>>9087 >It might be helpful if you could expand upon what issues you specifically have it with it.
When I say "extremely conservative", the advice focuses on building emergency funds, insurance, and then maxing out pension contributions and ISA / LISA accounts. I'm wondering if there are other, higher risk options that might be potentially justifiable at each step? (With the exception of clearing debts, I can see why this needs to be done first.)
It also seems to me that how long it takes to complete each step is going to vary a lot depending on income. I understand that they wanted the flowchart to be generalisable, but this feels like about as much you can say without knowing a person's individual circumstances or risk tolerance.
I would consider myself to be one of those people that doesn't know much about managing money. To make this a bit more personal, I've only ever put my effort into getting a higher salary and budgeting accordingly, anything beyond that is new to me. I'm currently 31 years old, on 42K GBP per year, with a bit over 10K in the bank. No dependants, debts, vehicles. Just a rented flat.
>>9088 I'm still not really sure what you're getting at. Pensions and ISAs are just wrappers to hold investments in rather than the actual investments themselves, so you can take as much risk as you want with them.
Risk also means different things to different people. What kind of high risk are you looking for? Crypto? Memestocks? Leveraging? Forex trading? Venture capital trusts? Other individual shares? Specialist collective funds? There's all sorts.
Proper financial planning is boring and it takes a long time. Is it that you're looking for a get rich quick scheme or something?
>I'm wondering if there are other, higher risk options that might be potentially justifiable at each step?
Not really.
An emergency fund is valuable because falling into debt is expensive and incredibly stressful. Stressed people make bad long-term decisions. A single person with no dependents doesn't need a particularly large emergency fund, but you still want one in case you lose your job, fall ill or get evicted.
Pension schemes are absurdly good value, because they're completely tax-free and your employer will match some or all of your contributions. In many cases, you can double your money overnight just by paying it into your pension.
The same goes for a Lifetime ISA - the government will add a 25% bonus, so it's a total no-brainer if you expect to buy a house at any point.
Your financial circumstances mean that you can move down the flowchart very quickly, but the steps are in that order for a reason and I wouldn't recommend skipping any. The boring stuff in the middle gives you very high returns courtesy of government perks and your employer, so you'd be foolish to leave that money on the table. When you do get to the bottom of the table, you can think more about your appetite for risk when investing in a stocks & shares ISA. Vanguard make this easy, because they offer a range of low-fee funds rated by risk.
>>9089 >Crypto? Memestocks? Leveraging? Forex trading? Venture capital trusts? Other individual shares? Specialist collective funds? There's all sorts.
Right, you've got it exactly, there. There are loads of ways to invest, so what would be the benefit of putting everything into an ISA over these other options? I'm willing to accept that it is the best option, but the flowchart doesn't really make the "why" clear.
Risk, in my case, means I am willing to put more money into things that might see a higher return when I'm younger, but with a chance that I may also lose some of these investments. I have no one to look after but myself.
>Proper financial planning is boring and it takes a long time. Is it that you're looking for a get rich quick scheme or something?
There must be something in-between maxing out an ISA and putting your money into "memestocks", right? I doubt that the flowchart is the only possible sensible approach.
A stocks & shares ISA is just a tax-free wrapper for your investments. You can choose to put that money into memestonks if you want, the ISA just guarantees that you won't have to pay tax on any profits you probably won't make.
>>9091 >There are loads of ways to invest, so what would be the benefit of putting everything into an ISA over these other options?
As I've said, an ISA is simply a way of holding investments. You can hold the likes of memestocks in an ISA, which would be the most tax efficient way of holding them.
>I'm willing to accept that it is the best option, but the flowchart doesn't really make the "why" clear.
Did you look at the Wiki or the guides on the sub? Most people won't outperform the market so a global equity tracker is fine for most people and an ISA is the most tax efficient way of holding it.
Have you thought about why you actually want to take more risk? It sounds like you're trying to run before you can walk and are after instant gratification which isn't really feasible. Do you have any particular goals in life?
>There must be something in-between maxing out an ISA and putting your money into "memestocks", right?
>>9090 >The same goes for a Lifetime ISA - the government will add a 25% bonus, so it's a total no-brainer if you expect to buy a house at any point.
I've looked at these but there are weird limits, aren't there? I have my money and it's mid-five-figures; have I missed the boat on this now? Because I don't think I can just put it all into a Lifetime ISA right now and immediately get the 25% if I need it. Can I?
You can up to £4,000 per tax year into a Lifetime ISA until you're 50. This counts against your annual ISA allowance of £20,000.
You haven't missed the boat, you'll just need to drip-feed your money in. Stick £4,000 in a LISA and put the rest in a Cash or S&S ISA. The tax year ends on the 5th of April, at which point you'll be able to put in another £4,000.
You can only get the bonus after you've had the LISA account for at least 12 months. After that, you get the full bonus on all the money you've paid in as long as you use that money to buy a house. If you decided to buy a house in the second half of next year, you could have up to £15,000 - three yearly allowances of £4,000, plus the 25% bonus.
>>9093 >Have you thought about why you actually want to take more risk? It sounds like you're trying to run before you can walk and are after instant gratification which isn't really feasible. Do you have any particular goals in life?
