Where should a 20 year old invest €5k

C

C.R.E.A.M

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Hello,
I joined this group as I am completely lost on anything to do with money really, some how I managed to go from nothing in my bank at the start of the year to a small sum of 5k without even trying mainly because everywhere is closed. But I want to keep this growing.
I am 20 years old I own my own car no debts and very few expenses (rent to the mother, phone bill,petrol). So my question is what would you do if you where 20 again to set yourself up for the future. I know literally nothing about how investing works.
thanks
(Any advice is appreciated)
 
Invest in your own human capital.

Acquire a trade/skill that allows you to earn strong and rising earnings.

By that I mean maybe 50k by age 30 in 2030, and 80k by age 40.
 
I suggest you get a handle on your finances by budgeting so that you can develop a plan, The plan can change, but firstly you need to know what you outgoings in particular are, and set a budget. I You may want a long-term and a short-plan. f you've got 5K (despite the pandemic) you have some competence with money. The budget will tell you where your outgoings are going. i.e. 50 on phone, 100 a week on nights out etc. If you're handy with technology, use a budgeting app. If not, straight old pen and paper. Start with a rough plan. Divide wages by weeks, divvy that out on predictable costs; food, transport (whenever we get back to that), socializing etc. Budget to safe a proportion after fixed outgoings. i.e. save 100 a month/week whatever. You may have many savings objectives - buy a place, travel, car, whatever, but all of these will rely on your plan. It might seem daunting, but make a start - that's probably the hardest bit.

Money management begins with developing good habits. Then plan for the future - I hate to tell you, but the 20's pass quickly! Don't worry about making mistakes - everyone does., but make it your business to know where money goes and to have a plan rather than just coasting along. If you have a career plan, that's good too. The key piece of advice - make a plan.
 
What are your goals?

It might be start a business? If you have a trade then it's sometimes easier to go into business. Taking in cash. Handling tax. Employing people.

It might be purchase a house?

Purchase rental property?

Lots of resources online including YouTube also check out Amazon books, search for personal finance. Purchase the ones you find useful.
 
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moneymakeover said:
What are your goals?

It might be start a business? If you have a trade then it's sometimes easier to go into business. Taking in cash. Handling tax. Employing people.

It might be purchase a house?

Purchase rental property?

Lots of resources online including YouTube also check out Amazon books, search for personal finance. Purchase the ones you find useful.
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My only real goal is to retire as early as I can. I would like to own a house but i at also open to the idea of building a granny flat in my parents house. Is there any resources that is more about investing in Ireland. I’m seeing a lot of American only stuff. Thanks
 
C.R.E.A.M said:
My only real goal is to retire as early as I can. I would like to own a house but i at also open to the idea of building a granny flat in my parents house. Is there any resources that is more about investing in Ireland. I’m seeing a lot of American only stuff. Thanks
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There is a few resources in Ireland, a couple of well written blogs in an Irish context. If you google Financial Independence Retire Early it’s a whole movement of people on that path and it might give you an idea of what you want to aim for. A lot of people look towards the accumulation of wealth as a means of becoming financially independent, the *need* to work a 9-5 job becomes an option not a requirement.
Basic stuff track your expenses so you see where the money goes and then decide if you need to be spending it.

If you’re serious about the granny flat that would be a good starting goal for your savings - how much would you need to help your parents fund this on their property? If you “invest” in this and at a later stage they rent out the flat perhaps you’d share in the income as a return in your investment
 
There are Irish investment advisers eg
Rory Gillen
John Lowe Money Doctor

The idea of the granny flat sounds good if you have the space to build on. You could build something for eg 30k and it might prove a good investment
 
Live below your means, saving the rest. Make your savings like a bill that is paid automatically after every pay packet. As your income increases, increase the savings by at least the same amount. If you keep that discipline throughout life, it won't take long to accumulate money.

It takes a long time to accumulate wealth so don't get distracted by get rich quick videos. For all the people who tell you they bought Tesla before it took off, they probably have loads of losses they the don't tell you about either. Investing in quality companies at good prices is a boring but steady way to make money.


Steven
www.bluewaterfp.ie
 
C.R.E.A.M said:
My only real goal is to retire as early as I can. I would like to own a house but i at also open to the idea of building a granny flat in my parents house. Is there any resources that is more about investing in Ireland. I’m seeing a lot of American only stuff. Thanks
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While the granny flat might sound like a good idea now I think you're a bit young to be committing to something that may not suit your needs in 5/10 years time. I say that as someone who bought a poorly thought out property at a young age and was stuck with it for a number of years. A house or apartment could be sold on whereas I don't think you could sell on a granny flat.
 
