Reddit reviews Smarter Investing: Simpler Decisions for Better Results (Financial Times Series)

You're freaking out.

Your proposition boils down to currency speculation.

Search "can I time the market" and read up on the results - only buy € now if you're sure that your estimate of the future value of the € is more accurate than the estimates of all those currency traders in the City.

If they knew that the exchange rate was gonna be better in 6 or 12 months, they'd all be doing the same thing, right?

The current price depends on what bigshot currency traders in the market today think it's worth.

If you have large investments (as you are, in effect, invested in £) it is quite common to be scared by large market movements (i.e. crashes, normally). But you have to work out in advance what your financial plans are, and then stick with them.

You are presently living in the UK, and you're spending £, so keep your money in £. If you decide to move to Europe, that is when you need to convert any money you have to €. It is not wise to go converting money on what if's - for all you know you'll have to change it back in a year or two, at a loss.

Tim Hale's Smarter Investing is amongst the recommendations in this sub's recommended reading list - I've been reading it this week, and it has some sections in which emotional decision making is discussed. You should pick up a copy.

Don't let it loom over you.

Unless you're going to blow all the money you inherit, it probably shouldn't change your life plans much.

I'd expect you're going to finish school and maybe go to uni. You've probably always expected to get a job and, in about 10 years time, think about buying a house.

Given the value of the estate, your third is enough to buy a flat or a house, but it's not enough for you to be able to quit working (well, if you do you'll run out of money in 10 or 20 years, at most).

This money gives you a little security and flexibility, but it doesn't fundamentally change your life plans, I don't think. If you leave it invested for the next 40 years, with compounded returns, then it'll probably ensure a comfortable retirement (but you should probably still top it up, anyway, to make sure and to cultivate good financial habits).

I think you should try to be as grown up as possible about managing the probate period - a solicitor, for example, would help you ensure that your uncle and grandfather are fairly assessing the value of his share of the business. For all you know he owns a 50% share of a £10,000,000 business - how do you know they're not fobbing you off with just a fraction of it? My solicitor was a godsend - very helpful and insightful and she filled me with confidence at a very difficult time; I encourage your mum to call her if you haven't yet decided upon one.

Having got that side of things out of the way, just chill about the money and don't let it worry you too much. You can't afford to blow it, so you'll need to stick it somewhere safe and leave it for a long time.

Subscribe to /r/UKPersonalFinance and try to read a post or two there every day - ask questions there about anything you don't understand. Buy a copy of Tim Hale's Smarter Investing and Vicki Robin's Your Money or Your Life. You don't need to read them all at once, but they're pretty easy reading and you can dip in to them from time to time.

I think you should be planning to learn more about finance over the next year or two, so that you know the best way to save (well, invest, really) this money.

>Adulting: It’s a term that some see as derogatory, and that some use to describe positive actions such as holding a steady “real” job, getting a mortgage, paying off a car, or doing anything else that less mature individuals aren’t quite yet ready for. Today’s adulting topic is an important one: personal finance. You’re finally earning some real money, and you’ve gotten past the impulse to blow it all. What to do? Here are some ideas to help you make the best financial decisions possible, whether you’re 18 or 25.
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>Debt:
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>Understand that there’s good and bad debt, and that it all has to be paid off, somehow. Inevitably, you’re going to end up paying more than the amount you borrowed, thanks to a little something called interest.
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> Credit Cards: Credit card companies go after college students and other young adults like starving piranhas chasing down a swimmer, so you probably have some credit card debt, which also goes by the name unsecured debt. Most people have it; the key is to keep it from getting out of control to the point where you’re making huge payments that mostly cover interest. So take a look at all the credit cards that you have and determine which ones cost you most to own and use. Look at the interest rate as well as any fees you incur, and figure out how much you’re paying just for the so-called privilege of having unsecured debt. If you have a 24% APR on your credit card, it’s costing you $240 per $1000! Not good. You have to repay the principal (money you spent) PLUS the interest and the APR. It can easily spiral out of control, so catch it now, while it’s small, and you’ll have far more money to spend on things that matter in the long run.
> Car Payments: If you’re paying on a car loan, it’s likely that your APR is somewhere in the double digits, but not nearly so high as that associated with the average credit card. If your APR is 11 percent, then you’re going to be paying $110 per $1,000. Not great, but less costly in the long run than unsecured credit card debt.
> Student Loans: Student loans are pretty much a fact of life, and in most cases, they come with small interest payments. If your student loan has a 3.2% APR, you’re paying $32 per $1,000 in interest. Not too bad.
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>Bottom line: If you’re putting extra money toward your debts in an effort to get rid of them, it’s best to go after the ones with large interest rates before you focus on the ones with smaller associated costs. Credit cards, car payments, and student loans all help you to establish a good credit rating, and keeping your costs low will help you make the most of your money.
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>Taxes:
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>Takes are a fact of life. If you’ve had a job for a while now, then you know what it’s like to open up your paycheck and see just how much came out for income tax. Know what your tax bracket is, and be aware of any special deductions that you can make. Taxes are something to plan for, but part of savvy taxpaying is to look for ways to reduce the amount you hand over to the government by taking steps to make a smaller portion of your income taxable. That’s an entire topic in itself; for in-depth advice, seek a local tax professional who can analyze your unique situation and make suggestions for reducing your tax load.
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>Investing:
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>Investing isn’t just for your mom and dad. It’s for everyone. It takes a while to reap the rewards, but starting now, at your current age, puts you in a better position than starting next year or five years from now. With the right plan, $10,000 you set aside this year can turn into $100,000 by the time you reach age 65. But you have to keep the money in there. Of course there will be years when you may lose part of your savings. Don’t let this stop you from investing! There will also be years when your money will grow rapidly. Invest early, invest often, and don’t neglect your retirement simply because it is so far away.
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>Also, make sure you read Read Tim Hale's Smarter Investing - at least a 25% of the book addresses the risk vs reward of index and managed funds. I wish I had read it sooner.
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>Now that you have basic insight into the big three personal finance topics, here are some additional tips for making your money go as far as it possibly can, now and into the future.
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>Repaying Student Loans:
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>You have to repay student loans unless you can get them forgiven. There are a few strategies to consider, depending on your student loan debt load. Any student loan amounts that are forgiven may be taxable, so know the potential implications before you sign on the dotted line.
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> Repay Student Loans According to Schedule: If you own $30,000, then your payment is probably close to $300 / month. It’s not awful, but it is a little more than the average car payment. If you own $100,000 in student loan debt, then your monthly payments are probably closer to $1,000 monthly – in other words, about the same as a home mortgage, but with nothing tangible to show for it (beyond your spiffy new education, that is.) Paying your loans back on schedule means that you pay the minimum amount on the loan. Only do this if your student loan has an interest rate of 4% or less, unless you’re simply not able to make larger payments. If you have higher interest loans, consider refinancing them to get a lower rate. As long as you have good credit and a decent income, you should be able to qualify.
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> Check into a Reduced Payment Plan: If your income is low in comparison to your student loan debt load, then you may be able to qualify for a reduced payment plan such as IBR (income based repayment) or PAYE (pay as you earn). You’ll spend a longer amount of time repaying your student loan this way, and you may end up paying more than you would if you repaid according to schedule.
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> Drowning in Student Loan Debt? Consider Public Service Loan Forgiveness (PSLF): This program lets you make minimal payments to your student loan while you spend ten years working in public service, and then your unpaid balance is generously forgiven.
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>Investing for retirement:
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>You’re young now, but someday you’ll reach retirement age. Investing now means you will be able to relax and enjoy your golden years without the stress that comes with financial worries.
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> Take advantage of 401k benefits: If your employer offers 401k benefits, be sure to hop on board. Not only is this a nice little investment, it also has the potential to help with your current tax burden. Most employers add 3% of your salary if you contribute 6%, and this basically amounts to free money. If you retire after age 59.5, you can withdraw the money without paying a penalty, and if you switch jobs, you may be able to take the money with you.
>If your employer offers a Roth 401k option, you’ll pay taxes on the money you contribute, but you’ll be exempt when it comes time to withdraw.
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> Don’t invest all in one place: Diversify your investments so that you’ll continue earning in case one part of the market crumbles.
> Consider an IRA: An IRA is like a do-it-yourself 401k. you set up your account with a company that offers IRAs, and give them an annual amount (up to $5500 / year as of this writing) to invest on your behalf. You can open an IRA whether your employer offers 401k benefits or not. If you think that you might have to tap into your retirement fund before it matures, then consider a Roth IRA since you can raid it anytime without paying penalties or taxes.
> Don’t go it alone: Choose an investment company to help you maximize your potential earnings. Online management fees cost less, and the benefits of having help with money management are many.
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>Other Personal Finance Considerations:
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>You’ll be faced with many money-related decisions throughout your early adulthood. Here are some other topics to keep in mind as you work your way through the personal finance maze:
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>* Health Insurance: Your parents may be able to keep you on their health insurance plan until you reach age 26, however, if you have a job that comes with employer-provided insurance, be sure to go for it. Be cognizant of how much you’ll need to spend on co-pays and routine costs. If possible, consider opening a Healthcare Savings Account (HSA). This will allow you to deduct contributions for medical expenses you need to pay out-of-pocket. As of this writing, you can contribute up to $3350 / year to your HAS. Some employers contribute to their employees’ HSAs. If your employer or parents aren’t offering health insurance, then you’ll need to purchase an individual plan on your own. Be sure to compare all the costs and benefits of the plans that are available to you.
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