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Starting to invest with a young family and little time

Behind every investment is a person, a person with goals they’re trying to achieve. This year Moneyfarm takes to the streets to speak to the people behind the investment and share their stories.

Michelle McDermitt, 43, had never invested before. After a decade of building up her savings in a cash ISA, the married mum of two was fed up with the measly returns offered by high-street banks. Deciding to take control, she made her investing debut.

Juggling motherhood, her job as an audit manager and managing the family’s finances, Michelle doesn’t have the privilege of time when it comes to growing her wealth – a common problem facing many savers today.  

Meticulous saver turns savvy investor

For the last decade, “meticulous saver” Michelle has put all her extra money straight into a cash ISA. With no goal in mind, keeping her rainy-day fund accessible in a cash ISA made sense 10 years ago. But interest rates have since been slashed from over 5% to 0.25%, which has diminished the returns offered on the cash ISAs from high-street banks.

Cash isn’t as safe as it used to be, either. Latest figures point to inflation of 2.3%, whilst the Bank of England has kept interest rates at 0.25%. Put simply, the cash you have today could have less purchasing power in the future.

“As time passed, the returns were getting less and less worthwhile on my cash ISA,” Michelle explains. “After a bit of research, I decided that a stocks and shares ISA might be better for me with the chance of increased returns.”

After shopping around, Michelle took the plunge last summer and set up her first ever investment account; a Moneyfarm Stocks & Shares ISA. Satisfying her keen eye for value, Michelle was won over by the low-cost product, accessibility of the ISA and transparency of our digital wealth management service.

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By making an investment, your capital is at risk.

As a new investor, she finds Moneyfarm easy to use and is happy with her portfolio’s performance – she enjoys logging in once a week to keep track.

She’s financially savvy and is confident the family’s budget is flexible enough to absorb any increases in prices and rates, but young families don’t always want to lock their cash away in case of an emergency, especially if you’re just learning the ropes of a new industry.

Feeding more than a baby

Drip-feeding £100 a month into her portfolio, Michelle is slowly building up a sizeable pot, which will allow her to benefit from any market volatility through pound cost averaging.  Knowing she and her husband can’t rely on the state pension throughout retirement, she wishes she could increase her monthly contribution, but is currently restricted by the uncertainties being a parent to two young children brings. For now, Michelle is doing what she can by maximising her employee contributions.

“As I’ve got older I’m starting to think more about retirement and I want to be comfortable without relying on whatever state pension there might be when the time comes. However, with a young family I wouldn’t want to lock that money away and not be able to access it if need be.”

She’s in it for the long-haul and is prepared to ride out any bumps in the road, especially as Brexit negotiations formally kick-off and global monetary policy comes under scrutiny.

The family own their own home and Michelle, the saver of the pair, is also a buy-to-let landlord. Whilst the formal Brexit process could impact personal finances and house prices, the Swindon-based mum is more concerned the current climate could restrict the financial landscape for her children when it’s time for them to go university or get on the property ladder.

At least Michelle is now maximising her returns with a Stocks and Shares ISA, protecting her investments from income tax above the basic rate in a £20,000 wrapper.

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