Investing at 18

djosullivan98

Hey everyone...I'm looking for some advice on what to invest my money into. I'm 18 years old, have a job and very little expenses so I'm just wondering if anyone had some tips for me investment wise?
I currently have a pension with Irish Life which I pay into monthly and I have put a little money into Linked Finance (P2P) but I'm wondering if anyone has investment tips?

I'm looking to invest about €1000 and then about €100 a month into something...I was thinking the VOO ETF through DeGiro. Would this be a good choice?

Thanks in advance!

irish_investr

Small suggestion to split up the lump sum, by investing €200 per month for the first 10 months?
VOO is a good choice considering your age and capital. Good luck!

topper_harley2

Ensure you have 6 months of expenses before investing. This is emergency fund. Ensure you read all the many threads on here about ETF taxation, and ensure you understand what you are getting into.

djosullivan98

I do have a decent emergency fund already so the money I have to invest is purely "disposable" income...Am I right in thinking that I would pay less tax on US Domiciled ETF's?

But on the other hand I was wondering if, because of how bad the FX rate is with the dollar, would I be better off investing in Euro or UK ETFs?

topper_harley2

djosullivan98 wrote: »

I do have a decent emergency fund already so the money I have to invest is purely "disposable" income...Am I right in thinking that I would pay less tax on US Domiciled ETF's?

But on the other hand I was wondering if, because of how bad the FX rate is with the dollar, would I be better off investing in Euro or UK ETFs?

All this is covered repeatedly on various threads. Briefly, yes US ETFs are better for tax, but introduce their own issues, like estate tax. Canadian ETFs dont have this. Opinions on FX effects are divided. I never really got clarity on that to be honest.

topper_harley2

djosullivan98 wrote: »

I do have a decent emergency fund already so the money I have to invest is purely "disposable" income...Am I right in thinking that I would pay less tax on US Domiciled ETF's?

But on the other hand I was wondering if, because of how bad the FX rate is with the dollar, would I be better off investing in Euro or UK ETFs?

All this is covered repeatedly on a number of threads. Briefly, yes US ETFs are better for tax, but introduce their own issues, like estate tax. Canadian ETFs dont have this estate tax issue.
However, its not just about paying less tax, its the ability to offset losses of ETF A against ETF B. You cant to that with UCIT ETFs. As I said, this is covered already on here, and on askaboutmoney.
e.g
http://www.askaboutmoney.com/threads/the-tax-treatment-of-etfs-for-irish-residents.199443/
http://www.askaboutmoney.com/threads/be-careful-if-you-hold-more-than-60-000-in-us-equities.191697/

Opinions on FX effects are divided. I never really got clarity on that to be honest.

TimeToShine

Investing at 18...Jaysus...

Use the money to go interrailing or something. You'd be mad to leave yourself short in any way in order to put it away.

As above if you have 6 month emergency fund & no debt & a good amount of disposable income then good luck.

ballyharpat

Great idea to invest now. Look into opening a brokerage account-Firstrade are what I use-low fees, easy to use and a small company so I can get a hold of someone whenever I want on the phone as well as access to most international markets. Investing now will make life a lot easier for you even in your 30's and 40's. It will mean that you are ready to take advantage of opportunities in the Stock market as well as the property market. All markets go through cycles, if I were you, I'd pick a few stocks, open a virtual portfolio on yahoo and see how your picks fare out if they were real investments.
Etfs are safe, but will not give you the return of picking a good stock-of course you will not lose as much as picking a bad stock either if the market goes south.
The amount you have is not a lot, so even if you studied the market for 6 months, you would not lose a lot if you left it in cash for the moment, also, I am of the belief that in the next 6-18 months, the market will have a major correction. I like to be ready for these with some cash at hand-there was the dot com in 2000, then the financial crisis in 2008, we are due one.... be prepared to pounce-best of luck!!!

