Opinions needed on a strategy

[Khas85]

I've been crunching some numbers to work out how much I want to put into PM every month but the figure I've come up with is very low and I won't be able to buy Britannias or Sovereigns on a monthly basis. This has led me to do some more research and I found that there's a platform I can move my ISA to in the next tax year in which I can invest smaller amounts in gold and silver and then when the balance is sufficient to buy physical gold, I can sell just those holdings within my ISA (tax free) and use it to buy physical coins. I understand that the price of gold and silver will be different from the time when I sell the paper holdings in my ISA to when the funds clear into my bank account but I'm willing to take the risk that it may go down.

When I joined the forum last week, I thought I was going to invest about 20% of my income into PM but I think I'm more likely to invest 7% but this means that my monthly budget for PM is quite low.

What do you think, is this a smart strategy?

[Petra]

Just save your money, then buy. Gold coin every other month or so, odd silver in between (or not). Trouble is it gets too tempting to buy smaller coins instead of saving.

[James32]

6 minutes ago, Khas85 said:

I've been crunching some numbers to work out how much I want to put into PM every month but the figure I've come up with is very low and I won't be able to buy Britannias or Sovereigns on a monthly basis. This has led me to do some more research and I found that there's a platform I can move my ISA to in the next tax year in which I can invest smaller amounts in gold and silver and then when the balance is sufficient to buy physical gold, I can sell just those holdings within my ISA (tax free) and use it to buy physical coins. I understand that the price of gold and silver will be different from the time when I sell the paper holdings in my ISA to when the funds clear into my bank account but I'm willing to take the risk that it may go down.

When I joined the forum last week, I thought I was going to invest about 20% of my income into PM but I think I'm more likely to invest 7% but this means that my monthly budget for PM is quite low.

What do you think, is this a smart strategy?

Never copy another guy/girls homework, if they are wrong your wrong.

Each individual has to find their own comfort level and what works best for them.

You have rightly identified the risk in your plan "spot price " but like you say, it may also come down.

 

[Zeuk]

Make sure to factor in account and transaction fees to get a clear idea of cost - both when buying and selling, i'd be tempted to just save cash in a high interest isa or savings account if i were in your shoes, or trade up from silver to gold when the timing is right.  There are some differences between etf pms vs the real thing, exit price/exit strategy in particular imo.

[modofantasma]

If you take cash out of your ISA to buy physical gold remember you can't put that money back in beyond the current limit (£20k/year) the power of the ISA is really to let it grow and compound IMO. 

If it were me I'd just save the £ in a normal savings account or current account and buy when you have enough for sovs every other month for eg. Sounds like you've put some serious thought in to it which is nice to see too

[Khas85]

Really grateful for the responses. Some really good points made.

I think I'll open a cash ISA/savings account specifically to save up to buy physical PM

Edited December 20, 2022 by Khas85

[harrygill111]

ISA rates are generally poor vs a savings account unless you're exceeding your savings allowance and you're paying tax, which doesn't sound like is the case?

Out of curisority, why don't you leave your money in a savings account indefinately? 

Gold has averaged 6.5% compounded annually over the last 10 years. Good not fabulous. Factor in storage costs, you could still be quids in over the last 10 years, but maybe not the next 10 years. 

Just curious about what is driving the decision.

Do you plan to buy and flip, platform arbitrage? Buy and hold, buy and add value, collect? 

Do you have a mortgage, do you think gold will beat your interest rate? 

 

 

Edited December 20, 2022 by harrygill111

[Zeuk]

37 minutes ago, Khas85 said:

Really grateful for the responses. Some really good points made.

I think I'll open a cash ISA/savings account specifically to save up to buy physical PM

Another good way of saving is to use a round up account, I use moneybox and get 2.3 ish %.  It just takes a round up every week (i think) for daily purchases, i move that from a 90 day savings to a lower interest account that i can take out of once a month.  I reckon i save about 200£ a month doing this without ever thinking about it.  When im skint the money is there to draw down on, when im not it builds up nicely without me having to be pro-active.

[Khas85]

9 minutes ago, harrygill111 said:

ISA rates are generally poor vs a savings account unless you're exceeding your savings allowance and you're paying tax, which doesn't sound like is the case?

Out of curisority, why don't you leave your money in a savings account indefinately? 

Gold has averaged 6.5% compounded annually over the last 10 years. Good not fabulous. Factor in storage costs, you could still be quids in over the last 10 years, but maybe not the next 10 years. 

Just curious about what is driving the decision.

Do you have a mortgage, do you think gold will beat your interest rate? 

