Basic saving advice

[chris285]

I've been reading some of the threads in this section and it's made me realise I need to start some regaular saving, and it is something i plan on doing when i get moved into my new house in the next few weeks time.

My situation is I'm a mid 30's single guy with a decent paying job for the area, like i say moving into my first house having taken out my first mortgage and I have no other loans/cards/car finance to pay.

I'm not going to have lots to put aside on a monthly basis I am thinking maybe 1-200 a month is my current target, however it is something i would like to increase over time when i can.

I don't really want the money to be unaccessible for a fixed period, granted i don't really want to be taking it out but if something happened i'd like to be able to access it if required.

I have done a stocks and shares ISA in the past, this was taken out in about 2008/9 i think and actually i worked quite well for me in terms of the return as i was on a medium/adventourous policy from memory. There is also the new LISA which is similar but not to sure on the exact rules and can do and can't do with this in terms of getting access to funds if required.

Or i am better and looking at a year or 2 fixed rate from say my current bank, and try to build up more funds this way and look to work with what is in there after say 2/3yrs time when it gives me better options?

[Sir Bagalot]

Do your mortgage company allow overpayments? Do they allow recall of those funds?

A few years back I needed about £10K. I simply called Nationwide whom my mortgage was with and asked for £10K of my overpayments back. I had payment within 7 days.

With overpayments you're obviously saving the interest

[chris285]

I'd have to have a look at my mortgage terms, but not sure id i'd want to put everything into this as i do plan to overpay as well as save

[mike9009]

I have a similar amount 'spare' each month, maybe a little more. I have taken a three prong approach with more or less equal thirds into each pot, originally....

1. Mortgage. It 'feels' like interest rates will go up a little, so protecting yourself with overpayments is a good approach, as mentioned above in the thread.. I find using this tool quite motivational.....

https://www.moneysavingexpert.com/mortgages/mortga...

Bear in mind I have been preparing for interest rates to rise for the last 7 years!! I am with Nationwide so I can get the overpayments 'back' if necessary. It provide some short term flexibility, if I need it.

2. Stocks and share in an ISA wrapper. I have some stock and shares investments, but after the last week these are making me a little nervous. These have given me a good return over the last few years, though.... just glad I don't need the money this week! This is my medium term savings

3.Pension. As a higher rate tax payer and playing the child benefits 'game', putting extra into my pension really makes the most financial sense. So I have refocused more money into my pension this year, especially after a recent pay increase. Definitely the long term vision.....

A little bit in each spreads the risk for different outcomes through my life.......

Believe it or not I also make sure I have some money for 'fun' stuff too - this obviously is not counted in this post!


Mike

[Macneil]

Several banks offer regular higher interest savings accounts to existing customers limited to a few hundred pounds a month. You can get 5% on £200 per month with Santander, similar on£300 per month with First Direct and I think M and S bank too.

[chris285]

I do have a pension through my work as well, i cannot remember how much per month goes into the pot but i think it is above what I am looking to save per month as well

I was thinking stocks and shares link ISA as a possible course, but obviously I understand that there is more of a risk just because of the type of investment involved compared.

My bank gives me 3% currently for 12 months so i may look to use that in the short term, then look to move the funds once the rate expires

[PWeston]

Drip-feed monthly into a Vanguard Lifestrategy Fund. Just make sure you pick an appropriate equities/fixed income mix for your likely investment horizon.

[Craikeybaby]

I do a 4 way split, over pay mortgage, increased pension, S&S ISA (Vanguard Lifestrategy) and normal savings account.

[chris285]

I'd not seen vanguard before, so thank you for pointing me in that direction as i think i'd look at that as a bit more of imedium term investment plan

Might look at like the 4 way to start with and just carry on reviewing what i have as time goes on really, thanks for the help so far i think it has given me an idea of a plan

[pmanson]

If you can get into the habit of paying an extra 10% on your mortgage (i'm aiming to get my LTV down to 75% later this year, remortgage to a lower monthly fee then save/invest the extra cash each month).

Try to get a 3 month buffer of cash saved away so you know you can cover the mortgage etc for that time period. Depending on whether or not you have any income protection you may want a little available in instant access.

After that lots of options available - i recently opened a Vanguard ISA and i'm drip feeding an amount in each month against a couple of funds (It's a minimum of £100 per fund)

Don't forget to save for holidays / car services etc so probably good to split between a longer term investment (ISA) and savings

ETA. This book is often recommended on here, i've got a copy, which i'm halfway through reading. Really interesting

Edited by pmanson on Thursday 8th February 13:22

[Chainsaw Rebuild]

On the subject of ISAs, I used to have a high street bank IAS and it was a bit pants. Then I got one with ST James Place via an independent financial advisor which has paid me over 6% on average over the last 4 years.

So don't get an ISA with a high street bank - get a proper one. :-)

Also my IFA has been pretty helpful, might be worth getting one. He doesn't cost me anything.

[sas62]

Chainsaw Rebuild said:

On the subject of ISAs, I used to have a high street bank IAS and it was a bit pants. Then I got one with ST James Place via an independent financial advisor which has paid me over 6% on average over the last 4 years.

So don't get an ISA with a high street bank - get a proper one. :-)

Also my IFA has been pretty helpful, might be worth getting one. He doesn't cost me anything.

St James Place can be one of the more expensive places to invest and has been the subject of a Which report for hidden charges. If your IFA is charging you nothing you should check what STP is charging you (for initial and ongoing fees) and and fees paid by STP to your IFA. Could be your 6% is before some hefty charges - 5% initial charge is not unknown.

[Chainsaw Rebuild]

sas62 said:

St James Place can be one of the more expensive places to invest and has been the subject of a Which report for hidden charges. If your IFA is charging you nothing you should check what STP is charging you (for initial and ongoing fees) and and fees paid by STP to your IFA. Could be your 6% is before some hefty charges - 5% initial charge is not unknown.

I will look into that, thank you. I have the annual report paperwork somewhere so I will get right into the fine print. Its certainly working out better for me than the high street, but I will check what other options I have.

To be honest I went with St James Place because my IFA is also my climbing mate, in the unlikely event his ripped me off I shall simply tie him off and leave him hanging half way up the wall.

[craig1912]

Chainsaw Rebuild said:

I will look into that, thank you. I have the annual report paperwork somewhere so I will get right into the fine print. Its certainly working out better for me than the high street, but I will check what other options I have.

To be honest I went with St James Place because my IFA is also my climbing mate, in the unlikely event his ripped me off I shall simply tie him off and leave him hanging half way up the wall.

If your mate works for St James Place he isnt an IFA anyway.

[chris285]

pmanson said:

If you can get into the habit of paying an extra 10% on your mortgage (i'm aiming to get my LTV down to 75% later this year, remortgage to a lower monthly fee then save/invest the extra cash each month).

Try to get a 3 month buffer of cash saved away so you know you can cover the mortgage etc for that time period. Depending on whether or not you have any income protection you may want a little available in instant access.

After that lots of options available - i recently opened a Vanguard ISA and i'm drip feeding an amount in each month against a couple of funds (It's a minimum of £100 per fund)

Don't forget to save for holidays / car services etc so probably good to split between a longer term investment (ISA) and savings

ETA. This book is often recommended on here, i've got a copy, which i'm halfway through reading. Really interesting

Edited by pmanson on Thursday 8th February 13:22

Based on my mortgage I am looking to overpay by 10% on the montly rate, so will be about £357 and i plan to round up to 400 per month

I plan on having a pot for car costs outside of fuel, holidays....well i do some car shows but very little for me right now but i get your point

I will work on the 3month buffer, and also look into a copy of that book as well