Mr. Sensible and The Spending Devil

Playing cards representing good and evil

What motivates millennial investors?  We care, so we asked one to write for us.

As a young, working 22-year old recently catapulted into real life from the cushy comforts of University, I wanted to write a piece to share my early experiences of investing, what I like, what motivates me, and what my strategy is for the long term.

The increasing centrality of the internet to our daily lives has democratised investment opportunities and has allowed previously untouchable unsophisticated investors like myself to invest across a number of different verticals.

Financial independence is a funny thing - the devil on your shoulder is urging you to spend large and live like a king, whilst your sensible 30-year old self quietly advises you to put that money away for a rainy day. However without an understanding of the products on offer, the Spending Devil will put an end to Mr. Sensible.

My overarching strategy is to have a diverse portfolio of steady investments that will provide a reasonably predictable rate of return. I currently have around six thousand pounds wrapped up in a Funding Circle lending portfolio and and 7.5k in a Nutmeg Stocks and Shares ISA. Funding Circle enables a minimum investment amount to SMEs of £20, meaning my 6k has been lent out to over 300 businesses. As businesses make their repayments, funds accrue in my account and the automatic investment tool I have enabled - AutoBid -  automatically reinvests these funds into new businesses.

The result is a rolling portfolio of SMEs generating an average rate of return of around 7.2%. Even if a couple default, which they have, the sheer number of companies I have lent to means I am bound to always be in the green. I tailor Autobid so that it doesn?t invest in companies that are assigned the risk bands of D and E, as whilst offering higher rate of returns, these have been deemed risky opportunities by the lending platforms in-house team.

I've learnt the importance of taking a long-term view

As for Nutmeg, it similarly allows you to tailor your risk appetite, again putting your faith in the hands of in-house professionals. I have selected a similarly conservative approach and expected rate of returns sit around those of Funding Circle. I have set up a direct debit into my Nutmeg account to capitalise on the peaks and troughs of public markets, which always present an opportunity to buy cheap and see your stock bounce back.

Through Funding Circle and Nutmeg, I have been able to establish a steady rate of return that really suits someone like me - new to the world of investment. The tailored services on offer have allowed me to automate and outsource the backbone of my investments, whilst also providing occasional moments of jubilation when you witness your portfolio exceeding expectation!

Sometimes it can go the other way, and I've learnt the importance of taking a long-term view when that happens. However the variance either side of this is minimal because of how I have structured my investments, and when this backbone hits roughly the £30k mark, I will look to spend the next few thousand on one or two higher-risk, higher-return venture capital investments, facilitated by equity platforms like VentureFounders and GrowthDeck.

Any losses made here will be offset by my conservative super-structure, and any gains? Well, it's Mercedes time.

The absence of exit fees at both online brokers provide enormous peace of mind for an unsophisticated investor such as myself. The ultimate goal is to leverage the enormous opportunities presented by FinTech companies which are lowering the barriers to entry for all, and, when the time is right, liquidate and purchase London property - the commonly accepted, ultimate investment.

Read our earlier article about millennials, Young, Gifted and Already Investing.