 

 

I don't have a mortgage and savings accounts have been paying very low interest rates. I'm hoping to be able to buy a property in a few years and want to use gold as a savings mechanism for the deposit. If the money is held in a savings account then it can be spent. I do plan to keep money in a savings account also but I want to add layers so that it is more difficult to spend it all. I hope I'm making sense.

[ZRPMs]

1 hour ago, Khas85 said:

I've been crunching some numbers to work out how much I want to put into PM every month but the figure I've come up with is very low and I won't be able to buy Britannias or Sovereigns on a monthly basis. This has led me to do some more research and I found that there's a platform I can move my ISA to in the next tax year in which I can invest smaller amounts in gold and silver and then when the balance is sufficient to buy physical gold, I can sell just those holdings within my ISA (tax free) and use it to buy physical coins. I understand that the price of gold and silver will be different from the time when I sell the paper holdings in my ISA to when the funds clear into my bank account but I'm willing to take the risk that it may go down.

When I joined the forum last week, I thought I was going to invest about 20% of my income into PM but I think I'm more likely to invest 7% but this means that my monthly budget for PM is quite low.

What do you think, is this a smart strategy?

Be careful when changing round your ISA. If its a stocks and shares ISA you'll find a lot of the funds have dropped significantly lately. You may find you could loose more in the long run. There's nothing wrong with 7%. For the longest time I was only about 2%. Probably best to open an instant access savings account. I know they aren't great but put your savings in it that you wish to use for your PM's. When you have enough for your desired coin withdraw the funds. Keep doing this and you'll be amazed at how fast it builds up. 

Also don't try to stick to your % amount too rigidly. This month you might make 7% then for the next few months its 5%. A bit later on perhaps 10%. Never leave yourself short.

[Khas85]

17 minutes ago, Zeuk said:

Another good way of saving is to use a round up account, I use moneybox and get 2.3 ish %.  It just takes a round up every week (i think) for daily purchases, i move that from a 90 day savings to a lower interest account that i can take out of once a month.  I reckon i save about 200£ a month doing this without ever thinking about it.  When im skint the money is there to draw down on, when im not it builds up nicely without me having to be pro-active.

I have a savings account with my bank that pays 5% and has a roundup feature also. I'm using one of those right now to save up 6 months worth of expenses. I may open another one also

[Khas85]

1 minute ago, ZRPMs said:

Be careful when changing round your ISA. If its a stocks and shares ISA you'll find a lot of the funds have dropped significantly lately. You may find you could loose more in the long run. There's nothing wrong with 7%. For the longest time I was only about 2%. Probably best to open an instant access savings account. I know they aren't great but put your savings in it that you wish to use for your PM's. When you have enough for your desired coin withdraw the funds. Keep doing this and you'll be amazed at how fast it builds up. 

Also don't try to stick to your % amount too rigidly. This month you might make 7% then for the next few months its 5%. A bit later on perhaps 10%. Never leave yourself short.

My percentage might be lower than 7%. I made a mistake in my initial post. It's 7% of my savings allocation. The majority of my savings is going to my ISA. I'll probably keep the ISA I have currently and just open a new one with the new provider to start paying into from April. So I'll have money in two ISAs then.

[harrygill111]

Help to buy ISA? Gov is better than gold

Edited December 20, 2022 by harrygill111

[ZRPMs]

If your saving for your first property. Look in to using a lifeime ISA. The government tops up this ISA with an extra 25% of your contributions. Give this a look https://www.moneysupermarket.com/savings/lifetime-isas

[Khas85]

Just now, harrygill111 said:

Help to buy ISA? 

I've not researched this much so not sure how it works. I think I've read that they won't be available soon. I could be mistaken though.

[ZRPMs]

2 minutes ago, Khas85 said:

My percentage might be lower than 7%. I made a mistake in my initial post. It's 7% of my savings allocation. The majority of my savings is going to my ISA. I'll probably keep the ISA I have currently and just open a new one with the new provider to start paying into from April. So I'll have money in two ISAs then.

You can't contribute to 2 ISA's in the same financial year. Be careful not to fall fowl of the rules. 

[Khas85]

2 minutes ago, ZRPMs said:

If your saving for your first property. Look in to using a lifeime ISA. The government tops up this ISA with an extra 25% of your contributions. Give this a look https://www.moneysupermarket.com/savings/lifetime-isas

Thank you for this. I knew a little about the LISA but I thought I'm too old for it to benefit me much. I've just seen in that link that the account needs to be opened by 40 but that's not necessarily when the bonus stops as I previously thought.

