Ross appeared in the Telegraph’s Money Makeover feature at the weekend, offering his advice to Gussy Hydleman, a 25-year-old marketer from Exeter who wanted to know, ‘How long will it take me to retire on £30,000?’
Gussy Hydleman has recently had an offer accepted on her first home with her boyfriend, Tom, after investing her money to achieve the deposit required. Of her £38k, she has £15k in a Lifetime ISA, £12k in a stocks and shares ISA and the rest is in cash.
Once purchased, Ms Hydleman will be able to save £750p/m and dreams of retiring early with an annual income of £30k.
“There’s no point retiring when you’re too old to enjoy it. The dream would be to save enough and have a couple of properties in the next five to 10 years that we can rent out. I want to make sure I’m buying the right funds so my money accumulates over time.”
In his reply, Ross said:
“What I would be really careful about is Gussy leaving her deposit invested in stocks and shares all the way up to the point where she needs the money to buy the property. Should there be a decline in the markets soon, as there was at the beginning of last year, she could be left short without the time to recover. This could put her house purchase in jeopardy or require her to seek financial support from elsewhere.
“Normally, I would suggest keeping the deposit in Premium Bonds this close to completion. However, money in the Lisa cannot be accessed until the purchase of a property, so cash is the next best option. What would be sacrificed in potential returns would be more than made up for by having the reassurance that the cash will not fall in value and will be readily accessible when the time comes to complete.
“Turning to Gussy’s investment strategy, she has done well over the past 12 months from the funds and stocks in her Lisa and Isa, which is great news, but this will not always be the case.
“Once the property purchase is complete, Ms Hydleman should decide how she wants to invest. The Lisa, which will be depleted when the purchase goes through, was invested in socially and environmentally conscious and sustainable funds, such as Baillie Gifford Positive Change and Pictet Global Environmental Opportunities.
“However, the Isa – assuming it is not all swallowed up when the couple complete – holds Shell and tracker funds, which are exposed further to oil companies and mining stocks. If investing ethically and sustainably is important to her, she will need to shift away from this.
“It is great that Gussy wants to continue investing, but the most important factor in successful saving is patience. Investing is all about time in the market as opposed to timing the market. As unsexy as it is, contrary to the Instagram influencers and “Bitcoin bros” on Twitter, the best way to get rich is slowly.”
You can read Howard Mustoe’s full article in the Telegraph here.