First foray into investing

[Dresirus]

I'm a university student in the UK and I would like to start putting the relatively small amount of money I have to good use. The fact that a new tax year is upon us has spurred me into action. (I would say that I live a reasonably Mustachian lifestyle when at uni, and during the vacations I live with my parents, so my expenditure is reduced dramatically.)

This year I paid into a cash ISA which was earning roughly 3% interest. I haven't quite managed to fill this ISA (~£1000 short). I will need to transfer this into a better paying ISA, as it loses a 1% bonus at the end of the tax year. I have a rather small amount (~£100) a month left from the 'allowance' (can't think of a better term for it) paid to me by my parents. I am taking the full amount of student loans I am entitled to (I am still on the old £3500 a year fees), and I can make some money each year (£600-1000) by doing small bits of part time work.

I would like any advice at all about what I should be doing this year. Should I be looking to put some money into a Vanguard index fund (in the form of an ISA goo.gl/QsHO6), or should I be looking at slightly more riskier options such as p2p lending? Or something completely different? All I really know is that I don't particularly want to put money into a cash ISA which is earning less interest than the rate of inflation.

[daverobev]

I would open an account with one of the online brokers - for example, IWeb Share Dealing.

Then you can set up regular payments in, and regular investments. Buying a stock or ETF this way costs you only 2 pounds a throw.

So each month you auto transfer in 100 pounds, and set your account to buy 100 pounds of VUKE (which is a low-cost FTSE 100 ETF, run by Vanguard).

You can also set dividends to automatically reinvest, though with ETFs you cannot buy fractional shares.

You could try HMCX which tracks the FTSE 250.

Reasons I say these two is that they are UK-based so you don't get currency risk. You could buy VXUS, I think, which is a really good US$ based Vanguard ETF that basically holds everything (except the US) - not sure you have access to NYSE stuff on the UK platforms though. I think you do not, by default.

I mean - ok, so the first question should be 'what is your goal for this money?'. If you want to use it soon then a cash ISA is the only thing to buy. Or perhaps some NS&I interest-rate following stuff - I don't know much about that (as I'm no longer in the UK). But if it's for long term, setting up monthly purchases like the above will take you far. As you get more money to invest you can add investments (Eg, European ETFs, real estate ETFs, and so on...).

[Dresirus]

Thanks a lot for your advice.

I mean - ok, so the first question should be 'what is your goal for this money?'

My goal for the money will be to start building up money for eventual use in early retirement. I am fairly certain that I wont be needing any of the money that I currently wish to save for at least 2 years (the end of my uni course). After that, I'm less certain, however, there is a chance that I would need the money for a post-graduate course. That is rather uncertain at the moment though, as it depends on a number of different factors.