Author Topic: Help Confused Pre Pubescent Moustachian From the UK  (Read 1697 times)

marine1983

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Help Confused Pre Pubescent Moustachian From the UK
« on: February 26, 2017, 06:22:44 AM »
Hi,

Listening to Tim Ferris about Mr money moustache has hit a chord about what we need to do with our money. We are at a cross roads on what to do with our money and investments. We have  young children and currently going through the process of selling our house. I'm 33 and my partner is 37 she is currently a stay at home mum. I work in the IT sector and a decent wage as a contractor to maximise my take home.

From this sale we would have around 100k. We have no idea on what to do with this amount. We are from UK so we dont have the IRS or 401k's. Is there any one on here that could help me out on translating these to a UK equivalent?

I have looked into the Vanguard accounts and i'm grateful to see that you are able to open an account from the UK. I'm a little confused/concerned that you need to open an account with a minimum of 100k. Is this correct? The products listed are overwhelming, do we go for accumulation or income etc? Any help on deciphering what we need would be most helpful.

We are thinking to use 20k of the money to put down a deposit on another house leaving the rest for investment. I have used the calculators but still do not fully understand them. Are they these same as basic compound interest calcs?

These are the start of my questions and i'm hoping to bounce ideas and start a discussion.


« Last Edit: February 26, 2017, 01:52:30 PM by marine1983 »

former player

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Re: Help Confused Pre Pubescent Moustachian
« Reply #1 on: February 26, 2017, 06:54:16 AM »
Hi, and welcome to the forums.

Two useful UK sites on financial issues are

http://www.moneysavingexpert.com/
http://monevator.com/
Which? also does financial info but you need to pay a subscription (there should be a cheap introductory deal which you could then cancel).

I'm in no way a UK investing expert.  But -

The UK equivalent of the IRS (I think you meant IRA) is an ISA.  You put after-tax money into this, but capital gains and income are free.  ISAs are either cash ISAs or stocks and shares ISAs.  You can put about 14k into one this tax year and 20k into one next tax year.  You  going through an ISA provider, who will be a bank, building society or other financial institution - check their charges and the funds they offer before signing up - the sites above will do comparisons for you.  You will be able to find Vanguard funds being offered by various ISA providers.

The equivalent of a 401k for you as an independent contractor is probably a SIPP (self-invested pension).  Much the same applies: you need a provider and to make decisions on investments.  The money that goes into this is income tax free, the money that comes out is subject to income tax.  The advantages of this are that you get the tax-free investment increases on tax free money while it is invested, and you may be taking pension out when your income is lower and therefore your income tax rates are lower.

You are right that if you invest directly with Vanguard in the UK you need a minimum of 100k.  That is probably not for you, unless you are already maxing out your tax-advantaged options through a stocks and shares (ie you could put 34k of your 100k into an ISA within the next few weeks, and a lot or all of the rest into a SIPP - although you would need to check that amount against your earnings to see how much of it could be income tax free this tax year and next).

Investing in stocks and shares is a "buy and hold" operation: if you are expecting to need the money in the next year or two, for instance to get back into the housing market, you should find the best cash investment you can.  Remember that the UK government guarantees only the first 85k of your savings in any one institution, so it might pay you to split it between two different institutions - although a lump sum of 100k might get you a higher interest rate.

PJ

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Re: Help Confused Pre Pubescent Moustachian
« Reply #2 on: February 26, 2017, 12:36:09 PM »
Hi,

Just wanted to say that I'm pretty sure there's a UK section in the Meet-Ups and Social Events section of the forum, though you may have to search for it a bit. 

Also, maybe edit your title to add "in the UK," so that other forum members will know to check out your thread.  Sorry, I don't know the answers to your specific questions - but welcome!

marine1983

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Re: Help Confused Pre Pubescent Moustachian From the UK
« Reply #3 on: February 26, 2017, 02:09:13 PM »
Thanks for all the links I shall be digesting those over the week. I have an ISA already through the use of the money box app on my andriod phone. Its the first time I have really thought about making my money work. I have credit card debt which needs to be paid off. I have also started to listen to the audible book rich dad poor dad. It pretty much sums up my thoughts on how the world encourages you to feed into the system and mindset of earn more get in debt more.

