Plum & Freetrade - Making Money Go Further
At the start of 2021, I started looking into making my money work a little harder. This was primarily by having a better saving strategy in place as well as entering the world of investments.
Plum - Basic Route To Entry
Plum was my first foray into having something out of a banking environment to manage my money. Plum is a savings app that connects to your bank account and cards to analyse your spending to get an idea of how much money it can transfer from your account into its "saving pockets". The amount of money transferred can be configured to adjust how much money you want Plum to transfer. There are multiple options available within the app.
Once the money is transferred, you can either leave it within Plum as a separate pot of money to keep aside for a rainy day or go a step further and invest in funds. It was through this app that I got my first exposure to investing in stocks and giving it more of a serious thought after previously being quite reticent.
As great as the wide variety of fund portfolios offered by Plum are, I found them a little restrictive and wanted to venture into making my own decisions. I invested in two funds:
- Tech Giants: Investing in technology shares like Facebook, Apple and Google.
- Balanced Bundle: With 60% shares 40% bonds, this fund offers a balanced combination of shares and bonds.
I ended up making quite a nice return from those funds alone, but I felt I wanted more control. For example, the Tech Giants portfolio had a relatively small percentage of equity in FAANG companies.
Freetrade - More Control
I haven't entirely replaced Plum for Freetrade as I believe it still has its uses. Even though I withdrew all money from investment funds to re-invest into my stocks in Freetrade, I still use Plum to sneakily put money aside automatically based on my preferences.
Freetrade wasn't my first option for carrying out investments - it was Trading 212. Unfortunately, Trading 212 are not accepting any further sign up's "due to unprecedented demand" and have been on their waiting list for over a year. Trading 212 seemed to have a greater variety of shares and a range of investment types, including CFDs, gold and crypto.
I can't grumble with Freetrade as it has allowed me to invest in the majority of the areas I require, which is good for someone who is finding their feet in the investment game. Transferring funds is seamless.
My portfolio consists of S&P 500 and individual stocks in FAANG (and a few other) companies, where my monthly investment ratio is an 80/20 split:
- S&P 500 - 80%
- FAANG - 20% spread over multiple stocks
I plan on revising this ratio to a 70/30 split later in the year once all wedding expenses are done and can afford to gamble a bit more. As you can see, I am focusing on S&P 500 for the moment as I feel it's safer and overall less volatile.
For anyone new to investing, S&P 500 Index Fund is the safest place to start as you're investing in the top 500 large publicly-traded domestic US companies and is considered to be the best overall measurement of US stock market performance. The main benefit is that a decline in some sectors might be offset by gains in others.
- Vanguard S&P 500 (VAUG)
- Microsoft (MSFT)
- Amazon (AMZN)
- Dell (DELL)
- Apple (AAPL)
- Google (GOOGL)
- AMC Entertainment (AMC)
I see investing in S&P 500 Index Fund as putting things in place for long-term wealth and not short-term wins... Short-term wins I'm hoping to achieve through specific stock investments. AMC was a little bit of a wildcard investment as the stocks were so cheap and I just kept buying through the dip. It is only now I managed to receive a 56% return.
I've come late into the stock game as I know of people who have made quite a good return from the stock options made during Covid... Who would have thought Covid would be an opportunity where more money could be made???
Based on my current strategy, I know full well that I won't be getting a high return to supplement my current income and that's just down to playing it safe. I'm still kicking myself on why I didn't start sooner - even if it was just solely investing in an S&P 500. On average the yearly return is around 10% and pretty consistent.
If I had been quicker off the mark and invested £200 a month over the last 10 years, this would equate to £41500 with £17300 of interest. Probably best not to focus on time lost and just focus on this point forward.
My goal is by end of the year is to increase my portfolio and if I'm able to get some form of short-term reward, that's a bonus! I plan on writing a follow-up post by end of the year to report what worked and what didn't.
Disclaimer: I am not in any way a financial advisor and this post is just a write up of my thoughts.