Investor Clinic: Help two young teachers who are slumming it to save for their future


#1

Originally published at: https://whichinvestmenttrust.com/investor-clinic-help-two-young-teachers-who-are-slumming-it-to-save-for-their-future/

A young couple who are novice investors need help to plan where they should invest to build up chunk a of money to use for a deposit in several years’ time. Name: Pavan and Maya Your Portfolio: Each has £3,000 in lump sums from savings, and they are willing to save £325 pm to save…


#2

What you need is a change of Government to bring down the prices of houses. Not a Jeremy Corbyn fan at all but the Tories have done nothing on housing during their 8 years in Gov. It has not got better even one jot.

I think we will need to suffer or risk the incompetence of Corbyn because if we don’t this housing crisis will continue.

Sorry state of affairs our country is in what with the lunacy of breaking our most important trade agreement with the EU, the housing mess and the near £2 trillion national debt!


#3

Are you aware of the risks as well as the benefits of investing Pavan and Maya?

You have to be conscious of the fact that stocks can fall as well as rise and although in the long-run they rise it could pan out that when you want to take the money out to buy a house you find the value has fallen, possibly at the same time as house prices have fallen (after we elect a Corbyn Government).

@jamaicabound I agree with the housing mess, and I’m so frustrated by the Tories and worried that they might let a Corbyn Government in. My children can’t afford to buy homes so I’m having to stump up cash to try and help them.

I used to be strongly opposed to building on the greenbelt but now I think we need to just build houses and make the whole mess much more affordable.


#4

Just realised @PavanMaya have a profile on here.


#5

@PavanMaya First, well done for starting early with investing. Hopefully you will be able to carry on, once you have a house, for your retirement too. Nothing can be banked on, especially the Government, so you have to do it yourself, and you have. Second, this is a tricky time in the markets, so paying in regular amounts is very important. This is called Pound Cost Averaging in the trade and is a powerful way to accelerate out of a bear market. I like Investment Trusts, so I would naturally recommend them!

I’m a little unclear on your risk levels you are prepared to take since you start with “as much as we need to take” and later you mention “the money is very important to us”. If you have an idea of how much you need then the growth you need is easy to work out. If you are not sure what prices will be in 8 years (who is) then it’s harder. So, I would suggest you maybe go for it now and then get more defensive as you get nearer the end, say 3 years out or so.

Some trusts to get you off the ground should include, a global mid-range trust like Witan, Caledonia, F&C, and/or Scottish Mortgage. Then some small cap, Rights and Issues, F&C Global Smaller, Chelverton UK Dividend, Baillie Gifford Shin Nippon, Henderson Smaller, JPMorgan Euro Smaller. Others to get a fully diverse account, TR Property, Finsbury Growth & Income, Jupiter Euro Opps, Fidelity Asian Values (I think value may have its day soon), Polar Capital Tech. To name some!

Fees are your real issue when you start out, so try and minimise these as much as possible. Look especially at dealing fees as it may be cheaper to build each trust to say £1-2,000 rather than spread your monthly amounts across 12-15 trusts each month.

You also may want to look at the LISA where you can add £4k p.a. and get £1k from the Government. You can only use this for purchasing a house, or retirement. It has a load of conditions of course but I think it may help you reach your goal. Any excess contributions could go into an ISA or SIPP.

Please keep us updated with your progress.


#6

Great breadth of suggestions there from @james_pigott. Chelverton UK Dividend I’ve never even heard of.

I thought LISA’s had to be in cash savings but maybe I’m wrong.

Like James says though it can be difficult investing regularly affordably @PavanMaya. One way could be to put some of your regular savings through the Baillie Gifford Investment trust Savings scheme. They manage Scottish Mortgage which has a great pass record of growth, and invests in bit technology and biotechnology companies around he world.


#7

@sandradore LISAs can hold stocks and shares, just like an ISA. Chelverton (SDV) has had a little beating recently so offers good value :wink:. Baillie Gifford, class act. Maybe even add to the UK and US growth trusts they have.