

Ask HN: How do you invest your savings? - ivp

Graduate here.<p>Just started my full-time job and from what it seems I will be able to save about £800-1000 a month. I have some savings already (not much, £7-8k) and want to find some good investment options, but I am obviously not very experienced in that. My question is - what do you think is the best way to employ this money (the savings + the monthly chunk I can save) in order to get a decent return without taking too much risk. Obviously, I am not even thinking I can live off that but I think it&#x27;s good to start thinking about those sort of things as early as possible and having just graduated I don&#x27;t think there&#x27;s a better time :)<p>How do you go about investing your savings? Any answers will be greatly appreciated.
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Jtsummers
I did a few things when I started working.

First, I'm very conservative and got hired on during the 2008/2009 financial
melt down. I saved up enough cash to survive for a year (I was still used to
college spending so this didn't actually take long to accumulate). I put this
cash into 4 CDs, each is a one year CD and one comes up every 3 months. The
interest isn't great, it's pretty bad, but it's better than the interest on a
savings account. This isn't an investment, this is "in case I lose my job or
get furloughed or ...". I've since made it a point to bump up the amount in
the CDs to represent my current cost of living less things I can easily cut
every couple of years.

Second, I owned my car outright at the time, I put the equivalent of a car
payment (it was old then) into a savings account every month. I used this to
(almost) pay cash for my new car this past year.

Third, I put a similar amount into a brokerage account, but I didn't start
that until after I had that 1-year fund. I'm not a great investor, I can't
give advice on this part, I've just gotten lucky on a couple things but mostly
played it safe.

Fourth, I know how much cash I need in my checking account every month (with a
buffer, just in case), so at the end of the month I transfer the excess to my
savings. (This year excepted, a bunch of unexpected medical expenses)

The result is, if I lose my job, I have enough cash on hand to get me to my
first CD's maturity date, and they can each carry me to the next. This is a
lot of peace of mind for me after seeing many colleagues laid-off in 2008/2009
and others who'd been unemployed for a year or more. In my current job that's
a low risk, but once the money is saved you can ignore it (until you need it).
I also have enough cash + credit that, in a catastrophe, I could carry myself
to the CD maturity dates to pay off the debt or, worst case, I could take a
hit on the CDs and close them early (I wouldn't lose much, penalty is the
interest + a fee and the interest is low at the moment).

This next part is US-centric, I don't know the UK's retirement system.

Retirement, here in the US we have (at many companies) 401k's available with
some matching. I put in the minimum needed to get that matching: it's free
money for retirement. I put in more now that I'm in a better paying job and
have my other finances in order. We also have IRAs, another retirement
account, I've been maxing that out since my 3rd year of full-time employment,
I could have started my 2nd year but decided the 1-year fund had priority at
the time (I don't regret that decision, my employer at the time laid a lot of
people off that year and my office was next on the chopping block). Whatever
the UK equivalent is, explore them. I know too many of my peers that have no
savings or minimal savings for retirement, we're obviously 20-30 years away
from it, but investing earlier you'll get a much greater return, and when you
have a family and need money for those sorts of expenses, you can (though you
should try to avoid this) cut back on your retirement savings without too
severely impacting your retirement goal.

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stevekemp
I have two forms of savings:

* A pile of cash in a bank account.

* A pile of cash which is used for buying index funds.

Even with a credit-card it is useful to have a pool of cash for short-term
emergencies, such as job-loss, car-crash, or roof repairs. On that basis I
keep £15,000 in an online bank account. The interest rate is terrible, but
that's the price I'm willing to pay to make sure I can get cash to hand if I
need to in very short term.

After that the real investment goes to index funds. Every month I allocate
£300 to buying more shares. (In the past I used that money for peer-to-peer
lending with zopa.com, I didn't lose money but I started to get concerned
about the time it took to get money out. So I've ceased offering loans there.)

