need cash. How you split your savings between the two is debatable. Probably 50/50 at the outset, but more in favour of shares as the cash element reaches a significant amount .

Investment media gets talked about a lot. Some want an investment which looks after itself, like an IT. Others like to be more active. Personally I would avoid OEICS or UCITS, as they tend to attract higher platform charges. ETFs are mostly foreign domiciled, which can cause tax complications. Hence my preference for ITs or equities.

Hope that helps

TJH

[Urbandreamer]

I also have a relationship with SJP, but concur with the others regarding doing more yourself.

Despite having a relationship with SJP, I have SIPP's and ISA's with A J Bell and II.

Given your age, I'd strongly recommend using both ISA and SIPP. If things go well for the next 25 years the SIPP will provide the better financial returns. However if there are issues that effect your income in that time, or even a need for capital (i.e a house), you will be glad of the ISA.

Nobody starts life knowing anything about anything and I also didn't have a background in finance when I started investing at 28. I'd like to think that I've improved that situation over the last 30+ years. You can do the same.

I didn't start with anything as sensible as an index tracker, but such boring investments do really make sense and are a "nobrainer".

The likes of SJP do provide a valuable service, but you pay for financial advice, NOT investment returns.

Oh, I have a reputation for plugging bitcoin on these boards. If you investigate that, try to keep your investment small and research asset allocation and portfolio theory. As I said, you can improve your knowledge and doing so will pay dividends. You may even find that the traditional 60/40 equity/bonds split works for you (though it's not for me).

[DrFfybes]

3) on reflection im not convinced SJP is the best place for my money long term. I'm hearing things that are concerning me.
4) we all make decisions we reflect upon and want to alter so this is mine!
5) i want to invest money (perhaps £1k - 1.5k a month) into both a pension pot and also ISA. I want some of my money to still be accessible to me as I've yet to get married (still working on that one!) And to buy our house together.
6) im a contractor and earn near 6 figures. A fair amount of disposable income at the moment, but not always guaranteed.

Hi, Welcome to the LemonFool.

Firstly, well done on thinking about things this early.

3) Would those things include the radio ads from a solicitor offering to sue them on your behalf?


4) there are several stages to investment..
a) read the financial pages and pay someone a lot of money to make your decisions
b) realise you are just as capable of making poor choices as they are and ditch the manager
c) realise that by the time it hits the financial pages the professionals have known for a month, that you are still rubbish at deciphering company reports or predicting the economy, and go for Investment Trusts/Funds/ETFs.

Everyone has their preferences of funds, ITs, ETFs. There are pros and cons, but within a tax wrapper they are all treated pretty much of a muchness. The main difference is down to the charging structure of the platform you use. However for regular monthly investments you can buy part units in a fund so invest the exact amount each month, but you can only buy shares in whole units. Not as much of an issue for you as you're making large monthly investments.


5) A mix is sensible. Consider a LISA if you are saving towards a first property - you get the govt top up similar to a SIPP but with the tax benefits of an ISA. Contributions capped at £4k/year to which the Govt adds a free £1k for you. The £4k LISA allowance reduces your normal ISA allowance to £16k, AIUI. You are restricted on what you can use a LISA for if it isn't for your first home.

6) A SIPP is very attractive for the higher rate taxpayer, but access is obviously restricted until age 57 or later. You might find yourself able to retire before you can access it. Do you also have a cash buffer in case things go horribly wrong? Cash can be cash accounts, Premium Bonds (which have tax free returns if you win), or short term Gilts via a general investment account. There are discussions on these elsewhere on these boards.

At your rate of saving you'll soon build up quite a pot. Initially a percentage fee platform will be best (they charge circa 0.25-0.45%) but after a couple of years or so fixed fee platforms will be better and switching can be laborious.
https://monevator.com/compare-uk-cheape ... e-brokers/ is a good tool for comparing costs.
I would avoid the new app based trading platforms, if they go under (and it has happened) then whilst your investments are reingfenced you can lose access to it for a long time whilst the company is sorted out.

Personally I'm with Interactive Investor and Hargreaves Lansdown. This is just in case there is an issue with one or the other and ensures I have access to one or other pot, although in reality it probably just costs me a bit more money. Also they pay you to switch to them about Xmas time, so I just moved an ISA to HL for the rather large rewards.

