Advice on £4k Diversification

[MLNCoins]

First of all I hope this is in the right section so apologies if it isn't. I have had a look through the site to find something similar but as this is a personal circumstance I thought it best to start a new thread.

So a little about myself so you guys can get the full picture first, I aim to buy a house within the next 5 years, and I already have £5k saved for house deposit through a cash lifetime isa (I'm 27), I also have S&S Isa (3.5K) so I want to keep this money separate from that. 

The main attraction of course is that if you deposit money into a lifetime isa you get an additional 25% on top, which would give me and extra £1k, which is fantastic (fully aware of early withdrawal fees and don't aim to withdraw what so ever, I have a 3 month emergency fund else where)

Thing is, I've been doing a lot of research about the volatility of the economy at the moment (Brexit, china/Usa trade war etc) and feel that instead of just ploughing it into the lifetime isa for a house, would it be best to split the pot to preserve the wealth a bit? I already have 15oz of silver and 1 sovereign, and the H&B sovereigns for £224 look tempting. I feel for my age I'm doing quite well but is there anything I'm missing here? I've almost got a mental block about it and just need some outside perspective.

Obviously I have posted on a forum which has a keen interest in PM's, so aware of the advice that might be given already 🤣. Just wanting to give myself the best future possible, for the sake of any future family I may have.

[Norskgeld]

Blimey, for a 27 year old you have certainly got your act together.

You are light years ahead of where I was at that age.

I think others should come to you for advice!!!

Well done.

[Roy]

A good start!

Read through all of this section, lots of good advice, and pay particular attention to @vand's posts.

His attitude is frugal (brutal?!) but I believe it's tough out there for your age group.

Yet, your age is your advantage, you can make mistakes and still have time to recover so your risk tolerance will be different to mine.

Gathering wealth is easy. Spend less than you earn, put away at least 10-20% of your income each month and watch the pot grow.

[Oldun]

Minimum 15% must be put away for your older years. Starting early and staying the course is key.

[Abyss]

Any student loan debt? Advice at this age is pay off debt first, student loans, credit cards, overdrafts cannot start path financial prosperity when saddle with debt. We should next 2-3 years heading into recession and provided still retained employment this is the time when you want to buy house. One of the best moves I did was to buy my residential house new build 2008 because of the recession the property developer incentise buyers added all the extras carpeting, tilling, landscape gardening, all the extra upgrades (fixtures fittings furniture). In 2008 saved 30% value property only needed 70% mortgage offered further discounts on the mortgage rates because loan to value ratio. 2008 last best time to buy property and it will happen again and those who have patience to wait and have financially been prudent to save will be rewarded again.

[Roy]

Indeed! I forgot the basics 👍

Shocking figures there @Abyss. The reward for self-improvement?

I shall remember to thank my doctor for his contribution 😁

[MLNCoins]

Thanks for the positive comments all. Always saving around 15-20% sometimes more depending on the month. I don't have any debt by the way never went to uni. Didn't know what I wanted to do and wasn't prepared to pay £30k+ for something I may or may not use. Thanks for the useful information none the less, I'm here to learn from others! 

[PansPurse]

2 hours ago, Abyss said:

Any student loan debt? Advice at this age is pay off debt first, student loans, credit cards, overdrafts cannot start path financial prosperity when saddle with debt. We should next 2-3 years heading into recession and provided still retained employment this is the time when you want to buy house. One of the best moves I did was to buy my residential house new build 2008 because of the recession the property developer incentise buyers added all the extras carpeting, tilling, landscape gardening, all the extra upgrades (fixtures fittings furniture). In 2008 saved 30% value property only needed 70% mortgage offered further discounts on the mortgage rates because loan to value ratio. 2008 last best time to buy property and it will happen again and those who have patience to wait and have financially been prudent to save will be rewarded again.

Isn't there a missing column here for those between £25,725 and £46,305?

[PansPurse]

15 minutes ago, nee4891 said:

 Always saving around 15-20% sometimes more depending on the month.

Is this including pension or do you factor that separately?

[Abyss]

5 minutes ago, PansPurse said:

Isn't there a missing column here for those between £25,725 and £46,305?

You would think that but no not missing a column, more information available on Martin Lewis website recently updated related to student debt https://www.moneysavingexpert.com/students/repay-post-2012-student-loan/

From what I can tell earning more than £46.5k charged RPI + 3% below threshold then paying RPI. Need to prioritise paying off higher rate of interest debt(s) first.

[MLNCoins]

1 hour ago, PansPurse said:

Is this including pension or do you factor that separately?

That's factored in separately, I only do minimum contributions as I prefer to have access to anything I invest at the moment. I don't have a SIPP, but have looked at transferring other pensions I have from other employers into one.

