The Benefits of Investing Early #AD
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Now that I have paid off my debt, I have now turned my attention to my finances for the future – I can now use them for positive things that will help me build my wealth and set me up for the future.
I’ve been reading a lot of other blogs about early retirement. It’s fascinating, because over in the US it’s a big thing but over here…it’s not really spoken about. We all assume that we have to work until pension age, or that we will want to, when in fact we have no idea what may happen in the future or if we will even be able to work when we are older.
With everything that is going on in this country and the economy being an unknown state of affairs, I know that I do not want to rely on a pension only for my future – I want to have money saved that grows at a decent amount so that I become wealthier and wealthier each month.
So I don’t only want to build wealth for my pension-age self, but for before that also. In 10 years, 20 years or any time – I may want to get out of the ‘rat race’ and achieve financial independence. After reading so many (SO many!) blogs about early retirement, I can see that they all are investors.
Investing is something that again, is a topic that is not really discussed over here in the UK. Before I entered the personal finance blogging world, I thought the same as a lot of people do – investing is for people who are already rich, and is reserved for the men. But now that I have been doing my research, I know that anyone can start investing.
I think I’ll always have money in savings, but I really want to start investing my money too. There are definitely smart ways of going about it, and it depends on interest rates, the market etc.
A company that I have been looking at is Fidelity. As with all investments, it’s well known that there is a risk with your money, but we are living in times of tiny interest rates on savings accounts. Taking the risk can get you the best returns, and if it is a long term thing, investing is the way forward.
Fidelity offer Stocks and Shares ISAs to invest in but it is simple to transfer any cash ISA into it should you wish.
The reason that this is appealing to me is because you can start with as little as £50 per month. I would like to invest more than that, but I think that’s a great amount to get started with – you don’t need thousands as I previously thought!
The thing that frustrates me the most when it comes to my finances, is that I didn’t start earlier with a positive financial journey.
When I was a teenager, I spent all of my money on going out, clothes etc – the usual. I then started saving and had £3000 when I met my now-husband. We used that money for rent when we moved in together, but we had our daughter veryyyy quickly after being together, and I have had a super low income ever since.
If I had started investing and properly saving as soon as I started earning money, I would have so much now, and I would probably not have gotten into the financial problems that I did have.
I don’t think it’s ever too late to invest – but there’s no denying that the earlier you start, the better. Not just the earlier in life too – but earlier in the year.
I want to start saving in an ISA also, and it’s shown that if you start saving earlier in the tax year, rather than leaving it till the last day, any investment returns have longer to compound.
When looking on Fidelity’s site, I found some statistics that they shared saying that if you invested in a fund that tracked the FTSE All-Share Index at the start of the financial year since 2007, it could now have over £8000 extra in it.
To find the extra cash to invest, I’m going to concentrate on earning extra money on the side to use, through these kind of methods:
Earning extra money has enabled me to pay off my debt quickly, and I want to continue earning more and more money to achieve my financial goals.
There are also ways that you can save money in order to get more money to put into your savings pot. I definitely recommend tracking your spending and creating a budget, so that you can then see where you can cut your expenses.
The food shopping is usually a place where most families find that they could cut back – and still manage to eat the same delicious food.
I recommend potentially switching your supermarket shop – I changed to Lidl and am always amazed at how little I pay for a trolley full of shopping (we spend on average £25 per week for 3 of us which includes meat every day). Could you spend that little on yours?
After creating a budget and writing down all of your expenses, have a go at reducing some other ones. Could you change energy suppliers which could save you hundreds of pounds per year?
Just searching around for cheaper deals can be so worth it, and give you extra money for your future.
I’ve managed to reduce all of our bills by using comparison sites, and by reducing our usage of energy too.
As mentioned here, one of my big financial goals is to save for retirement. The ways that I am going to do this are saving and investing.
The reason that I’m going to both save and invest is just for my own feelings of security.
After being in debt and in a bad place, I don’t want to go there again, and therefore don’t want to put all of my eggs in one basket.
I think saving and investing in ISA’s are a great way to grow money over a long period of time.
Do you save in an ISA? Is this something that you will start doing in order to grow your money?
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Interesting post. I use Fidelity in the US and they are a great company to deal with.
I think your impression of early retirement in the US comes from the numerous early retirement blogs. However, I can assure you that in my day to day life, including people I work with, I am the ONLY one that talks about retiring prior to an old age (generally 55-65 in the US). Everyone else doesn’t understand it or has no expectation to retire early at all.
Good luck with your blog. You have an excellent writing style.
Haha yes, I do read a lot of them! But even so, there aren’t really any early retirement blogs in the UK. Thank you!
I’ve heard so much about Fidelity and Vanguard, but I’m not sure which one is better. My current retirement account is with Vanguard.
And you’re right, I don’t usually hear people talk about retirement in my office. But my colleagues are always wiling to talk about it when I ask them 🙂
Yes. I’ve heard of them both too. Not sure if the latter is available in the UK though
You can access Vanguard funds through various share platforms, Fidelity being one. If you are psrticularly interested in Fidelity, it’s worth looking at Cavendish Online; it’s basically Fidelity on a cheaper platform. One of MoneySavingExpert’s top choices.
It’s never too early to invest, just as it is never too late. I personally use the Fidelity platform for part of my investments and I love it. They have great research tools and recently just decreased their fee per trade. I don’t know too much about the UK but pension plans are almost a thing of the past in the US. Not too many companies offer them (just 401k retirement plans you have to contribute into yourself). Which puts more emphasis on individual investing fueling the fire for the financial freedom blogging scene over here. Thanks for sharing. Looking forward to seeing your progress as you start investing.