I find HL's website much better than ii, and in your shoes would open my LISA with HL invested in a ETF or IT. Regular automated monthly investment by direct debit is free, and fees on shares is capped at £45pa. ii's fees start at a fiver a month for an ISA, six quid for the SIPP, but double once you accrue £50k in one or £75k in total. More or less - their fee structure is rather complicated. Again I'm pretty sure regular automated investment is free.

[GoSeigen]

c) realise that by the time it hits the financial pages the professionals have known for a month, that you are still rubbish at deciphering company reports or predicting the economy, and go for Investment Trusts/Funds/ETFs.

If anyone thinks this is what managing investments is about they are sorely mistaken. And buying a tracker is a fashion, not a solution.


GS

[JohnW]

But like wearing a thick overcoat on a cold day, a sensible fashion and part of the solution.

[AndrewInDevon]

You don't need SJP. It's really not that difficult to DIY.

If I were you I'd open an account on a mainstream platform (AJ Bell, Interactive Investor or Hargreaves Lansdown). They all enable you to hold ISA, SIPPs and Investment Accounts (ie non-tax wrapper accounts) and have different charging structure's. This site contains heat maps showing different platform costs....

https://www.theaic.co.uk/invest-engage/availability-on-platforms/costs-at-a-glance

Each platform also has model portfolios or favourite/suggested funds as well as regular articles aimed at novice investors. These give you a great gateway into the investment world because the amount of choice you have can be over whelming.

I'd play safe and park most of my money in a passive global equity tracker fund or an established active global equity fund such as Fundsmith or Alliance Trust while you spend time gaining knowledge and more confident to make your own investment decisions - if you want to be a little more adventurous.

Don't become a day trader, buy and hold! The one thing you have massively in your favour is time.

[AndrewInDevon]

....also use this site, but use it wisely and apply some healthy scepticism. There are a lot of zealots on the Lemon Fool who would put many Islamic fundamentalists to shame!

[Boots]

Buy a copy of Tim Hale's excellent book "Smarter Investing: Simpler Decisions for Better Results". It's not a hard read, and hopefully it will help you to identify the best path forward.

Good luck!

[kempiejon]

Morning all!

I turn 32 in a few weeks, and am seeking advice on how best to make my money work for me, not just for retirement but for life events.

Now, my situation is as follows;
1) i am not from a financial background.
2) ive recently started an ISA & Pension accounts with SJP (please dont be too harsh on me, i know that SJP is controversial).
3) on reflection im not convinced SJP is the best place for my money long term. I'm hearing things that are concerning me.

Can you put yourself in the position you were when you thought SJP was the best decision to make. Do you know why you did that and if you now regret it do you know what has changed? Is it just some commentary in the press or from people you talk to? If that's what you're acting on perhaps some more education is in order. If you were introduced to them or somehow exposed to their sales can you be sure this won't befall you in the future for a more plausible contender?

There's more to investing to picking the right things to invest in. You need to understand the tax implication of various wrappers for sure but you need an idea of yourself, your life style and possible changes. Yes harvest the current tax advantages of ISAs and/or SIPPs and doing so early is probably the best time but at 32 there's that much again in work ahead of you if that's what you fancy.
Are you debt free - that would be a good start. Do you have a partner yet? I see that's an expectation what about little dependants and provisions for them?

4) we all make decisions we reflect upon and want to alter so this is mine!
5) i want to invest money (perhaps £1k - 1.5k a month) into both a pension pot and also ISA. I want some of my money to still be accessible to me as I've yet to get married (still working on that one!) And to buy our house together.
6) im a contractor and earn near 6 figures. A fair amount of disposable income at the moment, but not always guaranteed.

So, I suppose my question is, what would you suggest for my stage of life? I need to invest in pension, yet still have accessible money.

Any advice appreciated!!

Putting away a portion of ones income I learnt as a teenage and saved some of my paper round and then weekend jobs, I'm a natural saver I work on a percentage rather than absolute figures. You've set a figure of £1k per month where did that figure come from? You've said income is erratic so you should think about a chunk of easily accessible cash to tide over down turns. What condition would you be if it were months between contracts? Are your skills specialist and niche and are you staying current, will AI eat your breakfast in the next 5 years? Or some other unknown? I've been made redundant and taken career changes 3 times. Diversifying knowledge, staying current and upskilling, investing in yourself as well as with your money.
While you invest in yourself with work related knowledge picking up some financial, market and investing nous would be time well spent.

