Saving £250 a month. Have I started off the right way?

Saving £250 a month. Have I started off the right way?

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Discussion

grantley1988

Original Poster:

49 posts

158 months

Friday 8th September 2017
quotequote all
Hi,

New to this part of the forum.

I don't have thousands to save each month but want to start saving more now I'm starting to grow up a little 😂

I've set up a direct debit of £250 a month to be split across 3 investment funds.

I've also bought £500 worth of CPX shares.



Am I doing anything drastically wrong? I will save a little more when I get the hang of things a little and is less daunting.

Thanks

sidicks

25,218 posts

220 months

Friday 8th September 2017
quotequote all
grantley1988 said:
Hi,

New to this part of the forum.

I don't have thousands to save each month but want to start saving more now I'm starting to grow up a little ??

I've set up a direct debit of £250 a month to be split across 3 investment funds.

I've also bought £500 worth of CPX shares.



Am I doing anything drastically wrong? I will save a little more when I get the hang of things a little and is less daunting.

Thanks
Did you do this through an ISA?

grantley1988

Original Poster:

49 posts

158 months

Friday 8th September 2017
quotequote all
Yes.

BoRED S2upid

19,644 posts

239 months

Friday 8th September 2017
quotequote all
Looks as good a way to start as any. Out of interest why are 2 of your funds accumulation and 1 income?

Basil Hume

1,259 posts

251 months

Friday 8th September 2017
quotequote all
I can't advise on the funds you've chosen, but to give you some idea of what things might look like after 10 years...

In March 2007, I opened a stocks and shares ISA with an initial investment. I made regular monthly payments since that time.

The funds chosen have stayed relatively constant over that time, but the basic monthly contribution has stayed the same (thereby "dollar averaging"). I think I've only added a lump sum once, back in 2012.

Through 2007-10, things weren't looking that great. However, over time I've benefited from market uplifts, dividend re-investment and compounding.

As at this time, my valuation is about 70% higher than the cash I've paid in over that time period.

I'm realistic that this could suddenly drop, but as a long-term approach the basic method appears to be working for me.

My aim is to increase my monthly investment and I'm currently debating whether to switch attentions from clearing my mortgage (which I'll clear within 30 months otherwise). Either way, I can see how with continued spending restraint and separate pension contributions that I should be able to "pre-tire" at some stage around 9-13 years from now.

rsbmw

3,464 posts

104 months

Friday 8th September 2017
quotequote all
Take a look at Vanguard Lifestrategy, or the robo platforms, managing your own holdings is a bit of a mugs game IMO - particularly when starting out.

greygoose

8,225 posts

194 months

Friday 8th September 2017
quotequote all
Looks a good start, monthly saving gets the benefits of averaging out the ups and downs of the markets as time goes by. The three funds all seem to invest in big companies so you may want to diversify into a smaller companies fund at some point as these can grow faster at times or look at funds in specific geographical areas (UK, Europe, America, Japan, emerging markets etc) if you wish.

Maxf

8,404 posts

240 months

Friday 8th September 2017
quotequote all
Here's a question for the financial bods...

I have 4 funds which seem to be doing ok and I'm happy with the overall performance in terms of % growth. However, I have decided that my 'end goal' is to have my ISA provide a level of income for me (to top up a pension/moving down to part time etc). At the moment, the total value is growing, but I'm not getting any income as my funds are accumulation.

Would you:

Keep it how it is, let it grow, then sell the funds and buy income funds when I need to?

or

Sell the lot and buy income funds now, reinvesting the income?

I'm 40, so probably have another 10 years until I'll want the income.

Hobo

5,755 posts

245 months

Friday 8th September 2017
quotequote all
My personal opinion would be to split the £250 into more funds, and then diversify.

I invest into 10 funds per month, so more risky than others. Over the past 6 months I am up on all funds, at ranges from 4% to circa 15%.

A previous poster mentioned 70% over last 10 years. All I'd say is if that was my return over such a period, assuming all on accumulation basis, then I would not be happy at all. I'd be aiming for 170% over such a period (10% per annum).

Edited by Hobo on Friday 8th September 19:23

Basil Hume

1,259 posts

251 months

Friday 8th September 2017
quotequote all
Yes, 70% overall is roughly 10% per annum when drip fed monthly over the 10 years.

I realise this would be easier to explain with figures but I'd feel a bit uncomfortable doing so on a public forum.

Edited by Basil Hume on Friday 8th September 19:53

ROSSinHD

821 posts

150 months

Friday 8th September 2017
quotequote all
just out of interest who are you doing this through?

toastyhamster

1,661 posts

95 months

Friday 8th September 2017
quotequote all
Pretty much what I'm doing, paid the mortgage off earlier this year after years of over paying (willy wave), so am dumping extra into pension and some into an ISA wrapper (fiveraday). After a bit of pent up spending is done with this year and I've increased my cash savings to an amount I'm comfortable with I'll increase my monthly into pension and wrapper.

