Wealth Check: 'How should I invest my first proper salary?'

Chris Watt, 23, works as a junior reporter with the Herald and Times Newspaper Group. He lives with his partner in a modestly priced flat in Glasgow city centre.

Having recently graduated from the University of Glasgow, he is very happy with his current employment situation but he is thinking about his pension and is keen to get onto the property ladder.

"I've never had a salary before, and beyond the basics of feeding myself and renting a flat I don't really know what to do with it," he says. "I guess I should probably think about a pension, though at 23 it doesn't seem like a pressing concern. Looking at how pension funds have behaved lately, I feel like I'd be as well just hoarding Euros in my sock drawer or investing in gold teeth. Outside of that I would like to get onto the housing ladder within the next few years."

As well as starting a pension and getting a home of his own, Chris is also keen to find alternative ways to supplement his income.

"At the moment, I'm really just hoping to stay afloat, but in the longer term I've always fancied playing the stock market," he explains. "I'm unlikely to get rich through journalism, so if I could augment my income with some good investments that would be very helpful."

Income: Chris earns around £22,000 per year
Monthly Outgoings: Around £1,270
Debt: £8,000 to student debt company
Savings: Chris has £8,000 in ISAs

Advice this week is given by Gordon Bowden of Quainton Hills, Alex Pegley of Calculis, and Danny Cox of Hargreaves Lansdown.


The experts agree that Chris should set up a pension and start saving for his retirement.

"Chris knows he should consider pensions, but thinks that at 23 he's too young. By starting pension contributions now he will massively boost his retirement income. Assuming Chris wants to retire at 60, if he starts contributing now his pension will be 99 per cent higher than if he waits 10 years (assuming the same regular contribution) and he won't miss the money he contributes," explains Alex Pegley.

He believes that Chris's employer will almost certainly offer some type of pension arrangement, and recommends that he joins it as soon as possible and look to invest adventurously within it.

"In the unlikely event that his employer does not offer a pension scheme, Chris could start his own private pension such as a low-cost SIPP. A low-cost SIPP offers a huge range of investment choice including shares, funds and investment trusts. Contributions to SIPPs start at £50 per month and these can be built up over the years," says Danny Cox.


Once Chris has established his pension scheme, the experts believe his next step should be to invest in a high-interest ISA. In doing so he will protect himself in a turbulent market by having a financial buffer, should he find himself unemployed.

Gordon Bowden explains: "While interest rates are fairly dreadful at the moment at least his money should be secure and accessible when he needs it. Indeed this money can also provide a cushion for access should he be made redundant and not be able to find work for a period of time. Having a cash cushion as self insurance may prove to be the less expensive option."


Pegley advises Chris to get on the property ladder as soon as possible. "Chris wonders whether now is a good time to be buying property, in short yes – prices are lower than they have been and appear to have started rising. I think we're currently experiencing a w-shaped recovery in prices, ie they are picking-up (mainly as a result of limited supply) but may fall further (as the recession deepens and more jobs are lost). Regardless of whether house prices will fall again, by buying now Chris will pay less than a year ago and, in the long term, that will represent good value."

Gordon Bowden agrees: "My opinion is that Chris and his partner should do everything they can to get a foot on the housing ladder. He will not be able to time the bottom of the housing market but, in the long run, a house or flat purchase should prove to be a good long-term investment regardless of the actual timing. The alternative to buying is to rent, which will involve him paying his monthly rent to a third party and never seeing a return for it."

Unemployment insurance

With regard to unemployment insurance, Chris should shop around carefully before taking out cover. Cox says that unemployment insurance will often only cover debt repayments or other long-term commitments, and then typically only for a 12-month period. Generally, unemployment insurance is inexpensive, which tells you that not many people claim successfully, otherwise the premiums would be considerably higher.

For a free financial check-up, write to Wealth Check, The Independent, 191 Marsh Wall, London E14 9RS; or email wealthcheck@independent.co.uk. To find an independent financial adviser in your area, visit www.unbiased.co.uk

world cup 2014A history of the third-place play-offs
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur

Diving in at the deep end is no excuse for shirking the style stakes

The Mexico chief finally lets rip as his emotions get the better of him
world cup 2014
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
...and the weight loss industry is rubbing its hands in glee
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Yaya Touré has defended his posturing over his future at Manchester City
Detail of the dress made entirely of loom bands
Life and Style
There were mass celebrations across Argentina as the country's national team reached their first World Cup final for 24 years
transfersOne of the men to suffer cardiac arrest was 16 years old
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Information Security Manager (ISO 27001, Accreditation, ITIL)

    £70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

    Biztalk - outstanding opportunity

    £75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

    Trade Desk Specialist (FIX, Linux, Windows, Network Security)

    £60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

    Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

    £35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice