Advice for 22 year old

Larkinage

Hi Folks,

Here comes another thread looking for advice so please bare with me.

Basically I'm 22, recently finished college and started working full time earning a decent enough salary.

I have a credit union loan of 2000 that I'm paying back at 200 a month. It's a recent loan so I still have a few months left on it. Other than that I just have the usual bills, car insurance, rent etc.

I've worked out that I can afford to save €500 every month and still live comfortably. I don't want to just fire it into the credit union or a savings account and earn little to no interest.

I am interested in the possibility of buying shares. I understand the basics of it but there seems to be so much information to comprehend on the subject that it seems very daunting. Would anyone have any advice for a young person attempting to get involved in buying shares ?

I know that the first suggestion from most will be to start a pension. I know it's very good advice and something I should definitley look into soon. Would anyone have any suggestion as where to start ? How aggressively should a 22 year old be saving for a pension ?

Finally, I should mention, I will hope to get a mortgage eventually, the way things are now I suppose I it'll be five years before I'd be taken seriously by a bank so I suppose that's a medium term plan. I'm also hoping to start my own business down the line, again maybe 5 years.

So essentially I'm looking for advice on how I should go about saving my money in order to build up a good nest egg by the time my 30s roll around and I start to settle down. Apologies for the long post btw, I wasn't sure how to condense it much more.

Thanks in advance.


Edit: I had considered contacting Zurich or Irish Life or one of those and trying to organise to speak to a financial advisor but obviously these people would be looking to sell their own product. Would anyone know the best way of getting in touch with knowledgeable proffesionals who will give impartial advice about this sort of thing ?

grazinggreen

This is just my own quick opinion and what I've done as I'm in a similar position to yourself.

I'd build up a minimum of 6 months living expenses in case of an emergency, keep this in a place that you can access funds in relatively quickly/easily. Its no good having all your savings in a relatively illiquid investment.

Max out your pension contributions. Your employer should have a pension scheme available to you. This is extremely tax efficient and your employer will likely match your contributions or better.

If your'e fixed on buying a house in 5 years Id deposit the rest into a savings account, interest rates are poor at the moment but shop around. Your returns won't be great but you'll be relatively safer to turns in the global economy.

If you weren't as set in accessing this money what I would do is invest in passive index funds. S&P500 etc. through a broker such as DeGiro. After that you can branch into other areas of investment such as Gold/Cryptocurrencies etc. but if you do remember to do your due diligence and research as you get into more volatile markets.

Thats just my own two cents and I'd be interested to hear any other opinions.

Larkinage

Larkinage wrote: »

...............

I've worked out that I can afford to save €500 every month and still live comfortably. I don't want to just fire it into the credit union or a savings account and earn little to no interest. ...................

Finally, I should mention, I will hope to get a mortgage eventually, the way things are now I suppose I it'll be five years before I'd be taken seriously by a bank so I suppose that's a medium term plan.................

€500/month over 5 years will have you with €30k, more or less the minimum you'll need to go house hunting so that's what you should focus on.

I'd certainly not put you off throwing 5% of your gross salary at a pension but realistically dabbling in shares etc with €500/month when you want to buy a house in 5 years time isn't wise.

Open a Degiro account maybe, throw €1000 into it, dabble a bit maybe but just save your €500/month so you'll have the €20k+ in 4/5 years time.

Also, enjoy life, don't go without the odd holiday, city break, weekend on the tear etc etc

deathtocaptcha

My advice would be to build up cash in a savings account. Don't invest it, yet.

The reason is we're due a massive correction and if it doesn't happen within the next year or so we'll have broken history / beaten all odds.

Therefore I'd bet on a crash by waiting on the sidelines with cash and invest everything in S&P500 when it drops 30%+ from all time high and people are coming on here asking if they should sell their position now or risk suffering losses.

If you don't fancy that 'gamble', then I'd wait for a 5%+ pullback because we haven't had one in over a year, then start investing monthly if it becomes clear that's not enough to spook the market and we keep pushing upward.

Francie Barrett

Larkinage wrote: »

I am interested in the possibility of buying shares. I understand the basics of it but there seems to be so much information to comprehend on the subject that it seems very daunting. Would anyone have any advice for a young person attempting to get involved in buying shares ?

To buy shares in individual companies, you need to be able to have some sort of knowledge of accounting. I learned myself the hard way, but I have seen the below book recommended in many places.

https://www.amazon.co.uk/Accounts-Demystified-Astonishingly-Simple-Accounting/dp/0273744704

If this is too much hassle, then you shouldn't invest in shares. You can however consider investing in index funds instead (broad stock market indexes). It is pretty easy to drip feed money into Degiro and start buying.

gavmcg92

A lot of great advice here already.

I would start by saying that at your age a pension is so important. I was in a similar position to you a few years ago and had my parents sit me down and give me the same talk. The amount of people in their early to late 50s who are kicking themselves for not putting money away in a pension at your age is huge. The State pension is also no laughing matter. Hard to live on 12-13k a year.