[PansPurse]

2 minutes ago, nee4891 said:

That's factored in separately, I only do minimum contributions as I prefer to have access to anything I invest at the moment. I don't have a SIPP, but have looked at transferring other pensions I have from other employers into one.

Interesting. I can see what you mean about access but the tax relief is a pretty big bonus to turn down 🤷

[Paul]

7 hours ago, nee4891 said:

First of all I hope this is in the right section so apologies if it isn't. I have had a look through the site to find something similar but as this is a personal circumstance I thought it best to start a new thread.

So a little about myself so you guys can get the full picture first, I aim to buy a house within the next 5 years, and I already have £5k saved for house deposit through a cash lifetime isa (I'm 27), I also have S&S Isa (3.5K) so I want to keep this money separate from that. 

The main attraction of course is that if you deposit money into a lifetime isa you get an additional 25% on top, which would give me and extra £1k, which is fantastic (fully aware of early withdrawal fees and don't aim to withdraw what so ever, I have a 3 month emergency fund else where)

Thing is, I've been doing a lot of research about the volatility of the economy at the moment (Brexit, china/Usa trade war etc) and feel that instead of just ploughing it into the lifetime isa for a house, would it be best to split the pot to preserve the wealth a bit? I already have 15oz of silver and 1 sovereign, and the H&B sovereigns for £224 look tempting. I feel for my age I'm doing quite well but is there anything I'm missing here? I've almost got a mental block about it and just need some outside perspective.

Obviously I have posted on a forum which has a keen interest in PM's, so aware of the advice that might be given already 🤣. Just wanting to give myself the best future possible, for the sake of any future family I may have.

As most will agree here, im a black sheep a lone wolf.  I dont follow the herd. Think for yourself.  School and uni's learn you to be one of the heard another tax payer another useless eater 

Firstly it is very, very rare you will become rich working for someone else unless you make it up the greasy pole to the top CEO etc

Instead, create yourself a mathematical equation that "scales", then work that equation to death while acting, assessing, and adjusting along the way.

Few people understand that all of our actions and career decisions implicitly tie us into an equation.

This equation can be relatively simple or extremely complex.

At the end of the day, it will be your self-directed EQUATION that determines how much wealth you can (or cannot) accumulate.

Equations that scale make their owners rich.

Equations that do not, make their owners slaves to the system of “trading time for money.” ie working for a set wage each week/month

The beauty of this equation is that you can control its basic variable parameters.

But most people DO NOT because most people don’t even realise this equation exists as you are not taught it in school 

If you decide to get a job at McDonalds/Tesco and are paid £10/hour — congratulations, you just created yourself an equation to which you are now bound to:

Monetary Wealth = (rate of pay) x (hours worked)

If you work 37.5 hours, your equation is £10 X 37.5 hrs, which equals £375

If you go to uni and accumulate £50K in debt so you can have the privilege of earning £40K/year, congratulations, that’s your new equation.

Monetary Wealth = (hourly salary) X (years worked)

To complicate the mix, you are then suggested to save your money and give it to Wall Street/Stock Market.

There you get another equation:

Monetary Wealth = Market investments X annual ROI

This mainstream advice is the standard prescription for mediocrity.

And it’s clearly not a method to create monetary success in the short terms but the long term

As you can see, the problem with “trading your time for money” or “Wall-Street” as a conduit to wealth is that the variables are extremely limited and uncontrollable.

You simply cannot work x3,000 hours at McDonalds in one week.

You cannot force McDonalds to pay you £1,000+ per hour.

You cannot ask Wall Street to give you a +4000% return.

There are only so many hours in a day, and years in a life.

And herein lies the lie behind uni: Young people are told to go to uni so they can increase their PER HOUR rate from £10 to, say, £25 or even£30 may be considered a good hourly wage.

Or if they go into more technical fields (STEM stuff) they get away from hourly to annual pay. Now instead of making £50/hour, they make £50,000/year.

The problem STILL remains.

TIME CANNOT BE SCALED.

You cannot work x1000 hours in day.

You cannot live to be x500 years old.

You cannot ask Wall Street to give you a +4000% return in one year.

You cannot ask your employer to give you a raise from £50K/year, to £500K.

Your hands are tied because the equation you’ve given yourself SUCKS.

Instead of trying to scale time (more debt to earn a better education to earn a better paying job under an annual salary regime) start scaling units— units separate from your time.

This means you become a creator of relative "value".

Value ££ is the result of people pleasing or problem solving.

Creators produce products, services, books, information, inventions, it doesn’t matter so as long as:
A) Your creation can eventually become separate from your time.
You can scale your creation to a level that can change your life.
The other metric is relative value.