Having dealt with numerous tradesmen over the last two years the only advice i can give is absorb every bit of knowledge you can from the older generation. Take pride in your work no matter how big or small the job is and let your results speak for themselves.

If you are anyway savvy with social media setup a page displaying your work. From my experience there are too many people just getting the job done nowadays rather than putting 100% into every job. When you are good you set your own prices and will always have customers.

Don't go broke trying to act rich. Expensive designer clothes and emulating reality TV stars may look cool but most dont have a washer to their name. Live within your means, save a little, learn a lot and never make an enemy of anyone (everyone you meet gives you a chance a chance to network).

If you are going to spend money then invest in yourslef and / or travel to broaden your horizons. You are young and without commitments so whilst planning for your future is prudent you need to have fun also.
 
Hi Cream

Some good life advice so far.

You asked about investing €5k?

The best thing is the simplest, leave it in the bank.

With a bit of risk, you might earn 6%, so you get €300 income. Not worth worrying about.

The only thing you might do is to maybe keep €4k in the bank and put €1k in a stock market investment of some sort. That is more from a learning point of view though and not to make a lot of money on it.

However, I am not sure that the costs of setting up and maintaining an account would be worth it for €1k , or even for €5k.

In the old days, I would have told you maybe buy shares in one good company with the €1k and watch what happens. But I don't think it's possible to buy shares and get share certs any more. So you are stuck with maintenance costs which would probably wipe out any return.

Brendan
 
What Brendan said.
put it in an account that can't be accessed immediately.
Then set up a transfer to that account from your normal account that goes out on the day your wages get paid. (Echoing what SBarret said). That way you don't even miss it, and it's not in your mind as "spending" money.
Throwing in 20€ a week will have another €1,000 in there by the end of the year.

I did that few years ago, transferring the amount I get paid under €100 (e.g. if I got paid €534, I put in the €34, into the company credit union. I never missed the money, and before I knew it I had a few thousand in it, with no call on it.

You're at an age where some big bills will come down the road, e.g. , car, marriage, house, kids. It's great to have the money to pay for these rather than going into debt.
 
C.R.E.A.M said:
My only real goal is to retire as early as I can.
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That should never be a life goal for a 20 year old....What about your entire life between now and retirement??? That is 40-50 years that you have skipped. You are literally just starting out so don't be wishing it all away just yet.

Your short term goal should be to ensure that your apprenticeship is successful and you become a qualified tradesperson. Simple
Secondly, can you specialize within your trade? Increasing your income early in your career goes a long way to building wealth as long as you can maintain a sensible lifestyle and live within your means as @SBarrett already said
Thirdly, what do you want to experience in life? Your trade can open up opportunities to work abroad, experience new cultures/climates, all while earning money.
After that, you may not be thinking of it now but where do you want to live, do you want to be married or have kids. None of this is set in stone but building a good pot of savings will give you opportunities in your late 20's/early 30's to buy a home if you are ready to settle down.

C.R.E.A.M said:
I would like to own a house but i at also open to the idea of building a granny flat in my parents house.
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A bad idea in my opinion. Do your parents even want that? They might be waiting to kick you out at 21 to reclaim your bedroom :D You are far more likely to want to move out/away from your parents in the next few years so a better plan would be to plan for how you could afford renting with friends. How would paying market rent vs paying your current rent impact your savings?

Other than that, create a simple budget and monitor your spending. Figure out how you earned the €5k, was it from a reduction in socializing or was it because you have been working/earning more. When restrictions lift, will you end up spending a lot more? Don't get too obsessed with tracking everything you spend, you need to enjoy your 20's too. And finally, get savvy about what you spend your money on. You can enjoy the same lifestyle but for a lower cost than the average person. A simple example that is probably relevant to you, never buy a locked bill pay phone on 24 month contract. It is hundreds of euros cheaper to buy the same phone unlocked and then go sim only for €10-15/month. There are several things like this that will save you a lot of money without making sacrifices
 
Invest in your self.what I mean by that is perhaps take courses with may open up further earning opportunities in the next 10-30 years.what trade are you learning ?
 
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