TimeToShine

ballyharpat wrote: »

Great idea to invest now. Look into opening a brokerage account-Firstrade are what I use-low fees, easy to use and a small company so I can get a hold of someone whenever I want on the phone as well as access to most international markets. Investing now will make life a lot easier for you even in your 30's and 40's. It will mean that you are ready to take advantage of opportunities in the Stock market as well as the property market. All markets go through cycles, if I were you, I'd pick a few stocks, open a virtual portfolio on yahoo and see how your picks fare out if they were real investments.
Etfs are safe, but will not give you the return of picking a good stock-of course you will not lose as much as picking a bad stock either if the market goes south.
The amount you have is not a lot, so even if you studied the market for 6 months, you would not lose a lot if you left it in cash for the moment, also, I am of the belief that in the next 6-18 months, the market will have a major correction. I like to be ready for these with some cash at hand-there was the dot com in 2000, then the financial crisis in 2008, we are due one.... be prepared to pounce-best of luck!!!

OP has 1k, not 100k.

mickmac76

TimeToShine wrote: »

OP has 1k, not 100k.

I agree, thats not a lot for investing. That said having a pension at 18 is very good going and shows plenty of foresight. I'd be wary of Linked Finance as well. I have a small amount of money with them but am withdrawing it as the loans are repaid. I suggest you have a look at the Linked Finance thread in this forum for opinions on it. I think ETFs are the way to go for the small investor but maybe wait until you have around 3000 to invest so fees aren't eating too much of your capital and buy some each time you save 3000.

ballyharpat

TimeToShine wrote: »

OP has 1k, not 100k.

And how do you think he is going to get to 100k???

The theory is the same whether it's 1k or 100k

I started with $2500-and used that strategy, and it has worked out very well in around a decade..... Look at investing and compounding interest- and if he is at the start of his life adding €1200 PA, he is looking a nice figure in 10 years, even if after that he added nothing else, just shrewd investing and once he gets past the learning curve.

did you come here to criticise with silly comments, or have you some productive advice to add?

Invest in yourself OP - are you in education or training besides your employment?

TimeToShine

ballyharpat wrote: »

And how do you think he is going to get to 100k???

The theory is the same whether it's 1k or 100k

I started with $2500-and used that strategy, and it has worked out very well in around a decade..... Look at investing and compounding interest- and if he is at the start of his life adding €1200 PA, he is looking a nice figure in 10 years, even if after that he added nothing else, just shrewd investing and once he gets past the learning curve.

did you come here to criticise with silly comments, or have you some productive advice to add?

I am doing the same thing as you, I have all my money in US stocks and it has paid off hugely. I am no fool though, I know that by starting investing circa 2010 the last few years have been extremely generous nearly completely by circumstance.

My point is that if he's 18 with no savings, no emergency fund, and no liquid assets he can use to get himself out of trouble or you know, maybe live life, then it makes absolutely no sense to stick every penny he has to his name in an untouchable ETF. Your advice is even more erratic for a kid - stick it into high risk stocks so if they do go down you can bet he'll panic and take it all out solidifying his losses.

Just my 2c, you are welcome to disagree.

ballyharpat

---

If he had no savings, then it would be a different story, ha has said that he has an emergency fund. Also he has budgeted for extracurricular activities. Many people that are shrewd with their money can live life and still invest. Too many people think-(Im not saying you)- that living life has to involve spending large sums of money, and they go through life spending for the sake of it.

You seem to misunderstand what an ETF is - an ETF can be traded in the exact same way as a stock- even a mutual fund can be traded with ease- The banks have 'funds' that they set up themselves that can remain untouchable or else are charged a penalty for a withdrawal, not so for a Mutual Fund or an ETF.

Regardless of his age-actually, because of his age, I would advise him to look into researching stocks, this would be the best education that he could have regarding his financial future. He can find a technique that works for him, practically all the information we need is at our fingertips to find out anything we want to know about stocks. I didn't learn to sleep at night until I lost 2/3 (80k) of my portfolio in the space of a month, it all came back and more..... that is having faith and belief in the stock market- we all need to learn some way if we are to be consistent in investing-and I'm talking about investing-not trading.

TimeToShine wrote: »

I am doing the same thing as you, I have all my money in US stocks and it has paid off hugely. I am no fool though, I know that by starting investing circa 2010 the last few years have been extremely generous nearly completely by circumstance.

----The law of averages means that tenacity pays off. ----

My point is that if he's 18 with no savings, no emergency fund, and no liquid assets he can use to get himself out of trouble or you know, maybe live life, then it makes absolutely no sense to stick every penny he has to his name in an untouchable ETF. Your advice is even more erratic for a kid - stick it into high risk stocks so if they do go down you can bet he'll panic and take it all out solidifying his losses.


Just my 2c, you are welcome to disagree.