Sure your blog full of fitness tips my be valuable— but it isn’t relatively valuable because the web is filled with ‘em.

Whatever you create, it must be relatively valuable in the global pool of options.

This doesn’t mean you have to be the next Steve Jobs — it just means to skew value on one or two attributes; faster shipping, improved operation, better logistics, better service, better UI, better this, better that.

Entrepreneurship is about improving, more so than inventing the next hot thing.

So let’s assume you invent a cool new widget that appeals to women who are mothers.

Your equation now becomes:

Wealth = Widget Profit X Widgets Sold.

This is where things change.

Now you can SCALE a part of your equation. There are billions of mothers on the planet. Additionally, you control your widget operations and can fiddle with pricing, sourcing, and other operations integral to your widget.

So if you sell 100,000 widgets at £5 profit each, you just earned £500,000.

If a IG influencer raves about your product in IG and you get a rush of traffic for 1 week, selling +4,000 units, you make £20K+ in week.

Your ceiling for wealth can be influenced by your execution, marketing, and decision-making. You cannot do this under a “time trade” regime.

This is how you create wealth beyond the BS preached in the mainstream (get a job, save your money, invest with Wall Street for 50 years blah blah)

Of course I’m not suggesting this is easy.

The key is to change the equation, change the probability, and change your potential outcomes. Nothing is easy, but neither is getting up at 6AM, fighting traffic for 50 years, and retiring with a gold watch on 50% of your income.

And when you move to a “unit” metric, your markets expand beyond your local city — so what not appeal locally, might appeal globally. 

Here’s my SIMPLIFIED equation for wealth currently. (Actually it’s much larger but I think you get the picture.) The sum is its many parts and always in development.

(bup)(bs1)(bc1) + (bup)(bs1)(bc2) + (bup)(bs1)(bc3) + (bup)(bs1)(bc1) +(bup)(bs1)(bc4) + (bup)(bs1)(bc5) + (bup)(bs1)(bc6) + (bup)(bs1)(bc7) +(bup)(bs1)(bc8) + (bup)(bs1)(bc9) + (bup)(bs1)(bc10) + (bup)(bs1)(bc11) +(roy1)(bs1) + (roy2)(bs1) + (roy3)(bs1) + (roy5)(bs1) + (roy6)(bs1) + (roy7)(bs1) + (roy8)(bs1) + (roy9)(bs1) + (roy10)(bs1) + (roy11)(bs1) + (roy12)(bs1) + (roy2)(bs2) + (roy2)(bs2) + (roy2)(bs2) + (bup)(bs2)(bc1) + (bup)(bs2)(bc3) + (bup)(bs4)(bc2) + (bup)(bs5)(bc2) + (bup)(bs2)(bc6) + (bup)(bs2)(bc2) + (bup)(bs2)(bc2) + (bup)(bs2)(bc10) + (bup)(bs2)(bc2) + (wt)(webconv)(ad1) + (wt)(webconv)(ad2) + (wt)(webconv)(ad3) + (webtraffic)(insconv)(insfee) + (inv1)(roi1) + (inv2)(roi2) + (inv3)(roi3)+(inv4)(roi4) +(inv4)(roi5) + (inv5)(roi4) + (inv5)(roi5) + (inv5)(roi5) + (inv6)(roi6) + (res)(avg-app) + val(biz1)(pe) + val(biz2)(pe) + val(biz3)(pe) + altcoins(value) + altcoins(value) + altcoins(value) + altcoins(value) + btc(value) + eth(value) + …

Most of those variables listed above I can CONTROL and SCALE.

1) Create relative value.

2) Don't chase Money ££,  money/cash is a direct result of being a "People pleaser", a solver peoples pain points and problems.  Money is everywhere and people will gladly throw money in your direction for pleasing them and solving their pain points whoever big or small.

3) Recognize your equation.

4) Work the equation.

5) Act — Assess — Adjust

6) Repeat +

That my friend is how you create monetary wealth QUICKLY

 

[Martlet]

25% is bonus is adding to wealth, unless inflation goes up substantially and/or gold price goes up 25%.  But get some gold as a hedge, though im personally reluctant at the moment waiting for £:$ to reverse. Split spare income into lifetime ISA, savings (for liquid access), and gold/silver, weighted to that lifetime ISA.

[vand]

Thanks @Roy for the vote of confidence!

 

Firstly, regardless of L-ISA/ISA, & PMs, if you are eligible for an employer pension contribution match then you must do whatever you need to get the most they are willing to contribute. This is by far the easiest investment decision that most people have to make.. and even then many are getting it wrong!

