Core-satellite investing: an active approach
Think back to your school science projects. No, not the baking soda–molten lava volcano experiment,...
How much do you pay to look your best? Maybe around £2,280 a year, or £190 a month, according to some simple sums we ran in the office this week.
While I’d be the last to suggest we stop pampering ourselves entirely, a couple of cuts to your beauty regime could help you to save more than a pretty penny over the next few years. Here’s how.
Asking my female colleagues and friends, I put together a list of things that many of us spend money on regularly. Of course, you may want to do your own personal numbers using this as inspiration – the goal was simply to create a kind of ‘benchmark’.
As you can see, we’ve included a range of ‘basic’ services like haircuts or leg waxes, as well as a few more ‘luxury’ items like a massage or a manicure. In this first instance, we’ve based our cosmetics pricing on more expensive brands – although we have stuck to a just a few key products.
|Hair cut||£60||Every 2 months||£360|
|Hair highlights||£120||Every 4 months||£360|
|Full leg wax||£40||Monthly||£480|
|Massage||£60||Every 2 months||£360|
|Spray tan||£20||Every 3 months||£80|
|Foundation||£35||Every 6 months||£70|
|Moisturiser||£35||Every 6 months||£70|
|Mascara||£21||Every 3 months||£84|
|Lipstick||£28||Every 6 months||£56|
We then set about rationalising what went in and where we could potentially make cuts. After a few lively debates, we costed out a ‘version two’ of our basket, based on suggestions such as calling your local hairdresser on the day to see if they offer standby appointments, getting your highlights done professionally just once a year and touching it up yourself thereafter, doing your waxing and tanning at home, and getting your eyebrows done properly once a year and maintaining that yourself at home too.
We kept the massages in, but reduced their frequency, and we looked at alternative brands for the key cosmetics items. Again, you’d need to do your own prioritising as to what you could and couldn’t live without, but hopefully our list gives you some ideas.
|Hair cut on standby||£30||Every 2 months||£180|
|Roots touch-up at home||£5||Twice yearly||£10|
|Full leg wax at home||£15||Monthly||£180|
|Manicure by a friend||£0||Monthly||£0|
|Eyebrows once, then at home||£15||Yearly||£15|
|Massage||£60||Every 3 months||£240|
|Tanning product at home||£8||Every 2 months||£48|
|Foundation||£10||Every 6 months||£48|
|Moisturiser||£13||Every 6 months||£26|
|Mascara||£8||Every 3 months||£32|
|Lipstick||£8||Every 6 months||£16|
So, this works out to monthly costs of £190 for the first basket and £74 for the second – a saving of just over £115. This is nothing to be sneezed at. Nor is the annual saving of £1,393.
More meaningful still, however, is what you could achieve if you took your monthly saving and invested it. Say you’re thinking you might like to buy a property in a few years. If you started investing that £115 every month now, and received an estimated annual return rate of 5% for example, you could have £7,900 in five years’ time.¹
What’s more, if you’re under the age of 40 and you put that money into one of the new Lifetime ISA accounts (LISAs), you would also benefit from the government’s 25% bonus each year. So if you put in £1,393, for example, you’d get an extra £348.
If this has sparked your interest and you’re looking for investment ideas, I’d suggest keeping things simple with a few funds that can offer you diverse exposure to different countries and assets. AXA Framlington UK Select Opportunities and Investec UK Alpha are good core UK equity candidates, while M&G Global Dividend and Standard Life Investments Global Equity Income have a nice spread of holdings around the world.
To boost your growth potential, you might want a small amount in an emerging market fund like Lazard Emerging Markets, or a region-specific option such as Matthews Asia Pacific Tiger, although it’s important to remember these types of funds will be more risky than investments in developed markets and you will have a higher chance of losing money too.
For a more cautious investment, you could also consider a fund like Artemis Monthly Distribution or Schroder MM Diversity, both of which invest in some bonds and other assets, as well as stock markets.
¹The Calculator Site, compound interest calculator, £115 contributed per month for five years, compounded yearly