[Khas85]

2 minutes ago, ZRPMs said:

You can't contribute to 2 ISA's in the same financial year. Be careful not to fall fowl of the rules. 

I'll cancel my direct debit to my current one after my March payment and then start paying into the new one in April

[harrygill111]

Buddy line up your PM investment next to at least 2-3 alternatives. Help to buy isa included. Then do all of them, leaning to the one thats your best bet, safest return... becuase you're betting a house on it.

Many many years ago in your shoes, I did the same. Then turned to a side hustle of unpacking CEX time crisis game, gun and sensor packs and selling individualy 2-3x. Any idiot can do it. Cost me £20 to start, made 5 figures.

Point is gold sits around doing nothing. Same as savings accounts. They're both easy for busy people, which is good. Feeding the spending habit is not a bad thing, direct it. 

Not a financial advisor. 

Edited December 20, 2022 by harrygill111

[ShineyMagpie]

Interesting topic this I think a least. I like the idea of buying gold for multiple reasons, if nothing else other than to satisfy my spending desire. I know many have suggested to just save up then buy it. That may work for some but not for all (depends on self control) I intend to do this but then end up buy more "affordable" coins, in short smaller coins with higher premium and do generally wonder if this is good in the long run.

[sixgun]

Well if you are saving 100 units i would put more than 7 in gold but that is up to you.
i know i am often a pessimist but i have lived through a few booms and bust cycles. i lived through the inflation of the 1970's.
Fiat is going down the pan. GBP has done so badly over the last 120 years it is mind boggling. There is inflation in the system that doesn't get reported. Currency in a 'savings account' at 2% is losing 10% or thereabouts. Housing is high in the cycle and is declining. So many stocks could fall a lot. i remember the UK stock market from a few decades ago. There are plenty of Blue Chips that have disappeared, just gone out of business. 

Sovereigns are (taxed) money going in but tax free coming out. Buy at a fair price - you can sell privately at a fair price here. There are £millions sold on the TSF every year.
You can make interest on your gold - there is Kinesis and Monetary Metals but i don't want to complicate this.
Gold is safe. A little box of coins can be hidden somewhere that can't be found. There are plug safes. i had a tiny bit of skirting that i could pull away and hide a bag of coins. i could push it back and it looked like nothing had happened or was there.
The world of paper and fiat is crumbling. Now is the time you should be going to real money. Have some real money - don't fook around. 

[Orpster]

I would not bother with paper gold myself, one of the attractions for me in stacking is that I physically hold it outside any financial system.

I would just put money by each month and purchase when able.  

 

 

[Bigmarc]

I moved up the property ladder two years ago. My new interest rate means my mortgage has gone up by £800 per month. Have to remortgage in June but have the current rate accepted on a mortgage in principle. I have done this so I have options in June if it comes down again, my fear is it won't. This has wiped out any potential savings and metal purchases for the next 5 years but we still have a house. I have been collecting silver for over 20 years and gold the last 4 and I have to be honest I never see it as a savings mechanism to buy anything other than a comfortable retirement. Looking at gold right now its to close to it's all time high to warrant buying a property in the next couple of years. Seeing a financial/mortgage advisor would be my first port of call, most are free and you will be better positioned in your head on how to move forward. 

[harrygill111]

We're potentially moving into the buying oppertunity of the decade(s) with bargains in commercial and residential property, the stock markets taking a pummelling, bonds wraping up thier worst performance ever. Fuel duty increases next year and further interest rate hikes almost guarantee it. You've got people making small fortunes selling crapy pieces of wood as rustic floating shelves on Etsy among dozens of other digital gold mines. You can get a picture created by someone in India and owning the IP flip it thousands of times over, in a craze of ETSY and NFT buying, car wash's are reaching £25 a pop inside and out (around my way anyway) the streets are lined with gold - but most people are shi**ting thier pants. 

Edited December 21, 2022 by harrygill111

[Petra]

7 minutes ago, harrygill111 said:

We're potentially moving into the buying oppertunity of the decade(s) with bargains in commercial and residential property, the stock markets taking a pummelling, bonds wraping up thier worst performance ever. Fuel duty increases next year and further interest rate hikes almost guarantee it. You've got people making small fortunes selling crapy pieces of wood as rustic floating shelves on Etsy among dozens of other digital gold mines. You can get a picture created by someone in India and owning the IP flip it thousands of times over, in a craze of ETSY and NFT buying, car wash's are reaching £25 a pop inside and out (around my way anyway) the streets are lined with gold - but most people are shi**ting thier pants. 

There are always opportunities around, just getting the money in, once you have money you’re laughing, money let’s you make money.