Enjoy your achievements as well as your plans. Keep interested in your own career, however humble; it is a real possession in the changing fortunes of time. (Desiderata).

 

My grandson, Jamie, has recently finished his time at University. I struggle to believe that another three years has flown by so quickly.

As you would imagine, he’s familiar with what I do at Saltydog, and has taken an active role in managing his own investments since his early teens. He’s never had a lot of money, but he has saved what he can and been relatively successful in his choice of funds.

He has asked if he could write a short piece about his experiences, so here goes …

 

‘When I was young, £10 felt like a significant amount of money. With £2.50 per week of pocket money, when thinking of the fantastical sums of £50 or £100 I might as well have been Midas.

Although I was not getting much money in today’s terms, when my main thoughts were buying sweets, toys, and the occasional video game, it felt more than enough. I’m 21 now, and although as a student £10 can still be crucial, rent is starting to cost considerably more than a couple of strawberry laces.

To me, this seems like the crux of the issue that stops many young people from investing at an early age. When we have spare money, it seems like too little to do anything with, and as soon as we start earning more, rent and other costs leave you feeling there is never any money going spare.

For young people, much of the writing on investment also does not feel like it applies to us. When investment portfolio owners talk about their investments in the thousands or tens of thousands of pounds, these sums make the £50 or £100 we have spare at the end of the month feel irrelevant. Traditional practices of building up towards large retirement funds seem to be too far away to be relevant when compared to issues of overdue rent, food bills, or a necessary laptop repair.

As a young person, investing in the same way that my parents or my grandparents do doesn’t necessarily work for me, but the key to investing at this age is that it doesn’t have to.

Although you may only have a small amount spare at the end of the month, or the odd bits of cash from a birthday or Christmas, investing this is still important.

It may not be as eye-catching as the mass investments of larger portfolios, but your money will still make the same relative gains, with better performance than a bank savings account. Investing £50 at the end of the month might only seem like a drop in the ocean, but after a couple of years alongside compound interest this can become thousands of pounds and grow even further after that.

I have never been someone to have large amounts of money, and I can count on one hand the number of times that I have had over £1000 in my bank account. However, between putting aside the odd bit of money at payday, and saving money from family gifts, I now have almost £15,000 saved in my ISA.

When I think about the purpose of my ISA, I don’t think of it as being there only to grow, or to fund a pension that only bears fruit in 40 or 50 years. The two main plans I have for my finances in the next two years are home ownership and travel.

 

‘young people should consider investing to support significant opportunities in the short term, that will have financial benefits for decades to come’

 

While we do not immediately have access to the finances that our parents have, there are also unique opportunities that only young people can take advantage of.

For me, this comes in the form of government help-to-buy schemes. By obtaining a 5% deposit for a first-time buyers’ mortgage, £10,000 becomes a loan for a £200,000 house. Not only will the money from my investments continue to grow with the value of the property, but the money that I would otherwise have been paying in rent will instead be building up my own equity.

The other plan for my savings, which is earmarked to see me staying in Jordan for a year to learn Arabic, will similarly reap dividends. On the one hand, this year will be highly enjoyable and allow me to develop key skills in the best possible environment.

However, investing in this as an opportunity will also be reflected in a more competitive CV for job applications, and earlier access to higher-paying positions in my career path.

In a year and a half, I fully expect my ISA account to be empty – and that’s okay. Investing as a young person is not about large amounts of money or security in a distant future.

Instead, use investments to get the best results from what you do have and consider the results of investment in terms of the chance to develop skills and opportunities. Rather than investing only for long term economic development, young people should consider investing to support significant opportunities in the short term, that will have financial benefits for decades to come.

Perhaps you might like to forward this on to any of the young people you know that you think might find it interesting. We can already see signs that people’s career paths will be much more fluid than they used to be, and jobs-for-life, final salary pension schemes, and generous government pensions will become a thing of the past (if they aren’t already). Young people need to be financially aware and capable of building and managing their savings. The sooner they start the better.

 

Best wishes and good luck with your investments.

Douglas.

Founder & Chairman

www.saltydoginvestor.com

 

diy investing

 





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