That’s really interesting that you’ve used it, glad it’s worked well for you. Here in the UK it’s pension pots only, I wish we had the 401ks etc!
SIPPs (self-invested personal pensions) are pretty much the UK equivalent of 401(k)s.
I’ve noticed there seem to be more female investors in the US too. Or maybe it’s just that we don’t talk about it in the UK so we don’t know who invests and who doesn’t.
I feel a bit like you- I should have started a long time ago at this stuff! But lots of people start later or don’t start at all and sometimes you have to experience certain things before you can be receptive to investing- that’s certainly how I feel.
I think that’s a really good point! I’m definitely open to investing now. I don’t know any other female investors, certainly not in my social circle they don’t
I’m female and I invest! Like you, I came to it late and really should’ve invested all the money in my ISA years before I actually did! But it was only after learning about financial independence and retiring early when we were living in America that we took the plunge and started investing. I agree, the early retirement scene seems pretty non-existent in the UK but myself and my husband are looking to retire in our early 40s and move to the Lake District 🙂
Good luck with your investing journey! It’s full of ups and downs!
Love that! Do you have posts about your early retirement on your blog? Weird that it’s so unheard of over here. We need to change that! 🙂
Lake District, excellent place to live, not giving any hints where I’m based 😉
All us UK’ers on our FIRE journeys, great reading everyone’s blogs and engaging on the FIREUK subreddit
Will have to check it out!
I will definitely check out Reddit – finding other UK FIRE people has been really difficult so far! I’ll get to the Lakes one day – I’ve wanted to live there for SO long.
@Francesca – I don’t have too many early retirement posts yet, I posted a lot about FIRE early on & I did write about our investing strategy if you fancy a read 🙂 http://www.alifelessconventional.com/2017/01/12/investment-strategy/
I would love to – thank you for sharing! 🙂
I just looked at Fidelity’s description of an ISA. It seems like a wonderful vehicle.
It’s great that you can start with 50/mo. But I’d suggest seeing how you feel in six months. If you don’t miss the money you might try increasing the figure.
Good luck!
Thank you, and yes good idea!
Informative post, Francesca.
As someone that is also looking at a Stocks and Shares ISA what interests you about Fidelity over the other investment fund managers out there? If you were to use Fidelity which one of their options for opening the ISA would you go for Pathfinder, Select50 or Full Fund Range?
I’ve heard good things about them, but I’m always looking for various options. Hmm, good question. I’m not sure, as they all have different good points to them. Possibly Pathfinder but I need to do some more reading. What about you?
Like you I think that it is something that I will have to research further and if need be consult an IFA, so long as they offer an initial free consultation.
Yes, good thinking!
We don’t have too many investing options so far in my country, so we’re working on building our side businesses and do some real estate investing in the near future. Other than that, options are pretty limited.
Where do you live Ramona? That sounds like a good idea. What are your side businesses?
Don’t worry about getting a late start, you are plenty young yet and the important thing is that you are on the right path going forward! I don’t use Fidelity but I have heard good things and know people that do. You would be making a good choice there. Best of luck and I look forward to reading more of your future success!
Thank you very much 🙂 do you invest? How are you doing with it?
I do invest through my work 401k, Roth IRA, and a traditional brokerage account. I definitely have more fun picking individual stocks myself but performance wise the edge might go to the work funds. 🙂
Sounds like a great way to do it! I am jealous of what you guys get over there!
Have a look at ‘quietlysaving.co.uk’, a U.K. female personal finance blogger.
Oo thanks, will do! 🙂
Everyone talks about how investing early = more time for compounding. But there’s another benefit that few people mention.
When you’re a young investor, you can afford to make mistakes and learn from those mistakes! If you just start investing in your 30s and already have 2 kids, you can’t really do that.
That’s very true! Oh dear, I have a child and I’m not far off my 30’s!
It’s interesting to learn about personal finance and investing outside of the US. The ISA plans seem similar to IRAs in the US, but your ISA plan has a much higher yearly contribution limit. I would definitely start contributing a dedicated amount every month. After a few months, you will not even miss that money as your expense budgeting will adjust.
It can be tough in the beginning. Mrs. Need2Save and I were married and had two kids by the time we were 26! At which point she stopped working for around 5 years. We always made sure we were contributing to my 401k plan during those years, even though it wasn’t as much as we would have liked. Flash forward 18 years and we have a very healthy savings pot 🙂
I can’t help but think that you have better systems over there to help you max your savings. However, that is no excuse to not save loads! 🙂
I currently have a retirement account through my employer. But my husband and I have been thinking about contributing more to our retirement accounts while aggressively paying off our mortgage. Thank you for sharing this great post!
That sounds like a great idea to me!
Some interesting points, thanks for sharing! I definitely agree with you, that the earlier you start saving the better. I think it will be even tougher for the next generation, so it’s nice to be able to open accounts for my children too. Goodness knows what house prices will be like by the time they are looking to get a property of their own.
You’re right, will be interesting to see how it all is in the future!
Don’t beat yourself up for not investing earlier. One, you can’t change the past, you can only move forward. And two, you still have plenty of time. So you don’t retire at 30. 40 or 45 is still early retirement! And by starting today, you’ll still be way ahead of your peers. Go for it!
Very true – thanks Kimberly!