Debt free - cards, overdraft, student loan etc, a cash buffer of say 3 months spending in case of down turn, a pot for big inevitable purchases like weddings, houses, cars so you don't have to borrow are a good place to stick the £1.5k before you start protecting your money from tax in ISAs and SIPPS, 'specially as the tax might change by the time you harvest the investments.
Received wisdom is that commerce - stocks and shares - offer better returns than cash but you have to take a risk to get those returns. My income has halved and my capital fallen by 50% in previous downturns, some of my cleaver well researched ideas fell to nought. If your hard invested cash collapsed to a similar extent how would you react? I remember people I know having a mortgage of 150% the value of the house they owned.

I've tried to apply my point of view to your questions and my questions above are for you to ask yourself but I don't care about your answers, I conclude with a final one - do you think this is the best place to get such advice? Good luck I envy your position of youth and earnings. At 32 I was busy having a blast so didn't have a lot of income or assets.

[JohnB]

If you can get salary sacrifice on your pension, its incredibly valuable.

[TUK020]

Lot of good advice here.

Ditch SJP. Fees are exorbitant.

Clear all debt, and establish cash buffer for rainy day.

Read Monevator website page on brokers. Suggestions above worth looking into.
open SIPP, ISA, LISA (either for planning to buy a place, or as an alternative/supplement to pension).

Read Monevator website page on passive investing - select a global tracker ETF, possibly with some Investment Trusts also.

Determine time horizon of investment for each type of account, this should determine risk appetite. E.g SIPP 25yrs+ all equity.
ISA & LISA planning for property purchase? 5 years? Choose a less volatile mix.

Keep plugging away saving, and keep reading up on investment

[LooseCannon101]

A very useful way of thinking about investment returns is 'The Rule of 72' which states that an investment will double in X number of years at a certain average annual percentage, Y. The formula is X multiplied by Y equals 72. The formula is uncannily accurate for returns of 8% or 9%.

Here are some examples -
6% average return, 12 years.
9% average return, 8 years.
12% average return, 6 years.

At age 32, I would put as much as possible in global equities - either through an index tracker or Investment trust which have achieved a total annual return (dividends re-invested) of over 10% (doubling every 7 years) for the past 20 years. £10k invested 20 years ago would now be about £80k. Expect a sharp downturn in prices every few years, and continue to invest come rain or shine. Compound growth will make you rich!

[BullDog]

Hmmm. Good advice galore. And a week later, the OP hasn't been back to comment further?

[Sissa92]

Hmmm. Good advice galore. And a week later, the OP hasn't been back to comment further?

My apologies all for a slow response to all your advice and help. Had a personal issue that took priority but now life returning to normal.

With huge thanks to all for your input. I will reread this thread many times, I am certain!
Once I am ready to, I will educate myself even more and take action.
It's daunting to learn this whole new world but I hope by starting young(ish) I can give myself a strong future.

I wish we were taught this stuff in schools! Alas, it is not to be.

Thanks again all!

[Kantwebefriends]

Find a girl (or boy, as the case may be) who would rather see your money spent on a house than on a FABULOUS wedding.

In fact, finding the right girl is almost certain to be much more important than the ISA/LISA/SIPP/equities/bonds/cash questions.

The other non-investment topic that's financially important is frugality. Don't lash out on frequent changes of expensive new cars. Don't smoke. Don't spend money you don't have to buy things you don't need to impress people you don't like.

[DrFfybes]

Find a girl (or boy, as the case may be) who would rather see your money spent on a house than on a FABULOUS wedding.

In fact, finding the right girl is almost certain to be much more important than the ISA/LISA/SIPP/equities/bonds/cash questions.

The other non-investment topic that's financially important is frugality. Don't lash out on frequent changes of expensive new cars. Don't smoke. Don't spend money you don't have to buy things you don't need to impress people you don't like.

Pretty much sums up me and MrsF.

Find someone frugal, qualified, good job, and ideally born quite late in life to relatively affluent parents, then try and persuade them you're normal

The downside is that when you do get to the point where you have far more than you need, it is very hard to persuade them to spend any of it.