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I'm a 25 year old with approximately £14k in savings and am completely new to investing. I'm also quite risk averse as I'm doing PhD and will be for the next three years, so can't really afford to lose my limited savings. I'm thinking about investing in an index fund, (maybe a global one?) as I understand they're a safe bet. I was wondering though, does anyone have any good sources for sensible investment advice for a begginer? Things like what I should be considering when picking one and how to assess whether they're a good or bad pick. How much should I invest? How do I actually find a fund?

I am acutely aware that the world is full of bullshit artists and morons so I need to be careful where I get my advice from. I personally don't really know anyone who knows about this stuff.

Edit: The reason I'm considering investing now, is because of Brexit. I'm worried that my savings which are all primarly in Pounds Sterling will be worth considerably less in a few months time if Britains exit from the EU does not go well.

  • can you afford to lose some of your savings? how much? – D Stanley Sep 25 '19 at 20:28
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    "I understand they're a safe bet." "safe" is relative - they're safer than individual companies but not as safe as, say, a savings account. – D Stanley Sep 25 '19 at 20:29
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    "I am acutely aware that the world is full of bullshit artists and morons" So is the internet :) – D Stanley Sep 25 '19 at 21:06
  • How much is partially what I would like help deciding. I guess about a third? As I replied to someone else, I don't want to keep all my money in a savings account due to impending brexit and the effect that will have on the Pound Sterling. I don't want all my savings to half in value if everything politically goes tits up which is why I'm considering investing. I am also aware that the internet sits within the world in the venn diagram of the universe, but I do appreciate the reminder haha. – generic purple turtle Sep 25 '19 at 21:20
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    That's a very reasonable concern to have, but it's also a very different question from the one you asked. You seem to be looking for ways to hedge against a Brexit-related downturn in the UK economy. That can be the basis for a very reasonable question. If you only want to know about non-UK index funds which a UK PhD student can invest in, that's also a reasonable question. Consider whether you want to include or exclude the EU and EEA, since Brexit will affect them pretty significantly as well. – Ben Voigt Sep 25 '19 at 21:28
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I'm doing PhD and will be for the next three years, so can't really afford to lose my limited savings.

In this case, your best bet might be a mixture of:

  1. Fixed Deposits (for "high" interest), and
  2. a Savings Account (for quick access without penalty).

Look for online banks, since they offer better rates than High Street banks.

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  • So that's literally exactly what I'm doing at the moment, however with an impending brexit, I'm slightly worried that keeping money in Pounds Sterlin is unwise, hence why I'm considering an index fund. – generic purple turtle Sep 25 '19 at 21:15
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    @genericpurpleturtle an index fund is just a container (and can be an index fund of Fixed Deposits!), so your original question is a bit misleading. Better to ask about asset protection in the face of Brexit, and let the answers choose the methods. – RonJohn Sep 25 '19 at 21:35
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    @genericpurpleturtle if you decide to ask specifically about "asset protection in the face of Brexit", please ask a new question instead of radically changing the scope of this question. – RonJohn Sep 25 '19 at 21:37
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Read JL Collins stock series. It will give you a good understanding of how index funds work so you will have the fundamentals to choose the one that best fits your financial plan, it will also help you understand how to think about your investment so you don't panic and pull your money out if the market drops temporarily. Mr. Money Mustache is also a good source, and provides advice about managing your spending and other ways to improve your saving ability and retire early.

In general you want to track a large index with a low management expense ratio (MER) since any fees you incur eat into your earnings exponentially through compound interest. A global index is good in that it's very diverse, but there are arguments for just doing a total US stock index (which has a lower MER and is still very diverse, and has historically higher gains); There are also arguments to be made for investing in the total stock market of your home country. Read the articles and choose the option that makes the most sense to you.

**Edit: You should absolutely have an emergency savings account of liquid cash (possibly in a Money Market fund which can still earn 1-2% annually) to cover 6 months of expenses (rent, food, utilities, etc...) BEFORE you invest any money. If you lose your job and the market goes down and you are forced to draw out your investment you will lose money. Investing should primarily be a LONG-term goal.

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  • I don't wnat to invest in the stock market of my own country (the UK) due to brexit. Depending on the the leaving deal the UK makes with the EU, it could make trade for British companies difficult and have a negative impact, as well as negatively effect the exchange rate of the pount sterling. It's because I'm worried about the pound dropping in value which is why I'm considering investing in the first place. – generic purple turtle Sep 25 '19 at 21:23
  • Makes sense. I'd probably avoid buying a UK index fund if I were in your position too. Your best bets are going to be a Vangaurd Total World index fund (VT) or Vanguard total US stock index fund (VTI). 0.09% and 0.03% Management Expense Ratios respectively. Historically VTI has done better than VT (for reasons explained in the articles). Make sure you've read up on the index fund fundamentals before you buy anything though. – Dugan Sep 25 '19 at 23:42

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