Looking for financial advice

[learningfromscratch]

Hello, I’m hoping someone might be able to help me.

We’ve never really talked much about finances in my family. Pretty sure my parents don’t have shares or investments. They own their house outright and put a bit into savings, but that’s about it. Just to give you an idea of how clueless I am! Some of my friends have all sorts of stocks and isas and things, and money is something they've grown up with. I feel like I'm being left behind as I don't have any inheritance or knowledge to work with.

Dad has always encouraged me to save 50% of my income (after essentials), which has been a good habit to get into. But I’m wondering if there’s more I could be doing? I’d really appreciate it if you could share your experiences and advice. I feel like I have so much to learn, and it’s not something I’ve grown up with much knowledge about.

Here’s what I am already doing :

• Regularly save into an account with the best interest rate I can find (I have shopped around to avoid being stuck with a lower rate, which I guess then happens every year? Do you close the old accounts?)
• Have just started investing into a stocks and shares ISA. Only £25 a month but it's a start.
• Pay into a SIPP, again not much right now but trying to start good habits.

I don’t have a big pot, but I’m hoping to make sensible decisions and grow it while I’ve got very few responsibilities and outgoings. Appreciate any advice! Thanks.

I didn’t mean to discourage you! You’re 19. You’re doing amazing! The emergency fund is also savings! You just want it a bit more accessible than money you want to use for retirement.

Also remember That flow chart is also relevant for people much older than you so needs to cover all possibilities and give you a good view of what is best to do first. Eg You don’t need to have 12 months of outgoing. It says 3-12 as eg someone who is paying their mortgage and works in a difficult/unsecure area needs more than someone living at home/mortgage free with a very reliable job. So see what makes sense for you there. It’s not a bible but a guide.
I’m cheering you on in your financial journey from here!

@Parapapapa that makes so much more sense! Thank you

HL is a good investment platform. Their charges are competitive (this is important!) and they have a lot of useful information about investing. Vanguard is another provider with a VAST portfolio of low-cost funds.

Other points of interest:

• learn about compound interest - VERY important.
• if your employer matches pension contributions, throw every spare penny at it.
• managed funds rarely outperform trackers.
• always check the fees and charges!
• Vanguard offer a huge variety of funds and investment trusts, and their fees tend to be the lowest.
• Investment Trusts often trade at a discount and some of the old established ones are a great LONG-term investment - e.g. Foreign & Colonial, Finsbury Growth & Income, Mercantile etc.
• diversify! Spread your risk - UK, Europe and US mostly, plus maybe a Global Tracker....... but reserve Emerging Markets, India, China, Biotechnology etc for the far-ahead future.

Good luck and keep saving, learning and investing!

It's basically just saving a little bit every month for a big expense you know will come at some point. So you know Christmas is happening in 12 months, it's way easier to save £30 a month and then have a pot to spend next December than try and find £360 out of next November's pay cheque. Makes things much less stressful!

https://www.moneysavingexpert.com/savings/lifetime-isas/

if you not already have one the 25% gain is brilliant

The Meaningful Money podcast is very good at explaining things. They had a series last year that goes the financial flow chart in detail

https://meaningfulmoney.tv/2023/05/17/finance-os-intro/

Don't worry about having a long way to go. It's a plan for life and you're 19.

You're already streets ahead of many of your peers who often spend all their money on non essentials like car finance, takeaways and personal grooming.

Well done for wanting to learn about this, and for making a start.

I wonder if you have heard about child trust funds? You sound an example of what they were originally designed to help with - ensuring all young people had a small investment as a basis for learning about longer term financial matters, and to provide a pot to start adult life with. Unfortunately as with so many issues that need longer-term planning, political cycles are too short and these were stopped before even the first recipients reached secondary school I think, so the phase of linking financial education to "and you all have a fund" never got started.

You are in the age group that all had one (assuming you were born in the UK) - if your parents didn't actively open it, a small amount of money was deposited into one on your behalf. If you search for child trust fund on this site, others have explained how to track it down if you don't have details. Once you find it, you can hopefully move it into an ISA to join the investments you have just started, or put it somewhere else as you choose.