Index funds are pretty fun, and traditionally less risky than buying shares
arbitrarily in individual companies. Still there is a risk. If your fund is
small enough you're probably able to use an ISA, or similar, I forget what the
max per year is, but it is pretty low.

ObRandom: I'm also overpaying my mortgage with the intention I'll own my house
within the next 2-3 years.

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ysmirnoff
For the last 2 years my investments outperformed DJ by 150% and S&P 500 by
100%. What did I do? Go with the winners! Every January you revise your
portfolio and spread the basket among potential winners. Then you wait ...
After 2-3 months check to determine loser/losers and dump them in favor of the
winner. Bring in from time to time reps from hot areas. I have three specific
examples: Auto, Biotech and European Nordic fund. First one is having the true
renaissance in last couple of years, I bought a medium chunk of it in 2008 and
it gave me 120% growth by now. Some biotech funds are more than 50% since
01/2013\. What is there secret? They invest in a well-selected portfolio of
companies with pending FDA approvals. If a product goes through clinical
trials and gets the approval, that company is growing by the order of
magnitude. If it doesn't, oh well, you can write off a single value. For the
fund that I bought the success ratio is 2:1, which is great and that's why
it's 50% just for last 9 months. And lastly, Europe has been marked as the
undervalued commodity and specifically the Nordic geo with gas and oil
reserves. The European Nordic fund is 15% in green just in last 3 months. As
soon as any of your eggs in the baskets stops performing well, you switch it
to your other egg or shop for what's hot now. Just for fun, if you have time
and desire, leave a small change for daily/weekly trading to keep yourself
busy, but that strictly optional.

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chris_va
This really depends on when you need to use the cash, and how much risk you
can accept.

This is pretty deep:
[http://en.wikipedia.org/wiki/Modern_portfolio_theory](http://en.wikipedia.org/wiki/Modern_portfolio_theory)

... but it basically boils down to: Invest in a mixture of index/mutual funds
and bonds. If you need lower risk (but lower return), then tip towards more
bonds. If you can accept a higher risk (but in theory a higher amortized
return), then tip towards more stocks. If you do buy mutual funds, make sure
you read the fine print about fees/load.

(I am not a financial advisor)

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sherm8n
My favorite investment is in something that has no monetary value. But it is
priceless! I have it in a Bank Direct account that gives airline miles
monthly. I get almost no interest.

It forces me to think hard about traveling, however. I can fly free for life.
Since I'm not going to waste free flights, I take several international trips
a year. Sometimes I work. Sometimes I don't. It allows me reset and really
observe life.

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jlengrand
Exact same situation here, but in the Netherlands.

So far I put everything I can on a low interest account (circa 2%). My idea is
to wait 1 more year and invest in real-estate, without having to take a loan .
The rent would be used to reinvest in the future.

I don´t trust the stock exchange, mainly because I don´t really understand it,
probably.

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arh68
Just don't spend it, that's the key. ;)

A simple solution: auto-transfer the 'extra income' every month to a low-
interest checking/savings account. Once a year, transfer some amount from low-
interest savings into an index fund.

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tazzy531
Why low-interest account?

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2810
I am a fresh too! I save nearly 60% of my salary and invest 80% of it in the
stock market. Each year I make more than 10% of my total investment which I
didn't withdraw any of the profit I made, instead I keep pumping in money and
investing.

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toomuchtodo
I know you're in the UK, but I use
[http://www.futureadvisor.com](http://www.futureadvisor.com) here in the US. I
make monthly deposits, they rebalance according to investment research.

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dangle
Betterment, 40% portfolio return this year! You can very easy adjust
allocations according to your risk level and goals. It's low maintenance and
awesome.

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ffumarola
I've evaluated them and for what they do they are pretty expensive.

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creature
At that amount, it's worth considering a stocks & shares ISA. Something low-
involvement, like an index fund.

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hashtree
Myself and my business. My returns have always been far above the market
average ;)

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klaut
I am very much interested in this topic too - specifically for the UK market.

