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    (Original post by ch0c0h01ic)
    You have two options:

    1) Earn more (ie; pursue a better paid job/career, get a second job, etc)

    2) Cut your outgoings - move home, move into cheaper accommodation, flat share, shop around on utility bills, cut down on entertainment costs, etc.

    The best thing to do now is sort out a proper budget. Get out your bank and credit card statements and double check all of your outgoings.

    Ask yourself do you really need to spend that money or do you just want to?

    Can you get those goods or services cheaper elsewhere?

    Once you have crunched the numbers open a high interest savings account and set up a standing order to pay whatever 'surplus' you can reasonably afford into that account on payday. Once you have built up some emergency savings then focus on paying down high interest debt first (eg; credit cards, overdrafts, personal loans, etc) because the interest on these products will be higher than what you can make from the vast majority of savings or investments!



    Pretty terrible advice for their situation.

    Only invest if you can afford to lose 30-50% of their original value in the event of a "bad" year and be able to wait for several years* (if not more) for their value to rebound (which still might not happen!).

    *while continuing to pay your rent/bills/etc.

    Using your BP example, had you invested at the wrong time (ie; prior to the Deepwater Horizon disaster) you would have lost more than 50% of the value of your investment within the space of a couple of months. Several years on your stocks would probably still be worth 20-30% less than you paid originally!

    Do not get me wrong, monthly investing is a key part of my retirement savings. However, that is based upon me having enough cash and emergency savings to pay my mortgage and bills for 6+ months. I can afford not to touch my investments and "ride out" any adverse events or downturns in the market - the OP cannot!
    Thanks

    My salary goes up each year and I'm hoping to get a promotion in the next year or two aswell so that will help. I already flat share with 2 others and my rent is very low (below £300 Pcm) - bills wise we are tied into the provider that our landlord is with so nothing I can do about that. - but it's supposedly one of the cheaper ones anyway. I need to cut down on the money I spend on extras - takeaways, taxis, nights out - things that don't seem a lot but in reality are actually accumulating.

    Luckily aside from the normal student loan I have no other debt. I paid my overdraft off years ago and have never had a loan or credit card. This is something which I suppose works in my favour!

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    (Original post by ch0c0h01ic)
    You have two options:

    1) Earn more (ie; pursue a better paid job/career, get a second job, etc)

    2) Cut your outgoings - move home, move into cheaper accommodation, flat share, shop around on utility bills, cut down on entertainment costs, etc.

    The best thing to do now is sort out a proper budget. Get out your bank and credit card statements and double check all of your outgoings.

    Ask yourself do you really need to spend that money or do you just want to?

    Can you get those goods or services cheaper elsewhere?

    Once you have crunched the numbers open a high interest savings account and set up a standing order to pay whatever 'surplus' you can reasonably afford into that account on payday. Once you have built up some emergency savings then focus on paying down high interest debt first (eg; credit cards, overdrafts, personal loans, etc) because the interest on these products will be higher than what you can make from the vast majority of savings or investments!



    Pretty terrible advice for their situation.

    Only invest if you can afford to lose 30-50% of their original value in the event of a "bad" year and be able to wait for several years* (if not more) for their value to rebound (which still might not happen!).

    *while continuing to pay your rent/bills/etc.

    Using your BP example, had you invested at the wrong time (ie; prior to the Deepwater Horizon disaster) you would have lost more than 50% of the value of your investment within the space of a couple of months. Several years on your stocks would probably still be worth 20-30% less than you paid originally!

    Do not get me wrong, monthly investing is a key part of my retirement savings. However, that is based upon me having enough cash and emergency savings to pay my mortgage and bills for 6+ months. I can afford not to touch my investments and "ride out" any adverse events or downturns in the market - the OP cannot!
    No it isn't, creating a steady income from dividends is amazing. I get given £130 a year from BP to do nothing, all I had to worry about was buying the stock at a good price. The whole point of investing is to hold the stock forever and reinvest dividends. You only sell if the company you think is not what it used to be, as in doing bad. By reinvesting dividends, it creates even more steady income. You can even pay your bills with that income!!

    Even if the stock is worth less, why would I care, all I want is my 7.5% dividend (which also is increasing every year usually). So in a few years time I will be getting 10% just in dividend. Let the stock price fall!! I'm holding forever!

    If you want short term liquid money, keep it in cash or short term bonds. Nothing wrong with keeping a couple of grand in cash for bills and rents. Any more you don't need for the next 5 years should be in the stock market, if it isn't then inflation and literally zero interest on your bank account will erode your life savings.

    OP needs to start somewhere.
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    (Original post by fg45344)
    No it isn't, creating a steady income from dividends is amazing. I get given £130 a year from BP to do nothing, all I had to worry about was buying the stock at a good price. The whole point of investing is to hold the stock forever and reinvest dividends. You only sell if the company you think is not what it used to be, as in doing bad. By reinvesting dividends, it creates even more steady income. You can even pay your bills with that income!!

    Even if the stock is worth less, why would I care, all I want is my 7.5% dividend (which also is increasing every year usually). So in a few years time I will be getting 10% just in dividend. Let the stock price fall!! I'm holding forever!

    If you want short term liquid money, keep it in cash or short term bonds. Nothing wrong with keeping a couple of grand in cash for bills and rents. Any more you don't need for the next 5 years should be in the stock market, if it isn't then inflation and literally zero interest on your bank account will erode your life savings.

    OP needs to start somewhere.
    Granted 7.5% is a good return, whether that be in dividends or reinvested stocks. However, to create a position whereby you could pay your household bills through dividends requires substantial capital investment (ie; £10,000s). That in itself is rather unrealistic when the OP is struggling to save at all.

