I can’t advise on investing (as no-one legally can unless they have the right professional qualifications to do so) however while saving for travelling I put my money into investments rather than a savings account. My goal was to save for two years, because of this time length I saw it as an opportunity to make money on my savings while I was saving. While I was working in London I saved £11,000 in 18 months. The figure when I started travelling, 31 months after my saving period started, was £13,500. I knew it had this potential because of what I invested in, their was however also the chance investing my savings could decrease the amount I saved. I could be worse off, but for me, the reward was too high and I was comfortable with the risks I was taking. Here I go over my goals, key terms, why I chose what I chose, and how. The aim here is so you can make an informed decision as to whether it may be suitable for you too.

travelling alone, female solo travelling, saving money for travelling
 saving money for travelling, female travelling, solo travel
travelling alone, female solo travelling, saving money for travelling

My goals for investing while also saving for travelling:

Liquidity:

Liquidity is the speed at which your investment has the ability be cash in your bank account again. This was absolutely key to saving for travelling, I wanted to know that I could have that investment back in my back pocket quick as a flash for whenever I needed. I was looking for investments that could give me my money back in around a week or so from when I requested it.

Long track record:

I looked for this simply because a longer track record means a more established portfolio, something I wanted when considering saving for travelling. I would look at if it had had downturns (losing money for more than a year?) if it did, even if it had downturns for six months I wouldn’t consider it. The average age of the funds I was investing in were 10 years old. While a fund may have been performing well for 2-3 years or so, the fact I was saving for travelling and only had a relatively short investment time frame, (24 months) makes only 2-3 years of track record very risky. The longer the time frame the better so I avoided being sucked into younger portfolios with very impressive returns, for portfolios that had age on there side. But I understood this didn’t mean it would definitely give me more money than I had invested.

Low initial, AMC and ongoing charges:

With investments it’s normal to have an initial cost at the start and an annual management cost (AMC) taken as a percentage of your investment. Particularly with a short investment time frame, I wanted a low initial cost. AMC can vary massively dependant on the investment, my average AMC was 0.90%, but you can pay anything between 0.75%-1.5%. A thing to remember here is that there may be extra charges not included in the AMC such as auditors fees, they may be called ongoing charges that they will disclose once a year. I checked and was happy with the ongoing charges of my portfolio choices.

Something I could not access on my phone:

I didn’t want anything that I could control or change on my phone. It could potentially mean I may change something drunk or hear one piece of information, pound signs would appear in my eyes and I would make an investment decision that wasn’t focused on my saving for travelling goals. I also set my account up so I couldn’t access it between 11:30pm-5am, as you can probably tell, I don’t trust myself when I’m drunk.

My growth goal vs volatility:

I decided on a return I wanted to for. I wanted a 10-15% increase annually over the 2 years. This aim would be considered a moderate to high risk decision. In short the more risk you take, the more return you can get, so while I would love to say I want an annual 50% return, I didn’t because I didn’t want to take on the risk considering this was about saving for travelling and not making all the money I could. Upon decided on 10-15% when doing research I was looking for funds that had had returns similar to this but with as lower volatility as possible.

To buy units in a trust:

The investopedia definition of this of a unit trust is ‘an unincorporated mutual fund structure that allows funds to hold assets and provide profits that go straight to individual unit owners instead of reinvesting them back into the fund’.
To make this a lot easier to understand its a bit like saying you and ten friends set up a sports club called ‘Sports for us’, to show you are part of the club, you each get one unit of ‘Sports for us’. In this club you buy a football, a basketball and a racket with tennis balls, all of this is owned under the ‘Sports for us’ name. Now technically because of your one unit, you have a tenth of all the positives of owning a tennis ball, racket, football and basketball ball. This is good for you, it gives you the opportunity to make the most of all three in the club. But the best bit about this is that say all of a sudden everyone hated basketball, if you only owned the basketball it would be a nightmare, no-one would want to play, but it’s fine, you have the tennis ball, racket and the football so people will still want to play. It’s the same in the investment world.
In a unit trust you are given units of that trust (the club in my example previously) which means the trust owns part of the companies the fund manager decides is a good investment. Your name will not appear on any shares of the companies that have been invested in via the trust, it will be the trusts name. This is good for you in two ways; one it is diversified for you, the trust on your behalf has fingers in lots of businesses potential upside. If any of the companies decrease in value in the trust it won’t be too heartbreaking because there are other businesses in the trust that are still doing well, so will give your investment cushioning.
A final benefit for me was that, say you only had shares in the company Nike. All of a sudden Nike are doing terribly and everyone wants to sell there shares, but what are the chance of finding someone who will take your Nike shares when it’s doing so badly? Very unlikely, you will no doubt have to sell them and lose money to get rid of them. However having Nike shares in a trust, of which you owned units in, because of how many companies the trust invests in, it means the price you can sell at won’t change that drastically. More often than not, the unit trust offers a price to buy them off you. Which makes the units I own liquid, they can easily go from investment to cash, which is my key objective and why I chose unit trusts.

