There are distractions all around us, particularly when you get started on the path of building wealth. Before you know it, your Facebook and Instagram feeds are filled with adverts for of get-rich-quick schemes, and Bitcoin traders promising to accelerate your journey to financial freedom.
Choose a Platform and Your Accounts
Assuming you have your emergency fund in place, you just need to crack on and choose a platform and accounts on which to start investing. Lots of people contact me when they’re at this stage in their journey and are obsessing about making the right decisions with their choice of platform.
Ditto the balance between pensions and ISAs, and whether it should be an ISA or a LISA. What this means is that they’re so busy obsessing that they don’t end up doing anything. So, let me take some of this angst away from you.
In almost every case, your decisions at this early point in your financial journey will not make or break your future financial success. They’re just not aren’t that important. I know you want to get them right, but don’t let inertia borne of misplaced fear rob you of the opportunity to JUST GET STARTED!
None of the decisions are permanent, so just chill a little bit. Pension versus ISA? Easy answer: Join your workplace pension if you have one, and contribute enough to maximise your employer’s match. Everything over that should be put into an ISA when you’re starting out.
Self-employed? Open both a pension and an ISA and tilt the balance towards ISA to start with. When you get a sum in there that you’re happy with, keep adding to both, then tilt the balance in favour of pensions. Pensions will always win in the longer term thanks to tax relief.
Lifetime ISA versus ISA? If you haven’t bought a house yet and you want to do that, then yes, the Lifetime ISA is a great idea, and it’s also useful for lifestyle savings. Pensions are better for that, though, particularly if you’re a higher-rate taxpayer.
Which platform? It doesn’t matter. Seriously. Not when you’re starting out at least. If you pick a platform with a percentage-based fee, then it’ll get expensive once your pot gets into the tens of thousands of pounds, but for now, it’s fine.
Just get started and then keep things under review. You can always move money from one platform to another in due course. By that time, you’ll be an expert on this stuff and will be moving money around effortlessly in your favour. So, relax already. The most important thing is to get started.