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Biz Help for a Normie?

Anonymous Wed 11 Nov 2020 13:57:21 No.920132 View View Reply Original Report

Quoted By: >>920136 >>920198 >>920303

Hey /wsr/.

I was wondering if you would be able to best advise me. I'm looking to start investing, I recently purchased and sold my first stock and made a tidy £400.

I'm 22, I have no major debts outside of paying up a car. I am currently working an IT job making just over minimum wage in the UK, so considering how easy it was to make £400 even though it was probably luck, I wanted to get some genuine advice because whenever I ask my parents I am more or less told its really risky and they compare it to gambling. Is it? From what I can tell I'm only really losing money if I sell for less than I buy...

Some general advice for starting out with investing would be greatly appreciated, what is the best platforms for investing in the UK and what not especially for someone starting out. I don't have a lot of experience in finance but this is something I definitely want to improve on.

Anonymous

Anonymous Wed 11 Nov 2020 14:20:02 No.920136 Report

Quoted By: >>920198

>>920132
>ask my parents I am more or less told its really risky and they compare it to gambling. Is it?
If you're making those kinds of returns then yes.
>I'm only really losing money if I sell for less than I buy...
That's the traditional way of losing all your money on the stock market, yes.

Have a read of "Rich Dad, Poor Dad", and/or google "financial independence; retire early".

In your situation what you probably want to be doing is listing all your savings and debts in order of interest rate, then using the lowest-return assets to eliminate any debt that has a higher interest rate.

>I'm 22
You probably want to be buying a house, which will eliminate 50-100% of your biggest monthly outgoing.

Anonymous

Anonymous Wed 11 Nov 2020 16:59:08 No.920198 Report

Quoted By: >>920232 >>920742

>>920132
Dunno about UK specific things, but good general source is https://www.investopedia.com/
After you have read education section, you can try to experiment with their stock simulator.
After that, you should have some basic financial common sense so it should be safe to visit >>>/biz/ and /r/wallstreetbets most of it is trash, but sometimes there is a good advice.

>>920136
>Have a read of "Rich Dad, Poor Dad"
No, absolutely meme tier book, he didn't get rich by doing the stuff in the books, he got rich by peddling this shit to millions of idiots.
>In your situation what you probably want to be doing is listing all your savings and debts in order of interest rate, then using the lowest-return assets to eliminate any debt that has a higher interest rate.
>You probably want to be buying a house, which will eliminate 50-100% of your biggest monthly outgoing.
Pray tell my lad, how do you imagine he would afford house on nearly minimum wage?

Anonymous

Anonymous Wed 11 Nov 2020 18:00:37 No.920232 Report

Quoted By: >>920331 >>920747

>>920198
>how do you imagine he would afford house on nearly minimum wage?
Same way everyone else on minimum wage does:
- minimise outgoings
- save up deposit
- use government young-buyer/first-time-buyer scheme
- if necessary use a shared-equity plan to buy half a house

Or, y'know, just keep renting forever and buy the house for your landlord instead. Everyone living in a house is buying a house, just some people are buying it for themself.

Anonymous

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Anonymous Wed 11 Nov 2020 20:21:50 No.920303 Report

Quoted By:

>>920132
DO NOT TRY TO PICK STOCKS. It's literally gambling. Do not do this.

You make "just over minimum wage" and are paying off a car loan. You don't need to start investing. You need to pay off that car loan ASAP and then start saving money. It's a good idea to have ~6 months of expenses in savings minimum. If you don't even have this, you don't have enough money to start seriously investing anyway. You're 22 - you should be focusing on finding a way to make more than "just over minimum wage" and saving money.

Anonymous

Anonymous Wed 11 Nov 2020 21:11:43 No.920331 Report

Quoted By: >>920337

>>920232
>Same way everyone else on minimum wage does:
At least in my country they don't.
They can get money from government to help pay rent, but to buy house/flat they would need mortgage, which is problem because:
a) bank will lend you at most 80% of price of the property
b) bank will not lend you money if the monthly mortgage payment would be more than 30% of your wage

Anonymous

Anonymous Wed 11 Nov 2020 21:23:01 No.920337 Report

Quoted By:

>>920331
Look into a shared equity scheme, where you buy half the house and the bank buys the other half and rents it to you.

When you pay that off, you can buy another half a house on mortgage, and not have to pay rent on the half you already own.

Anonymous

Anonymous Thu 12 Nov 2020 11:50:20 No.920742 Report

Quoted By:

>>920198
These where kinda my thoughts honestly, but genuinely I appreciate the fact that he is genuinely trying to help but currently given my situation it seems very unrealistic buying a house any time soon. Especially considering most prominent investors will say, start investing as soon as possible.

Anonymous

Anonymous Thu 12 Nov 2020 12:00:42 No.920747 Report

Quoted By: >>920759

>>920232
Lets say I minimize outgoings and save up for a deposit. My current major outgoings are paying rent and paying my car. Lets chalk that up to a round £700 give or take.

£700 pounds of pure raw savings and lets say I bump it up and don't purchase any luxuries, eat cheap foods, drink only water or milk and don't run into any financial troubles at all. No car break downs or any other misc bills that just come with life. Lets just say £1,000 every month and £200 to live. I make just slightly more than that so I'd be maybe £400 on living.

I buy a house at £100,000 and get something semi decent. It would still take me two full years of working a shitty job just to put down a 20% deposit.

I could go on a job hunt but with COVID and the current state of the job market today, I'm either going to be low-balled for whatever work or beaten out by grads or apprentices due to my age and experience bracket as they are cheaper labor due to government support...

Anonymous

Anonymous Thu 12 Nov 2020 12:42:34 No.920759 Report

Quoted By: >>920790

>>920747
>It would still take me two full years of working a shitty job just to put down a 20% deposit.
Oh noes. TWO YEARS? Holy shit that's like a lifetime. Two years is not just normal, two years is quick. Two years is fucking nothing.

Now let's run the rest of the math: a 25-year mortgage at 3% (which is achievable) means £34,000 in interest, which means your real-terms outgoings
go from £~400 on rent to £114 on mortgage interest. That's huge. £266 per month is going to buying a house, true, but it's not *outgoing*: before each mortgage payment you owned £266 of money, and afterwards you own £266 of house. By buying a £100,000 house on a 25-year, 3% mortgage, you are effectively being handed a £3,000 annual pay raise.

Anonymous

Anonymous Thu 12 Nov 2020 14:17:35 No.920790 Report

Quoted By: >>920799

>>920759
2 years isn't a lot generally speaking but what your basically telling me to do is put something like approximately 80% of my wage aside for just so I can purchase a house over a 25 year period. Is this really the best financial advice? I'm not trying to be a smart arse or anything, owing a house is a generally going put me in the plus but is this really the best financial/investing advice for someone in my age group?

Grind like fuck until I can lay down a deposit on house of likely and start paying up...

Anonymous

Anonymous Thu 12 Nov 2020 14:28:03 No.920799 Report

Quoted By:

>>920790
>Is this really the best financial advice?
Speak to a financial adviser, but it involves paying £154k to get an asset worth £100k and avoid paying £120k in rent, for a return of 42% over the period, or >250% over the next fifty years, if you assume you're going to live that long and need a house.

Obviously the faster you can repay, the better the return. If you take a twelve-year mortgage (or one that has low penalties for early repayment and repay in 12 years), that drops your interest payments by two thirds, and triples your ROI. After only fourteen years, you'll be 36 and never paying rent again.

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