If you were just starting out

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    If you were just starting out

    Just interested in how to advise a 20 year old who is just starting out in the real world. They have left school and got an average full time job and can still live at the parents rent free for as long as they like.
    What would your first financial aim be? Would all your savings go into a deposit for property one? Would you buy a residence or investmentt first? Would you pay into a pension or buy some shares?
    ​​​​​​Or would you invest in education to aim for a high paid job?
    thoughts appreciated!

    #2
    My advice to any 20 year old would be to have as good a time as possible and not worry about investments or planning.
    Spend time experiencing as many different things as possible.
    Travel.

    The best investment is your own home (but if you're happy living with your parents, it has less value).
    But there's no point being self-sufficient or even rich in your middle age and then deciding you want a life.

    The chances of life working out as you plan or expect is, in my experience, zero.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Originally posted by jpkeates View Post
      My advice to any 20 year old would be to have as good a time as possible and not worry about investments or planning.
      Spend time experiencing as many different things as possible.
      Travel.

      The best investment is your own home (but if you're happy living with your parents, it has less value).
      But there's no point being self-sufficient or even rich in your middle age and then deciding you want a life.

      The chances of life working out as you plan or expect is, in my experience, zero.
      Amazing advice.

      You're a kid (although you won't think you are).... enjoy your life! I didn't buy my first property until I was in my 30's.
      Be responsible with your money of course, but go and enjoy yourself as life goes very fast.

      The best times of my life were between 24 and 30. I'm glad I didn't have any adult responsibilities.

      Comment


        #4
        Living at home with no financial responsibilities gives you the most disposable income you are ever likely to have! Enjoy themselves certainly, but start saving for the future too. If their employer offers a pension scheme - which it should do - join it. Tax breaks & employers contribution makes this a no-brainer and the sooner you start the longer for the money to grow. Then save a little every month, preferably in a stock market investment in an ISA so that when you want to buy a car / buy a house / get married / travel around the world you have a little nest egg already. Its amazing how quickly you can build up a deposit if you are living at home, so use this time to get ahead of yourself so when the time comes you have more options. Money doesn't buy you happiness - it buys you choices!

        Comment


          #5
          I'd say half and half - save up some money for a deposit and make the most of not having to pay the majority of a wage into rent/bills/tax etc, but at the same time spend some time and money enjoying life before moving out and having those "adult" commitments. I'm only 28 now, but I don't think I properly appreciated the years of free rent, free food and not having to worry about bills and things. Plus trying to save for a deposit whilst renting isn't ideal

          Comment


            #6
            A lot of talk of enjoying yourself, I am sure you all had a really good time and then had to work until 65.....not my idea of a good time. Be fanatical about saving, make yourself financially independent as quickly as you can, he could easily do this by 30 years old (As I did). Then you have the next 50 years to have a good time and REALLY enjoy life. I am not saying do not have friends or good times, of course you should do that but always do it with an eye on the money and your ultimate goal which is to have enough money to not work if you do not have to, that is my idea of fun.

            Regards investments - Peer to peer sites, saving accounts, very small bit in BTC whilst you save for investment property number 1. I am yet to meet a single person who is a self made rich man who has told me "I wish I did not make all of this money and just went out and had fun". They no once you have made it the fun never stops

            Comment


              #7
              I became financially independent of my parents at 18 and saved hard to put deposit on first house at age 23 - a repo with no central heating or double glazing. I continued saving hard throughout my 20s and 30s. Budgeting and living within that budget is a lost art form which needs to be rediscovered. 6 years after graduating from uni, I also put myself through a distance MA which gave me access to higher paid jobs. Haven't been in debt (including mortgages) since I was 35.

              My one luxury throughout this time was travel. However, I not only travelled on a shoestring but lived and worked in a number of countries too. Living overseas is a complete eye-opener. You'll never see your own country in the same light again. I have loved every minute of the travel my savings afforded me.

              By far the best decision I ever made financially was not to have kids. We're more than happy with the 12 nephews/nieces we've got. We'll be taking early retirement later this year and that simply wouldn't be possible with kids at all. Neither of us is 50 yet but we planned towards early retirement proactively because there is so much more we want to do than sit in offices.

              In terms of general life advice: travel as widely as possible, read as widely as possible and become proficient in a foreign language and a musical instrument.

              Comment


                #8
                Property does not always go up.

                If I were starting now I'd probably avoid BTL.

                Good luck anyway.
                I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                Comment


                  #9
                  When I started I was going to work on a scooter and spending most of what I earned. But as my salary went up I started saving for a car, then a pension, then a deposit for a house.
                  I bought my first flat for £65k in 1989 and lost £25k on it which put me off investing in property for a long time. Only after I lost my job in 2013 with no real prospect of getting anything comparable did I go into BTL.

                  Comment


                    #10
                    Originally posted by theartfullodger View Post
                    Property does not always go up.

                    If I were starting now I'd probably avoid BTL.

                    Good luck anyway.
                    I am not sure about this one. For the last 400 years property has always went up. There have been ups and downs but there has never been a consistent fall in property for a sustained period of time

                    Comment


                      #11
                      Originally posted by hech123 View Post

                      I am not sure about this one. For the last 400 years property has always went up. There have been ups and downs but there has never been a consistent fall in property for a sustained period of time
                      Um. There is the small matter of inflation and currency devaluation. There has never been a consistent fall in the price of a pair of shoes either.

                      Comment


                        #12
                        Some old houses ( especially those with outside toilet at back of house ) become empty and no one wants to be living there, get vandalised with windows and entrance door boarded up. This causes the property value to fall and has a knock-on effect for the rest of houses in the street and surrounding area. Eventually the area is condemned by local council and the house value has fallen to Nil.