Performance so far hasn't been all that but this is a long term investment and I'll probably add some more robo trading in a year or two. Depressing when I paid off the mortgage thinking I was doing well, only to work out how much I was going to receive from all my pensions if I retire at 67 (or whatever), despite having always had a company pension.

BoRED S2upid

19,644 posts

239 months

Friday 8th September 2017
quotequote all
Hobo said:
My personal opinion would be to split the £250 into more funds, and then diversify.

I invest into 10 funds per month, so more risky than others. Over the past 6 months I am up on all funds, at ranges from 4% to circa 15%.

A previous poster mentioned 70% over last 10 years. All I'd say is if that was my return over such a period, assuming all on accumulation basis, then I would not be happy at all. I'd be aiming for 170% over such a period (10% per annum).

Edited by Hobo on Friday 8th September 19:23
I split ours over 4 funds as I don't have the time to keep an eye on or research 10! I prefer 4 that perform pretty well 10% a year minimum each and leave them alone to accumulate plus a drop feed every month.

JulianPH

9,912 posts

113 months

Saturday 9th September 2017
quotequote all
Maxf said:
Here's a question for the financial bods...

I have 4 funds which seem to be doing ok and I'm happy with the overall performance in terms of % growth. However, I have decided that my 'end goal' is to have my ISA provide a level of income for me (to top up a pension/moving down to part time etc). At the moment, the total value is growing, but I'm not getting any income as my funds are accumulation.

Would you:

Keep it how it is, let it grow, then sell the funds and buy income funds when I need to?

or

Sell the lot and buy income funds now, reinvesting the income?

I'm 40, so probably have another 10 years until I'll want the income.
Keep them in accumulation. As there are in an ISA there is no tax liability (and therefore no tax difference) but some unit trust managers put re-invested income through the bid/offer spread. Jupiter used to make millions a year from this alone.

OP - Looks good to me. Bearing in mind that each of your three funds will invest in a large number of individual stocks I would be concerned about adding any more fund yet. Over diversification can hamper returns and you may already have some overlap between three funds.

grantley1988

Original Poster:

49 posts

158 months

Saturday 9th September 2017
quotequote all
ROSSinHD said:
just out of interest who are you doing this through?
Hargreaves Lansdown

sunil4

197 posts

123 months

Sunday 10th September 2017
quotequote all
Have a look at investment trusts such as Scottish Mortgage and Lindsell Train along with maybe smaller companies such as Marlborough or Old Mutual.

jonny70

1,280 posts

157 months

Monday 11th September 2017
quotequote all
I would put £50 of your monthly contribution into a Uk small caps (small companies fund) ex Liontrust Uk smaller companies . (Slightly higher risk but long term have great returns ).

Stu-nph26

1,984 posts

104 months

Monday 11th September 2017
quotequote all
I do something similar with Hargreaves Lansdown investing each month into a Vangaurd Lifestyle Fund seems quite diversified but quite heavily invested in the US which has worked out well in recent years. Just setup the direct debit and forget about it. make sure it's in you ISA so you get the tax benifits.

oyster

12,577 posts

247 months

Thursday 14th September 2017
quotequote all
toastyhamster said:
Pretty much what I'm doing, paid the mortgage off earlier this year after years of over paying (willy wave), so am dumping extra into pension and some into an ISA wrapper (fiveraday). After a bit of pent up spending is done with this year and I've increased my cash savings to an amount I'm comfortable with I'll increase my monthly into pension and wrapper.

Performance so far hasn't been all that but this is a long term investment and I'll probably add some more robo trading in a year or two. Depressing when I paid off the mortgage thinking I was doing well, only to work out how much I was going to receive from all my pensions if I retire at 67 (or whatever), despite having always had a company pension.
I'm doing the opposite.

Whilst mortgage rates are so low I'm keeping my mortgage payments to the absolute minimum whilst investing in pension and other investments.

I am also trying to build up a small cash pile to offset the mortgage should rates rise quickly and this would enable the month mortgage outgoing to remain the same.

downthepub

1,373 posts

205 months

Thursday 14th September 2017
quotequote all
Earlier this year, after Santander dropped their interest rates, I started to do exactly the same thing to build up a nest egg - £250 a month into HL S&S ISA - after wiping out my entire savings on car. As you do. As we do.

I've been picking mostly accumulation funds and so far so good. Better than being parked in a bank anyway. Admittedly it's not that scientific but look for different types of stocks to diversify between. Also appreciate if things go Pete Tong on the markets it'll take time to recover, in for the long haul.

Appreciate the advice given above, I'll watch this thread (and others in Finance).