If you want to understand more on investment trust take a look at this Which? guide to investment trusts.

saving money in London, travelling alone, female solo travelling, saving money for travelling

Saving for travelling and doing your research:

This should take you time. I spent two days deciding on eight funds I would eventually invest in. The very first step would be either to google or if your platform has a recommended buy list, go through all of it. Read, saving it in your reading list, do whatever.There will be words you will need to understand in later life so, no time like the present! Again for me, as I was googling/reading/researching in my head I had my criteria, no matter if I saw a fund that seemed to be giving a 30% return I would not look at it. I wanted liquidity, a long track record and a performance with a low volatility.
When researching you’ll see lots of words: ISIN, SEDOL, MEX, INC,ACC,NAV, key features documents, composition, management team, OEIC, mutual fund classifications: accumulation, fund size, and type etc. It looks daunting but provided you know your key objective goals you can meander through the investment jargon. Remember when your looking through the funds to only focus on your goals, don’t be lured in by companies names you recognise or high growth in the last six months.

Tools to help you choose:

travelling alone, female solo travelling, saving money for travelling

saving for travelling, travelling alone, female travel

travelling alone, female solo travelling, saving money for travelling

How.

Set up an stocks and shares ISA/portfolio or a DIY investment account:

In the world of financial planning, the first thing any financial planner will tell you to do with any excess cash is put it into an ISA in the UK. ISAs are beneficial to users because they give tax free growth, many platforms will call ISAs ‘tax-efficient wrappers’. (Once your investment profit reaches a certain value a tax is levied on this profit of your investment- this is called capital gains tax, or CGT.) Because my investment time frame so small and my goal was saving for travelling, it really didn’t make a difference that it was in an ISA, a DIY investment account would have achieved the same goal for me. Funds(unit trusts) are cheaper to buy through fund supermarkets and you can easily set up an investment portfolio. Below are just some on the platforms you can use to set up a portfolio to put money into.

Want to know more about the best platforms to buy funds from? See here.

travelling alone, female solo travelling, saving money for travelling

Saving for travelling and choosing funds.

Once you have chosen the platform you would like, the platform should make it  simple for you. Follow the steps the platform guides you through. These were the choices I made based on the objectives I had for myself and the fact I am comfortable with risk and investing in small companies.

  1. BAILLIE GIFFORD GLOBAL DISCOVERY B NET ACC NAV
  2. MAITLAND INSTL SVC MI TWENTYFOUR AM DYNAMIC BOND
  3. FUNDSMITH LLP EQUITY I INSTL ACC NAV
  4. MARLBOROUGH FUNDD MANAGER UK MICRO CAPITALISATION GROWTH P ACC
  5. OLD MUTUAL INVESTMENT MANAGEMENT UK MID CAPITALISATION GBP ACC
  6. SARASIN FUND MANAG GLOBAL HIGHER DIVIDEND HGD P INC
  7. ARTEMIS FUND MANAGERS GLOBAL INCOME UNITS INSTL INC
  8. MAITLAND INSTL SVC MI TWENTYFOUR AM DYNAMIC BOND

travelling alone, female solo travelling, saving money for travelling

Saving for travelling after investing.

Once you have made the choices do not look at it regularly apart from when you are putting your monthly set amount in. The day to day fluctuations can be high and will either leave you feeling elated one day and deflated the next. Remember that the FTSE (financial times stock exchange) has been around since 1935 and the general trend is up. Leave it alone for day to day changes and do not be tempted to tinker with it.

Related articles:

Can’t save? Neither can these lot.

travelling alone, female solo travelling, saving money for travelling

You should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, and the income derived from them, may fall as well as rise and the amount realised may be less than the original sum invested.

travelling alone, female solo travelling, saving money for travelling

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