                        But some old houses in London Area which could be bought for less than £10K about 50 years ago , have been modernised and now sell for £1 Mil and over, if located near to tube station.

                        So you have to buy property in the best location because location matters.

                        Comment


                          #13
                          Originally posted by AndrewDod View Post

                          Um. There is the small matter of inflation and currency devaluation. There has never been a consistent fall in the price of a pair of shoes either.
                          Andrew - There has been currency devaluation and inflation for 2000 years, it is really not new. I recently spent my holiday reading about the Mississippi Scheme in 1684 set up by a British man in France to create bonds/paper money. There are many such stories when you look back through time. Inflation in the Roman Empire from Emperor Nero......... just another one.

                          The key is how to profit from the way things actually are. If you study economic history you will see many things actually do not change very much.

                          Inflation/currency manipulations/QE/Forward guidance/low rates etc..... They do not matter but must be understood. Inflation is a landlords best friend as although it eats away your spending power it also eats away debt. Imagine buying a house for 1000 pounds many years ago and you now look at it and the rent is 1000 pounds a month. Who cares about the ups and downs in the currency as you can now pay off your mortgage with one months rent, the inflation has eaten away the debt

                          Comment


                            #14
                            Originally posted by hech123 View Post
                            Inflation/currency manipulations/QE/Forward guidance/low rates etc..... They do not matter but must be understood. Inflation is a landlords best friend as although it eats away your spending power it also eats away debt. Imagine buying a house for 1000 pounds many years ago and you now look at it and the rent is 1000 pounds a month. Who cares about the ups and downs in the currency as you can now pay off your mortgage with one months rent, the inflation has eaten away the debt
                            That kind of argument makes no sense at all when you do the maths.

                            It is like saying "I bought a box of chocolates in 1919 for £1 which I borrowed - which was a hell of a big price back then. I put them in a drawer for 100 years and opened them in 2019. Basically I got them for free because I can now earn £1 in 1 minute".

                            There are all sorts of reasons it makes no sense - but I won't bother to enumerate them since they are so evident.

                            Comment


                              #15
                              Interesting thread with some interesting comments. I would say it’s personal.

                              IMO the person needs to sit down and (try to) understand their wants / needs from the short, medium and long term, accounting for their risk profile and personal skill set.

                              One size doesnt fit all and what worked or didn’t work for anyone else on here doesn’t reflext the outcome for this young person.

                              Comment

                              Latest Activity

                              Collapse

                              • Overpay which mortgage?
                                Peter42
                                Hi All. We have a BTL interest only mortgage @ 3.88% on rental
                                We also have a interest only mortgage on our residental house @ 2.05%
                                If miraculously we have money to overpay , which should we choose?
                                I thought 3.88% as higher interest , wife says 2.05% as its our residence and leave...
                                23-05-2019, 14:27 PM
                              • Reply to Overpay which mortgage?
                                JK0
                                CGT is charged on what you get for a house versus what you paid for it. Whether you have a mortgage to pay off or not is immaterial.
                                23-05-2019, 16:12 PM
                              • Reply to Overpay which mortgage?
                                Peter42
                                Ok thanks. We thought overpaying on the rental increases the profit ie more CGT
                                23-05-2019, 15:26 PM
                              • Reply to Overpay which mortgage?
                                JK0
                                I don't think your mortgage has any bearing on CGT.

                                Even taking 40% tax relief off 3.88% is more than 2.05%, so I'd say the BTL is the one to overpay.
                                23-05-2019, 14:33 PM
                              • Workplace Pensions
                                mojo_scotland
                                Going off on a slight tangent here.

                                My workplace auto-enrolment pension now has me contributing £150 per month. My employer matches this.

                                My statement reads, in today’s money...

                                At 65 years old (I’m 36 now) I may receive.

                                11k tax free. ...
                                21-05-2019, 09:07 AM
                              • Reply to Workplace Pensions
                                leaseholder64
                                The ones I've always seem assume no further contribution, but the OP seemed to suggest that the scheme has only just started, and, given the figures used for these estimates have gone down a lot from when I was first in a money purchase scheme, I think a £44k pension pot in present day terms couldn't...
                                22-05-2019, 10:36 AM
                              • Reply to Workplace Pensions
                                Welshie
                                I believe your pension statement is based on a calculation of what your pension fund is worth today and inferring no further contributions made. So if you stopped paying in to your pension fund, this is what your fund could potentially be worth at 65.

                                Each year you contribute more, this...
                                22-05-2019, 09:50 AM
                              • Reply to Workplace Pensions
                                alice123
                                its not as bad as mine your better off than me -
                                my workplace pension 53pence a month and im 6 years off retirement i think ill get about 50 pound a year so im going to have to work beyond retirement doing on line work and stuff like leaflet distribution but id be happy with the 11,000 a year...
                                21-05-2019, 14:50 PM
                              • Reply to Workplace Pensions
                                jpkeates
                                I'm a little bothered by the low figures.

                                If the "tax free" amount is meant to reflect the position of today (ie. you can take out 25% tax free), it would mean your pension fund would be £44k when you are 65.
                                Which means that the fund must have lost more than half its value...
                                21-05-2019, 14:24 PM
                              • Reply to Workplace Pensions
                                OneSmallStep
                                Hi,

                                The monthly return does appear 'low'. However, I put as much into my pension as possible each year to bring my income into a lower tax bracket.

                                Think about how much it is actually costing you.

                                For £300 contribution each month it is only costing you £120 (assume...
                                21-05-2019, 14:08 PM
                              Working...
                              X