really excited for the launch of the android app (hopefully it comes out soon), I’m 21 and have wanted to invest for a long time, but the price to buy stocks has always put me off because I don’t have a lot to spend on them, so I was wondering if investing only £50 a month is worth it, and does anyone have any experience with investing a small amount?
VUSA is an ETF that tracks the S&P 500 index, which itself consists of the largest traded companies in the US (companies like Apple, Coca Cola, and 498 others).
It costs about £40/share right now. You could reasonable expect it to, on average, over the long term, grow by 7% per year.
If you buy 1 share a month for a year, and then stop investing, you’d have spent around £480, and then a year later, if things happened to go well, those 12 shares would be worth £514.
So you made about £30 for pressing the “buy” button in an app 12 times.
If you then just leave it there for 10 years, having forgotten about it, it might be worth £944. So that’s £460 for 12 clicks.
Is that worth it? I expect so
Warning: the above should be considered a best case scenario & things aren’t guaranteed to work out quite that well in the future
‘Worth it’ is subjective. I max out my workplace pension (which isn’t that great) and pay a token amount into my SIPP and put the rest of my money elsewhere because I would like to get it before I’m 58 and also in a lump sum.
But yes £50 per month is absolutely fine. The advantage of Freetrade is that at low values like that you aren’t losing out by having to spend so much on commissions. For example a buy and a sell of a share with your £50 would be £30 gone at Hargreaves Lansdown.
Completely agree with you on this one- Pension saving is vital for older age and has great tax advantages, but I would add property investment as well (if possible) in other words diversify your total lifetime investments
Definitely, I’m in the same group as you (albeit your starting much earlier than me!) as I can only afford a small amount right now but I know that the small investments when your younger make more than the large investments when your older.
as he says definitely look into maxing out your work pension if you have one to get some free money first and if you have money left over there is lots to consider when deciding between AVCs and other options depending on your goals and situation, have a look at the below thread which the community helped me out with.
these are all great point and really good insight into some of the longer term saving options, thanks everyone, was also wondering If there is a good ETF that pays out dividends that I should look into?
Funds and trusts mainly, but I do have 10 shares in Convatec (we use a lot of their dressings at work, I keep asking them to increase the order to drive up the share price, no luck yet…)
ETFs - Ishares S&P 500, Japanese Small Cap and MSCI world. MSCI China.
Trusts - patient capital (so red it’s not funny anymore ) Polar Technology and Renewable Infrastructure.
Most aren’t that expensive except Japan and the S&P (which are both red at the moment but they do flirt with green every few weeks) so I’ve only got a couple each of them. Want to get up to 10 of each of the rest before I get more of those. There’s plenty of lower cost ETFs and funds there that allow a good diverse mix.
As counterintuitive as it may seem, being on the red in the short term it’s actually a good thing when investing in broad tracker funds. Why? Because one can buy more for less. Being on the red it’s only bad when one has to sell.
Here’s how I look at it:
Have a £30 monthly budget for
Last month I bought 30 bottles of beer for £1 each
This month beer costs £1.05 per bottle. How can that be better for me since I’m buying and have no plans to sell in the next couple of decades?
For the likes of us with small amounts available for investing pound cost averaging may be a powerful tool, and one can only benefit more from buying at lower than at higher prices. When the time for me to sell comes, then I’ll be sad if price goes down
This is what I have so far: intend to buy small amounts of them all apart from Debenhams.
Any advice appreciated.
Must say I find it fun always wanted to invest but always thought it for those with a lot of money.
Also I plan to have these long term.