Is there someone who can translate the US-specific parts of this advice into the UK context? We don’t have 401(k)s or IRAs, I’m not sure about mutual funds and money markets, and as far as I can see from a quick search, I can’t deal with Vanguard directly for less than £100,000, only through third parties with their own charges. So while the general form of the advice might be sound, I can’t translate it into any concrete actions.
Index funds are available through a few million places these days—check your local bank, if it’s big enough to have an investments arm.
As for the 401k bit, that’s just tax avoidance(the single most important concept in finance). 401ks are tax shelters, where money can grow completely untaxed until withdrawal. I’m sure the UK has an equivalent—what’s your national retirement account of choice?
I can’t help with most of it, but I can tell you that UK stocks are generally much cheaper—more like £1 or £2, as opposed to $100 in the US.
Share prices are essentially meaningless (with obvious exceptions at the ends of the spectrum: Berkshire Hathaway Class A and penny stocks). It’s the conversion ratio between actual money and notional units of a company, and the ratio can be changed without affecting anything in the real world (stock splits). Basically, the only issue is that high share prices (e.g. GOOG at $870) make purchases somewhat inconvenient since brokerages are stupid about fractional shares for individual stocks (as opposed to mutual funds, where you give them a certain amount of money, and they give you the right number of fractional shares down to thousandths).
Real changes in share prices are, of course, meaningful.
Is there someone who can translate the US-specific parts of this advice into the UK context? We don’t have 401(k)s or IRAs, I’m not sure about mutual funds and money markets, and as far as I can see from a quick search, I can’t deal with Vanguard directly for less than £100,000, only through third parties with their own charges. So while the general form of the advice might be sound, I can’t translate it into any concrete actions.
Index funds are available through a few million places these days—check your local bank, if it’s big enough to have an investments arm.
As for the 401k bit, that’s just tax avoidance(the single most important concept in finance). 401ks are tax shelters, where money can grow completely untaxed until withdrawal. I’m sure the UK has an equivalent—what’s your national retirement account of choice?
I can’t help with most of it, but I can tell you that UK stocks are generally much cheaper—more like £1 or £2, as opposed to $100 in the US.
Maxing out your ISA is probably a good bet; you should be able to buy an index fund “inside” the ISA.
disclaimer: this is not financial advice, I am not a financial advisor
Share prices are essentially meaningless (with obvious exceptions at the ends of the spectrum: Berkshire Hathaway Class A and penny stocks). It’s the conversion ratio between actual money and notional units of a company, and the ratio can be changed without affecting anything in the real world (stock splits). Basically, the only issue is that high share prices (e.g. GOOG at $870) make purchases somewhat inconvenient since brokerages are stupid about fractional shares for individual stocks (as opposed to mutual funds, where you give them a certain amount of money, and they give you the right number of fractional shares down to thousandths).
Real changes in share prices are, of course, meaningful.