This Viewer Started Investing £150 a Month — Now Invests £1,050 Here’s How

[00:00:00]So, a viewer on this channel started investing £150 a month 2 years ago.

[00:00:05]Fast forward to today, they are now investing £1,050 a month. Now, most people don't get to make that type of escalation in their investment contributions because they skip the one thing that makes it possible. So, I want to break down what this person did. Not by my estimation, but by their own words because they left a comment on the channel 2 months ago.

[00:00:28]This is worth talking about. So, this is the viewer comment and it's from Shawn.

[00:00:32]This is left about 2 months ago on this video right here. Now, there are so many gems here and I want to break this down section by section starting with the admission that Shawn made here. He said, "When I first started, I resisted the urge to invest every step of the way."

[00:00:49]Now, straight off the bat, that is going to sound completely counterintuitive cuz let's be honest, you've been told on social media, on YouTube, on TikTok, on Instagram that it is important for you to start early. You should start today because the more you wait, the less time you have in the market. And that is true.

[00:01:10]However, what people are not also told is that it's important for you to make sure that you have the foundations in place before you begin investing. So, what are the foundations? Shawn actually explains it in the next bit that I want to highlight. He says, "I got the 6-month emergency fund built up and said, 'Right. Okay. Let's just invest money I can afford to lose.'"

[00:01:37]Now, that might not sound like a huge revelation, right? But, the key here is in the emergency fund and having that emergency buffer built up. If you've followed me for some time, you've read my book, you would understand that having an emergency fund comes right before investing. And it comes right before investing because it is one of the three foundations that you need to have in place in order to invest with confidence. So, what does an emergency fund give you? It gives you a couple of things actually. The first thing it gives you, it gives you protection on your reality right now.

[00:02:21]I call it shrink wrapping your life, right? Having an insurance policy around your life right now. The ability to know that if you weren't able to work for whatever reason, you've got 6 months of your expenses completely locked up, ready to go in case of an emergency.

[00:02:37]That is a lifeline. That is peace of mind. And it gives you the second thing.

[00:02:41]It gives you the ability to go into investing with laser focus. And when I say laser focus, like really focusing on, "Okay, let me invest. I don't need the money in the short term. I can commit to this investment for the medium to the long term." If you don't have an emergency fund, you're constantly going to be in this state of mind where you're constantly conscious of what's going on in the market because if something happens, you didn't have work or you weren't able to work, you might have to call on that money. Now, what did Shawn do once he had the emergency fund in place? Well, he says, "Literally baby steps for the first few months, 150 each payday.

[00:03:23]After a while, I realized my money isn't made of sugar and it's still there even after a few crashes." Look, you can't get around the fact that when you invest in the market, it is going to go up, it is going to go down. The markets will crash. But having the emergency fund in the background means that you're not relying on the money that you're investing, which again leads back to the focus, right? And the ability to commit this to the medium to the long term. And I love what um Shawn says here and the way he phrases it, "I realized my money isn't made of sugar."

[00:03:58]Because a lot of time when we invest, particularly if you're investing for the first time, you see a market crash and you think it's just going to disappear.

[00:04:05]Like the money isn't going to come back.

[00:04:07]That is not the case. We know that the markets return best over the long-term.

[00:04:13]And as long as you have the ability to wait things out, typically when you look at market performance, the recovery is where a lot of people will make money on their returns. And that's where the compounding effect really comes in. But then, how did Shawn go from 150 to 1,050 lb a month? Fast forward 2 years and I'm now investing 1,050 lb a month, adjusting each year for pay rises. And my ISA is now growing and growing.

[00:04:45]What often we don't do is we don't necessarily account for what we're going to do and how we're going to allocate money when pay rises come along.

[00:04:56]I have definitely been guilty of this. I get a pay rise, I buy a nicer car, or I spend more money on certain things. You have that lifestyle creep. And that isn't to say that it's negative that you shouldn't allow yourself to lifestyle creep. That's not what I'm saying. I think it's all about balance.

[00:05:13]I think it's about understanding, "Okay, I've got a 10K pay rise. So, after tax, what does that mean for money in my pocket? What's my take home?" And looking at, "Okay, look, you've worked hard to get that pay rise. Obviously, if there's a treat that you want to treat yourself in, obviously go do that." But also, with one eye on the future, trying to figure out, "Okay, so how much of this extra cash that I have in my wallet every single month, do I want to commit to my future?" Now, I don't know Shawn's situation specifically, but it sounds like there have been some decent pay rises that has meant that he's been able to make a 10x increase on the contributions from 2 years ago. Now, obviously this might be different for you. You might go from 150 or 50 pounds to 350 pounds. The The number doesn't actually matter. The fact that you're making increases and you're being intentional around that is the most important thing here. And Shawn goes on to say that I regret not starting earlier, but for me, if I didn't have that emergency fund built up, I probably never would have started. And that's the most important thing here. The thing that I really, really want to drive home. The emergency fund is the key to you investing with maximum effort, with pure focus, allowing you to take, you know, investment risk that should hopefully mean that you get better returns in the future because we know if you take higher risk, the reward is much, much higher. That doesn't mean that it necessarily happens all of the time because the markets are volatile, but this is where you start getting into the nitty-gritty of investing and figuring out how you build a diversified portfolio, for example, or where you're putting your money in and what strategy you want to employ. It may be that you have a core satellite approach, which is where you have a lump sum of your money or the majority of money in, you know, a core set of ETFs or index funds. But on the periphery, you have some individual stocks that you might take an interest in. Your investment strategy becomes very, very important, but you can start to play around with the possibilities and the variations and how you might want to go about investing your money on a personal basis once you have an emergency fund that gives you a strong foundation to begin. Now, look, getting an emergency fund for a lot of people is is a big hurdle. All right? There is There is a system that sits around how you go about building your emergency fund. If you need a little bit of help with that, then I would really, really encourage you to look at the Car Money Community because that's what we do. We talk about how do you build an emergency fund? What are the fundamental things that you need to have in place, the tools, the practices, the habits that you need to cultivate on a monthly basis to be able to make that possible so you can actually get to the phase where you're investing and creating wealth for the future. A lot of people have an idea that they don't know how to execute on.

[00:08:12]In the community, it's a 12-month program. You get 12 months of support from me, monthly Q&As, expert-led sessions. This is where we actually do real work to help real people make real progress. If you want to go check that out, I would encourage you to. I've actually got a 10% discount code at the moment which I'll leave pinned in the comments and in the description. So, go check it out. And look, this right here should be testament to the power of an emergency fund. All I'm going to say in ending this video is, please don't skip that step because you'll make more progress taking the time to build it than if you just started investing and then you've got to take two steps back because you missed this crucial step.

[00:08:56]Really important. Hope you enjoyed it.

[00:08:57]Let me know what you think in the comment section down below. And again, thanks to Shawn for commenting on the video as well. Take care. See you later.