Beyond that, there is no real right or wrong because it comes down to personal preference, much more than maths and economic clairvoyance.  Saving for a house deposit and buying stocks/PMs are not and indeed should not be mutually exclusive, and if you are unsure exactly what you want to do then my advice is to do all of them at the same time. You'll figure out which way you want to tilt as you gain more experience and knowledge.

I would also strongly advise to tune out all the chatter about the economy and Trump and Brexit, because it is nothing you can control anyway. Focus on optimizing what you have direct control of; your budgeting, your spending, and your long term career learning and development and you will be fine.

[AuricGoldfinger]

Hi @nee4891. I think doing whatever it takes for you to get on the property ladder is a good shout. I’ve said it many times on the forum that you need to line you own pockets rather than your landlords as soon as possible. (BTW i am a landlord!) sure house prices go up and down and picking your moment is key but remember your own home is something you’ll own for life and once your in the market you’ll only ever be selling and buying into the same market - not really for profit. 

If part of that process is buying H&B sovs @ £224 each - even if you sell them immediately for profit then it’s a good place to start.

Anything you can do as a side hustle then do it, it all adds up! Seems like your covering the obvious but see where you can tighten up in ANY way possible. If you do decide to go into PMs I would only do it as a saving vessel to purchase your first home.

I’m all for diversification etc but you need to start from the ground up with a solid foundation. At 27 (I’m 29) - there’s plenty of time.

[MLNCoins]

@PansPurse I see what you mean and I have thought about it. Might open one with an old work pension and take it from there, at least I have control over what is invested! 

@Paul I know what you are saying, hopefully within the next year my business venture will take off and won't be working for anyone else, these things do take time though! Can I ask, where did you learn all that from? Would be good to know the source so I can add it to my things to read.

@Martlet agree on the £:$ but who knows what going to happen! Thanks for your input!

@vand I've been watching your threads closely and I'm quite a fan myself, some solid knowledge has been gained. Unfortunately they don't match contributions at my work, hence minimum contributions. It was my first question about the pensions When I started working there. This was only 6 months ago though. I always try to "avoid the noise". Again this was just to run it past like minded individuals who may have an insight.

@AuricGoldfinger thanks for the input! I am waiting for the housing market to crash again if I'm honest, it's just too expensive at the moment and I'll hopefully have a sizable chunk when when that time arrives. Going back tobwhat Paul said I have something in the pipeline at the moment so side hustle will start very soon! Also appreciate what you're saying about a solid foundation. Noted.

[Oldun]

10 hours ago, AuricGoldfinger said:

(BTW i am a landlord!) 

Watch out, watch out, there’s a marxist about....hope your properties dont have a garden if Corbyn ever gets in......unlikely I know but if he does, he is touting full on marxist rhetoric.

https://www.politicshome.com/news/uk/political-parties/labour-party/news/104337/labour-could-stop-renters-paying-council-tax

Either way, this dude wants your garden........

[JunkBond]

Third of an acre! 🤨

[Roy]

A progressive tax forced upon the landlord will only lead to 'progressive' increases in the rent.

Fools.

[richatthecroft]

Not here or with any of these crooks: 

https://www.theguardian.com/money/2019/jun/04/neil-woodford-fund-equity-income-fund-withdrawals

https://www.theguardian.com/money/2019/jun/03/neil-woodford-blocks-investors-from-pulling-cash-from-flagship-fund

It came back to me in a flash, just why I stick to Half Sovie's and Libs...

[AuricGoldfinger]

If labour get in we are doomed!

[Tn21]

Being 27 the best advice i would give is to not compare yourself to anyone. You just got to do your thing if that makes sense, what ever that is. 

I believe that every dog has its day and I'm sure yours will come to. If it of interest to you continue to stack strong as being a millennial you can hopefully reap the benefits later on in the PMs market (fingers crossed). 

Life's a gift as well as one heck of a journey.👩‍👩‍👧‍👦

[MLNCoins]

3 hours ago, Tn21 said:

Being 27 the best advice i would give is to not compare yourself to anyone. You just got to do your thing if that makes sense, what ever that is. 

I believe that every dog has its day and I'm sure yours will come to. If it of interest to you continue to stack strong as being a millennial you can hopefully reap the benefits later on in the PMs market (fingers crossed). 

Life's a gift as well as one heck of a journey.👩‍👩‍👧‍👦

Yeah I've never been one to follow the crowd, the whole reason I'm aiming for 5 years is there are things I want to do first before buying a house, just so I don't look back and wonder what if.

When the time comes though, depending on how much of a stack iv got, and the price of PM's, ill look to sell some for said house, maybe all if it means a better mortgage, guess we will see when the time comes.

[AuricGoldfinger]

@nee4891 5 year plans are good, thats what i do and tweak it as i go along usually looking 12 months ahead to achieve my goals within the 5 years