I too would reiterate "invest in yourself" as particularly valuable at your age. It sounds like you may have tried further education and stepped back for the time being - nothing wrong with that at all. But do follow your interests, and if there are courses that you can do through your work take any opportunities that come your way. If you see jobs advertised that make you think, I'd like to do that - look at the detailed job requirements and research any qualifications that are listed, and how you would obtain them. That ought to be an effective way of finding courses that are of genuine value to employers.

I strongly believe that the best time to do university level study is when there is something you really know you want to learn and understand more about - and there are multiple routes towards that when you are a little older if you decide you are ready to pursue something that is important to you.

Very best wishes for your journey over the next few years!

You are getting good advice here OP. I just wanted to congratulate you on getting to grips with this at such a young age.

You have a great attitude towards your finances and this alone will help you in the future.

Learning how to make good financial decisions is so important but not always prioritised at your stage in life.

Keep researching and keep doing what you are doing and you will be fine.

OP you’ve had really good advice and it’s great you’re thinking about this so young. I was clueless at your age and for a lot longer as I also didn’t grow up with money and no one has ever helped me with this stuff.

I did focus on my career in my twenties which has stood me in good stead so I’d agree with that - invest in yourself.

After that my tips are:

• (Once you’re in this situation) pay as much as you can into your pension to get the max employer contributions (free money) and do it by salary sacrifice if you can.
• Focus on building 3-6 months emergency savings in an easy access account (cash)
• Then split the rest between short and long term savings as pps have said - short term earmarked for things like holidays and Christmas, long term in a stocks and shares ISA invested in a tracker fund. Don’t withdraw money from your ISA if you can help it!

Good luck!

Thinking about this at 19 is fantastic.
For yourself my advice is when you get a job put money into the company pension scheme to at least the amount that maximises the employer contribution.

Then look at savings accounts that pay a high interest and a cash ISA to build up an emergency fund.

Then invest in S&S ISA (or look at LISA's, if that works for you). You don't need to pick the stocks and shares yourself, you can let the finance company do the picking you just pick the level of risk you are comfortable with. The risk is normally based on the pwrcent placed in equities (i.e. shares) which have a bigger upturn potential, but come with the risks of bad returns as well, balanced against less risky investments that offer a lower return e.g. government debt, the return on which would be less than a good performing stock market, but very safe as it is extremely rare for a default by a government.
With S&S ISA's you need to be prepared to let the money grow for a few years (at least 5, better to keep it going throughout your life) so ideally this should be money that you don't need in the short term.

Easy access Isa emergency fund.
Stocks and shares Isa for your savings. I use Vanguard/Money Farm.
Pension contributions as your employer will match and tax efficient.
That's all you need.

Educate yourself on other block chain technologies for future development. Check out Robert Breedlove 'what is money podcast'

Go down the rabbit hole of how politics, central banking and inflation significantly affects us all. Really try and understand it, mind blowing.

Go down the rabbit hole of how politics, central banking and inflation significantly affects us all

To add to this, don't pay too much attention to short term fluctuations in the value of investments that you don't need to spend in the next few years.

The absolute worst thing you can do is see the value fall, panic, and withdraw money from the investment because that means that you have lost money (crystallise the loss, to use the industry term).

Leave it alone and over time it should grow faster than cash based savings. In fact, if there's a dip in the value of your funds and you can afford it, this is the time to buy, not sell. It should be viewed as a 10/20/50% off sale and a time to buy.

You are brilliant OP.

Going for well-paid jobs, saving and investing are absolutely for everyone, regardless of their background.

Like many PPs I taught myself from websites, podcasts etc.

This book was mentioned on a Meaningful Money podcast and it's amazing (I got a cheap copy from Vinted):

www.waterstones.com/book/the-simple-path-to-wealth/jl-collins/mr-money-mustache/9781737724100?gad_source=1&gclid=Cj0KCQiA3sq6BhD2ARIsAJ8MRwVjizJ6d4I7aQAfukeiluv2QgEIygYlKgjMVy-i40TGwkHEBfn4eooaAhDhEALw_wcB

It's got an American focus but it tells you how anyone can become wealthy through very simple investing from a young age.

You too will be wealthy by middle-age OP if you follow the advice in this book. It has been life-changing for me and I'm a lot older than you, so you have a huge advantage!

Well done and all the best.

Some good stuff here. I’d also recommend the following for advice on learning more about investing…

https://www.bankeronwheels.com/category/start-investing/