How to invest?

[bubblebabble]

Hi there, I'd love for some advice here.

I'm almost 40, earning what I think is a good salary - over 100k after bonus, and after paying bills etc I have around £3k left.

I'm from a poor background so have never had any help with money. I have no idea how to invest and grow my wealth.

Could really use some advice pls. I've looked up starting an investment portfolio through my bank HSBC - is that a good way to start?

I've read that it's not always best to hire a financial consultant but I'm not sure what I should do for myself.

Any advice greatly appreciated. My family can't help me with this and I don't have friends who are savvy with money so I don't know what to do and who to turn to for advice.

Thank you.

I've read that it's not always best to hire a financial consultant but I'm not sure what I should do for myself.
You sound like a good candidate for an independant financial adviser, note independant not linked to a bank.
If you are earning 100k there are a lot of things you could be doing to invest for short and long term, pensions and beneficial tax wise.
Where do you put your spare £3k a month now?
Also, there is an Investments board which might be a better fit.

Agee an indépendant financial advisor would be a good start. Do you know anyone who uses one? You could do with one who comes with a good recommendation. Failing that, approach several and pick the one you like best. x

Thank you, to be honest I just save the money in my bank account. I don't know what else to do but very much appreciate your advice I will look into this.
Unfortunately I don't know any one who can recommend me an independent financial advisor.
I'm not from a well off family. I grew up watching my dad get into a lot of debt and I don't want to be like that so trying to be as smart as I can possibly be with my money :)

Thank you xx I will scour the internet for one. Do you know how an independent financial advisor differs from investing through a bank?

Join the meaningful money facebook page , they also have podcasts and YouTube . You'll learn more and get some really sound advice .

Seconding this. The basics aren’t hard to learn, you just need to read and absorb as much information as you can. You don’t necessarily need an IFA.

Do you pay as much as possible into your pension?

If that’s sorted, then you can take out a S&S ISA, with someone like Nutmeg or similar where they choose the stocks for you. Start like this, then you can invest more actively as you learn if it’s something you’re interested in.

Do you own a house? What are your financial or life goals for the future - early retirement, loads of travel etc?

Do you pay into a workplace pension? Mine do a sliding scale where if I pay in 8% they pay in 13% so maximise that.

If your 40 or under you can open a lifetime Isa (Lisa) and pay £4K per year and the gov top up an additional £1k. You can pay in till you are 50 but can't access till 60 without losing the 25%. That's my bridge to retire while not getting a state pension.

After that look at your mortgage and maybe pay 1/2 of your disposable cash off that.

Then the rest of your 20k Isa allowance pay into that. Once you've built up a pot I'd suggest a financial adviser.

https://www.reddit.com/r/UKPersonalFinance/

Another good place to start is the Reddit personal finance U.K. there’s a good flow chart for what to do with your money first, and lots of extra info.

Thank you, I have a pension where I pay in 8%.

I do not have an Isa, so that will be my first step.

You don't need to pay a financial advisor. Just buy tracker funds in a low cost S&S ISA.

Look at Meaningful Money and listen to the podcasts or watch the videos to learn more

How long have you been contributing 8%? General ‘rule of thumb’ for pension contributions is half your age that you started. So, if you started at age 20, contribute 10% every year. If you started at 30, contribute 15% per year. Starting age 40, 20%, and so on. You get to count your employer’s contributions in this, so if you started paying in at 30, and need to get to 15%, then as long as your employer is paying 7%, and you’re paying 8%, you’re good. At £100K paying into a pension is THE most savvy place to put your cash because of tax relief and tax rates. So if you can, I’d up your pension contributions as 8% sounds low to me in your 40s.

Here’s the very useful flowchart

Vanguard research needed-this is a good forum
https://www.bogleheads.org/

If I was earning as much as you I'd be chucking loads in my pension too as that's a 40% tax saving.

Have you got a house and if not would you be considered a first time buyer? I think you can set up a LISA before you're 40 and use that towards a deposit. Good luck OP x

Really easy to read book from Alvin Hall, he also had a TV show, covers everything you need to know step by step.

alvinhall.com/books-5

The monevator website is a really good uk website with lots of info about how to start investing, trackers or active investing, how to deal with market ups and downs, pension contributions or into an ISA. Some articles are too specialist for me, but it has a lot of great intro articles like the ones I've just listed which explains the whys and wherefores of different options.

It's not my website! Just one I find really interesting

And have a look at the teenager wants to invest small amounts thread in money matters, lots of good advice on there.

OP, you sound savvy enough to live off £2k/mth with net of about £5k - nice.
Personally I'd focus on keeping your living expenses at this level and look at 5 simple things.

1. Get max into your pension. Allowance has moved up to £60k per year in 2023/24. See if you can make AVCs through your employer. If not set up a secondary private pension and claim tax relief.

2. use your £20k isa allowance each year. If you're not confident with stocks and share, there are cash ISAs out there offering 4% pa guaranteed to lock away for 2 years.

3. over pay your mortgage if you have one. Great way to reduce over all interest, pay it off quicker and have the security of a roof over your head.

4. Get about £15k into instant access savings so you still have money for unexpected bills or treats. JPM Chase are paying 3.1% which at that amount should keep the interest earned below £500 pa - that's your annual allowance before it's taxed as income.

5. I doubt you've got interest on credit / stores cards.. but if you have get rid of it. It's a shocking way to leak money from your personal finances, it's wastage lining the pockets of others.

Thank you, this is so useful I will look into this.
I've not owned a credit card for years - watched what the debt did to my family and I swore to myself I'd never let that happen to me.
The only debt I have is my mortgage - appreciate the advice to overpay, I'll do this :)

Thank you, yes I own a house. Was very conservative and bought a small place. I'll have to increase my pension - it's not something I had thought about