If I'm honest about my goals, it's more to do with the value I put on my present time than anything. To give a semi-related example: one reason I've tried to reach a higher salary is so that in the future I can cut my hours and still have a "good" income (which I've set in my head as the UK median 30k). I want to have more time to focus on other projects and still know I can lead a comfortable life without selling so much of my time.
For the same reason, I would like to look into making investments that would make larger returns than just staying risk-free in an account somewhere, or even matched returns that I may only see benefit from when I retire. Considering the timing now, when I have no real commitments, it seems that now is a good opportunity to try something high risk if I am ever going to in my life.
Another thing floating around in my head is that I just don't know what to do with money beyond a certain point. This 10k is the most I've ever had in an account, hence why I checked the flowchart. If I continue sitting on it for another year it'll probably more than double. I will certainly use some of it to buy a cheapo car within a year or two, but beyond that it's all long-term thinking.
>>9090 >When you do get to the bottom of the table, you can think more about your appetite for risk when investing in a stocks & shares ISA.
Thank you for this. I can see that there would be several worthwhile steps, but I also thought I'd ask if there were any other possible routes I could take.
>one reason I've tried to reach a higher salary is so that in the future I can cut my hours and still have a "good" income
Good luck with that; not to sound negative but I've found that most places want you around full time or not at all.
All of the jobs that actually allow you to do this are either low-end and basically minimum wage, meaning you can't fulfil the "still have a "good" income" part; or else they're high up jobs where you're indispensable enough to the company that you get to set your own terms; in which case the salary is enough you'd just be able to retire instead after a few years if you planned well enough, but you'd have spent most of your life slaving away in order to get there in the first place.
If you're somewhere between those two extremes, like most of us are, a shorter working week is even more unobtainable than a foot on the property ladder. If there's one policy I'd support any political party offering it, it would be reducing the length of the working week, I know with bone certainty everyone would be more productive, if we all had more time off.
As a single-lad the 3 month emergency fund rule is wrong imo. 12 months just seems irresponsible.
That doesn't mean you shouldn't have a substantial amount of savings but it takes about a week to sell shares in a fund and get the money out of the market. There are certain scenarios where you have to sell at the wrong time but in my example that would be 5k sitting in a savings account that doesn't even beat inflation on the 25%~ chance I sell in a downturn. I have £800 sitting in my bank for an emergency, if I need more than that then I'm a fraudster.
Insurance is just laughable if you're single and rent.
>>9095 >Stick £4,000 in a LISA and put the rest in a Cash or S&S ISA
You can't pay into more than one ISA a year. What he'd do is pay into the LISA and then use a bog standard stock and shares that he'll probably never pay tax on anyway.
>>9097 >a shorter working week is even more unobtainable than a foot on the property ladder
But if you do get your foot on the property ladder and pay off the mortgage then it absolutely is attainable. Old people are loaded and barely touch their money, especially if we're using the standard of life our comparatively low-wage economy promises.
I can't say I've seen anyone over 60 still doing full-time hours even if for our generation it probably means taking some of our pension early. Phased retirement is the new black.
>>9098 >That doesn't mean you shouldn't have a substantial amount of savings but it takes about a week to sell shares in a fund and get the money out of the market. There are certain scenarios where you have to sell at the wrong time but in my example that would be 5k sitting in a savings account that doesn't even beat inflation on the 25%~ chance I sell in a downturn.
The logic is that people are far more likely lose their jobs during a downturn, at which point the markets are likely to have fallen so you're facing a double hit.
My emergency fund isn't that high, but it was useful to have when I had to spend a fair bit on my car before Christmas and not have to worry about making ends meet. For me it's more a case of having enough "fuck you" money so that I could quit my job if I wanted and I wouldn't have to rush into accepting another job to keep the money coming in.
I think people have gone full blown nuts worrying about inflation, though. Most analysis I've seen have said it's going to be a short sharp shock because of short-term supply chain and staffing issues rather than we're going to be facing long-term problems. You've also got to remember that investing may have a higher return, but we're talking about £5k in your example so a return of 7% would be £350; we're talking peanuts for most people here because it's such a small amount, but people get myopic looking at the % returns rather than the bigger picture.
>Insurance is just laughable if you're single and rent.
Income protection isn't a bad idea, certainly if you're young enough to get it cheaply, because a life on benefits would be shit for most people. That said, I don't have it.
>You can't pay into more than one ISA a year. What he'd do is pay into the LISA and then use a bog standard stock and shares that he'll probably never pay tax on anyway.
That's not true. You can pay into different types of ISA in the same tax year, just not more than one of the same type.
I used to have a LISA. Then I bought my first home in London and realised the house has to be less than £500k to get the bonus, which pissed me right off.
So did I. She had the most alluring kind of petit figure, barely scraping five feet and flat chested, but deeply feminine with an arse that could crack walnuts. She had this mischievous grin and a filthy sense of humour that just melted me at a glance. I took her virginity, she took mine. We had the most disgustingly cute nicknames for each other. But it was not to be. She changed. I changed. We grew apart. It couldn't last.