    Furthermore it does carry risk. Dividends are conditional on a company turning a profit or having cash reserves. Like I said, had you bought prior to Deepwater Horizon your £2000 and 7.5% dividends would be worth a hell of a let less than they are now (and you probably wouldn't be extolling the benefits of investing in BP!).

    I will maintain that someone that is struggling to save should be focusing on generating more income and/or saving more of their disposable income, especially if they lack cash for emergencies and/or carry high interest debt, not investing money that they cannot afford to lose.

    If I had followed your advice fresh out of uni I can tell you now that I wouldn't have been in the position to buy a house (or at least with the same level of equity) courtesy of the financial crisis and Deepwater Horizon.

    I get the impression that you are younger and have less to lose...

    We can agree to disagree.
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    (Original post by ch0c0h01ic)
    Granted 7.5% is a good return, whether that be in dividends or reinvested stocks. However, to create a position whereby you could pay your household bills through dividends requires substantial capital investment (ie; £10,000s). That in itself is rather unrealistic when the OP is struggling to save at all.

    Furthermore it does carry risk. Dividends are conditional on a company turning a profit or having cash reserves. Like I said, had you bought prior to Deepwater Horizon your £2000 and 7.5% dividends would be worth a hell of a let less than they are now (and you probably wouldn't be extolling the benefits of investing in BP!).

    I will maintain that someone that is struggling to save should be focusing on generating more income and/or saving more of their disposable income, especially if they lack cash for emergencies and/or carry high interest debt, not investing money that they cannot afford to lose.

    If I had followed your advice fresh out of uni I can tell you now that I wouldn't have been in the position to buy a house (or at least with the same level of equity) courtesy of the financial crisis and Deepwater Horizon.

    I get the impression that you are younger and have less to lose...

    We can agree to disagree.

    There are bonds which yield 8/9% which are pretty good to hold, granted they are not investment grade...but who else is going to give you 9% and not lose you capital (like some shares may do)

    Basically you want to be 100% in equities when you are young and as you get older, lessen the portfolio more towards bonds. I think pension funds do this, not sure to be honest. So just before retirement you want to be 95% bonds and 5% equities, as you can't afford to lose any gains and like you said the stock market is cyclical so it can take 2-3 years to make up loses.

    I try to find good dividend stocks in companies which I consider to be blue chip. I also hope for an increasing dividend, so that 7.5% yield I got for BP will yield me closer to 10% in 4-5 years time. Then I am happy holding a 10% dividend stock with potential for growth as well forever. Ofcourse I am reinvesting dividends, so making more money from the dividends.

    2 good buys right now.....Interserve (catch it before it goes, FTSE 250 company) and Persimmon (it's nearly gone now). Persimmon is the safer bet as its a larger cap and to be honest we need more homes, they can sustained if not increase the dividend...so you might as well take the 8/8.5% on offer....plus the 30-40% gain in share price you will get when Persimmon goes from underpriced (which it is now) to a more fair value around the 1800/1900p mark.
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    My advise to the OP is simply to create a spreadsheet outlining all direct debits and total that up. Then add a general spending allowance (£300 for example is £10 per day, more than enough for coffee and the like).

    Whatever the total is, use that as a threshold in which any pay above that goes straight to a savings account.
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    (Original post by fg45344)
    You need to create a second income....

    1) You could work another job, do some tutoring on the side, do mystery shopping, work in general elections. Something to supplement your main income. This only has to be a few hours a week, but an extra £30-40 a week can make a difference.

    2) You need to start investing in bonds/stocks which can produce a dividend. So steady income. Say for example, BP stock is yielding 7% in dividends right now, so £1000 invested in BP will give £70 a year, plus there is stock appreciation as well. For example my BP stock rose from 361 p to 455 p in the last 2 weeks, giving me £450 profit on the £2000 I invested.

    How do you go about picking your shares?*
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    (Original post by LavenderBlueSky88)
    I'm earning a decent enough wage, my rent is relatively low compared to London - I don't live particularly extravagantly (eg, most of my food shopping is done at lidl or aldi and I usually only buy cheap clothes from primark) yet I can never amass more than £1k in savings. Usually what will happen then is I will have to use them for something like a car repair or insurance, deposit on a place to rent, holiday, unexpected bill etc

    Money just slips through my fingers, a weekend with friends can start off cheap but if you factor in £50 return trains, maybe £30 on alcohol, £20 on food and taxis that's £100 gone in two days. There are always things to pay for, and I don't feel like I'm even a big spender. Most people around me seem to be spending similar amounts (and earning similar amounts) yet able to save SOMETHING. Yes I do book the odd holiday but I stay in youth hostels and deliberately go at non-peak times with cheap flights.*

    I currently have £200 in my current account and £0 in my savings until the end of the month. I can't get out of this rut, I feel I'm never making any progress with money.*
    1. If you are single (i,.e. have no dependents) and live in London, you do not need a car. Its a complete waste of money, since you can get everywhere you need to with public transport

    2. How often are you moving that deposits on places to rent are taking up a huge portion of your cash?
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    (Original post by Virgil.)
    1. If you are single (i,.e. have no dependents) and live in London, you do not need a car. Its a complete waste of money, since you can get everywhere you need to with public transport

    2. How often are you moving that deposits on places to rent are taking up a huge portion of your cash?
    I don't live in London, and need a car for my job

    Not often (around 3 times in the last 3 years), it was just an example *
 
 
 
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