What are dividend producing stocks

Should I invest my money in an ISA or government bonds? (Or any other suggestion)

So you've got off to a really good start. Congratulations on your debt free and good income.

Being an IT contractor can be financially rewarding, but it also involves risks, much like investing. With your disposable income, I wouldn't be afraid to invest in continuing education to improve weak skills through sites like PluralSite or CodeSchool. They are not particularly expensive for someone in your situation. If you were burdened with debt and payments, the story would be different.

An emergency fund will help you be a good IT contractor as it will add stability to your life. I would keep around £ 10K in a boring savings account. Do not think of it as an investment but as insurance against life's sufferings. With a fund like this, you can find a high-paying job that may fail you or invest with impunity.

I encourage you to take an intermediate step: undress on your own. I would recommend renting before buying, even if it's just a room from someone else. I would try to be out of home in less than 3 months. Being alone helps you mature in ways that can only be achieved when you are alone. It will also reduce the culture shock of buying your own home or starting an adult relationship.

I would invest at least £ 300 / month in growth stock mutual funds. Keeping this at around 15% of your income is a good metric. If available, you can enter this in tax-privileged retirement accounts. (I'm sorry but I don't know about retirement plans in the UK). This will fund your retirement at 60. (As of right now, you can retire well before 68.) Stick to an index fund for the time being, and once it hits 25,000 you may want to look for diversification.

For the rest of your disposable income, I would invest in something safe. Your disposable income is likely to change as you have additional costs for rent and food. This will be your home fund purchase. This should be safe. Something like a bond fund, a money market, dividend-producing stocks, or preferred stocks.

I'm currently doing this and have 50% in a savings account, 25% in a Blue Chip Index Fund, and 25% in a preferred stock fund. In this way you have a decent stability of the principle and at the same time a certain ability to grow.

Once you've built that up to around 12K and you're comfortable, you can start buying a home. You may want to be on the high end of your region so try to save at least 10%. or you might want to get really weird and save the whole thing and buy your house for cash. If you are still single, you may want to rent a room or two so that your home can generate income.

Here in the US there are other ways to generate income from your property. An example is a house with a separate area (and room) for parking a boat. A boat owner pays decent money to have a place to park their boat and there is very little impact on the owner. Be creative and you may find a way where a potential property could bring income as well.

Good luck, get back to you with progress and further questions!

To edit: After some reading, ISA seems like really good business.


Thank you @PeteB - I appreciate the fact that being an IT contractor is rewarding and risky at the same time, and I would make sure I made at least 6 months of savings before I jumped. I've worked with experienced contractors my entire professional life, and everyone has given me the same advice. I don't have to agree on the intermediate step of renting a room or apartment, it's just dead money and I'm perfectly happy to be living at home (as are my parents) until I can leave a large deposit on my first home . I'm going to dig into the 50%, 25%, 25% method, I looked at ETFs!

Liam Harries

voted for a mention of Pluralsight. I use it almost every day and cannot emphasize enough how valuable it is.


I'm pretty active in Pluralsight, AWS tutorials, and Codecademy.