I'm not saying put away the full 500 euro a month in your pension but I would recommend you having a chat with someone in your work about the company scheme. You may have to be there for 6+ months to join but it is well worth it. Your employer may contribute to your scheme or match your contributions up to a certain point (5-6%). If they don't have a company scheme then they must legally offer to set up a PRSA for you.

http://www.pensionsauthority.ie/en/PRSA_Providers/PRSAs/
http://www.citizensinformation.ie/en/money_and_tax/personal_finance/pensions/personal_retirement_savings_accounts.html

Out of the 500 euro you expect to save, I would recommend that you put away 150/200 euro into your scheme. You will get tax relief on this up to 15% of your net earnings.

http://www.pensionsauthority.ie/en/LifeCycle/Tax/Tax_relief_on_contributions/

If you find you're getting no where with work then take a look around online, talk to friends, family and ask them who they use for a financial adviser/broker. Shop around as there are some pretty piss pour offers out there. (At the end of the day the broker needs to get paid a commission and so you will find that most offers will involve a 1.25% fee for your scheme with a 5 year early encashment charge).

The rest of the 500 euro I would stick in an easy access savings account. You should think about getting 3-6 months of an emergency fund together just in case you need money quickly. Then I would look at investing.

CIP4

Kind of in a similar position to yourself op. I finished college last year and started working straight away now I'm 23. I started a pension through work last year I put in 5% and they put in 5% which I feel is enough for the minute. I would say it's important for you to start one but don't go too mad lumping huge amounts of money into it for the moment as your priority at the minute is to save money for a deposit similar to what I am currently doing.

I opened a degiro account a few months ago and have read a good few books on buying shares and investing just because it's an area I have an interest in the aim for me is over the next few months I'll build up my shares portfolio to a couple of thousand which I know is small but it will do for the point of learning and if I make a couple of hundredth here and there all the better.

The majority of my money is going into savings accounts I have 3; an instant access, regular saver account and then a credit union savings account, the aim is in 3 years time I would have a decent deposit for a house and a bit of a cushion.

But there is a balance too no point saving every cent you have at the expense of having fun. But at the same time I'd hate to be 30 with not a cent to my name renting a house looking back on all the money I threw away.

bmwguy

The way I do it is I figure out how much I can save each month

1/3 goes into pension

1/3 goes into a medium term savings plan which actually invests in same fund as my
pension
Both are doing brilliantly. Got my annual report last week and the funds earned 15.9% in 12 months. Average is around 8/9% since I started
1/3 Just goes into rainy day account for when I need it

gavmcg92

bmwguy wrote: »

The way I do it is I figure out how much I can save each month

1/3 goes into pension

1/3 goes into a medium term savings plan which actually invests in same fund as my
pension
Both are doing brilliantly. Got my annual report last week and the funds earned 15.9% in 12 months. Average is around 8/9% since I started  
1/3 Just goes into rainy day account for when I need it

Do you mind me asking who you have your savings account with?

EverythingGood

Larkinage wrote: »

Hi Folks,

Here comes another thread looking for advice so please bare with me.

Basically I'm 22, recently finished college and started working full time earning a decent enough salary.

I have a credit union loan of 2000 that I'm paying back at 200 a month. It's a recent loan so I still have a few months left on it. Other than that I just have the usual bills, car insurance, rent etc.

I've worked out that I can afford to save €500 every month and still live comfortably. I don't want to just fire it into the credit union or a savings account and earn little to no interest.

I am interested in the possibility of buying shares. I understand the basics of it but there seems to be so much information to comprehend on the subject that it seems very daunting. Would anyone have any advice for a young person attempting to get involved in buying shares ?

I know that the first suggestion from most will be to start a pension. I know it's very good advice and something I should definitley look into soon. Would anyone have any suggestion as where to start ? How aggressively should a 22 year old be saving for a pension ?

Finally, I should mention, I will hope to get a mortgage eventually, the way things are now I suppose I it'll be five years before I'd be taken seriously by a bank so I suppose that's a medium term plan. I'm also hoping to start my own business down the line, again maybe 5 years.

So essentially I'm looking for advice on how I should go about saving my money in order to build up a good nest egg by the time my 30s roll around and I start to settle down. Apologies for the long post btw, I wasn't sure how to condense it much more.

Thanks in advance.


Edit: I had considered contacting Zurich or Irish Life or one of those and trying to organise to speak to a financial advisor but obviously these people would be looking to sell their own product. Would anyone know the best way of getting in touch with knowledgeable proffesionals who will give impartial advice about this sort of thing ?

Does your company offer a share save scheme? An opportunity to buy shares at a preferential price? Many do now. I've invested €250 a month for past 5 years in my options. Perfomring really well. And can't lose, cos they'll give you back your basic investment if shares go down, upon request.

LimeFruitGum

I bought the Money Doctor book a couple of years ago and found it great in terms of explaining finance in an easy straightforward manner.

What I would add here is to keep a sharp eye on changing interest rates on your various current & deposit accounts, especially for the mortgage nest egg.
Don't hesitate to switch if they cut the interest rate on your account.