I have looked into the SIP just recently, i'm thinking perhaps I could fund one of these through my LTD company. I guess speaking to my accountants would help me answer the question.

We could split the 80k into ISA's and max those out for our allowances.

jade

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Re: Help Confused Pre Pubescent Moustachian From the UK
« Reply #4 on: February 27, 2017, 09:54:29 AM »
Hiya,

I'm from the UK too and fairly new around here.

After some advice here we invested in vanguard (life strategy 60 in our case) via a stocks and shared ISA at Charles Stanley direct Platform where you don't need the 100 k min. We decided on accumulation rather than income as we're looking to grow our stache right now. It depends what your aim is. As mentioned, monevator has everything you need, there is an  article about platforms, charges etc. depending on your needs.

It may be worth doing a case study to focus in on your goals and the card debts you mentioned.

All the best!

marine1983

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Re: Help Confused Pre Pubescent Moustachian From the UK
« Reply #5 on: February 28, 2017, 12:31:21 AM »
Hi Jade,

I'm still trying to get my partner on board fully. I'm struggling with the figures at the moment as I think that will show the potential of this.

I'm thinking of using this calculator http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php Though i'm not sure if that is the right one for showing very top level potential.

I have used the ones on the forum but i'm struggling to understand what the numbers mean. I already have a stocks and shares ISA though its through the money box app so I have no control on what it invests in. I have looked at the fidelity broker but have read nothing but bad reviews about it.

My debts are just the credit which I'm moving around on 0% credit balance transfer until its cleared so that its ongoing. Would you recommend your broker platform?

jade

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Re: Help Confused Pre Pubescent Moustachian From the UK
« Reply #6 on: February 28, 2017, 03:23:34 AM »
Hi again,

I'm pretty new to all this too but will do my best to help if I can :) What are you trying to calculate? How much your money could grow over time?  Try http://networthify.com/calculator/earlyretirement - it's the simplest I have found and you can tweak it to get various outcomes. I put in after tax income. There are others like firecalc but this might be a good starting point.

When we laid out our case study here, the fund I mentioned and then CSD and Hargreaves lansdown were recommended for us (but a lot of people said particularly CSD for beginners as the website is user friendly which I agree with). We've had good experiences so far and they have very helpful staff.

When I came here I also kept reading about the importance of keeping fees low. I think you might need to think about how and where you'll be investing to find the right way for you. I don't know anything about money box but I guess it would be worth checking out the fees in comparison to other platforms and also seeing if how it's invested is the way you want to keep going and comparing to other types of investing. As we were planning on doing regular trades (i.e. a direct debit every month and the odd top up) CSD worked for us and had the fund we were recommended here for our needs also. Some platforms charge per trade and some differently - the best platform will depend on what you are investing. Check out http://monevator.com/find-the-best-online-broker/ for more details.

As former player said though, if you are expecting you will need the money in the next year or so (e.g. buying a new house) the best cash investment you can find would be better than S & S.

My husband was very good with money when we met and I wasn't really to be honest. He convinced me to pay off our mortgage early (we did it 2 years ago, in 8 years) and I've gradually changed my money habits over time, as I've seen the benefits (particularly working part time). Sometimes he has to tell me to stop talking about mmm now! There's also post's here about getting your other half on board. For me, having a tangible reason to spend less (i.e. gaining more time) has helped a lot. I am sure you will work it out together in a way that works for you. Hopefully the calculator above might show you the potential you are looking for.

You sound like you're doing all the right things! I like many here, read through all the mmm articles and that has helped me a lot.

If I can help further let me know.

« Last Edit: February 28, 2017, 03:34:26 AM by jade »

Stag

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Re: Help Confused Pre Pubescent Moustachian From the UK
« Reply #7 on: February 28, 2017, 02:37:57 PM »
Hello!

Another UK-based noob here. Thought I'd chip in as nobody has asked the obvious question: Instead of investing in stocks & shares, why not just put down a bigger house deposit?

The lower the Loan-To-Value ratio, the better the interest rate you'll get from the bank / building society. Seems like the 'sensible' (albeit boring) option to me.

Stag
« Last Edit: February 28, 2017, 02:39:46 PM by Stag »