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  • FIRST POST
    • jelliott94
    • By jelliott94 20th May 17, 12:53 AM
    • 2Posts
    • 0Thanks
    jelliott94
    What a newbie should do with £1000 per month
    • #1
    • 20th May 17, 12:53 AM
    What a newbie should do with £1000 per month 20th May 17 at 12:53 AM
    Hello money saving experts everywhere!

    I'm due to graduate in the coming months and begin my graduate job in June. I'll be making a very good wage and want to begin putting £1000 per month away into either a savings account or some form of investment, and to continue to do so for the foreseeable future.

    I've just started researching my options and thought I could get some good suggestions on here, all suggestions are welcome!

    So I ask you to put yourself in my shoes and share what your plan of action would be!
    £1000 per month to work with, first time investor so ideally low risk, not afraid to dedicate spare time if needed as I've no other major commitments other than work, and I'm a quick learner!

    Cheers guys
Page 1
    • bostonerimus
    • By bostonerimus 20th May 17, 1:09 AM
    • 860 Posts
    • 435 Thanks
    bostonerimus
    • #2
    • 20th May 17, 1:09 AM
    • #2
    • 20th May 17, 1:09 AM
    Pay off any high interest debt first
    Put some emergency cash in the bank.....maybe 6 months of spending.
    Contribute to a work place pension.
    Fund a S&S ISA

    At your age you should be taking some risk so I would be looking at a fund like VLS80 in your pension and ISA,,,or the component part equivalents if you want to save some money on fees. Do not buy individual stocks or actively managed funds.
    • rosieraspberry
    • By rosieraspberry 20th May 17, 4:29 AM
    • 13 Posts
    • 2 Thanks
    rosieraspberry
    • #3
    • 20th May 17, 4:29 AM
    • #3
    • 20th May 17, 4:29 AM
    I am currently saving about the same amount. I am hoping to buy a new house in the next two years so have only really explored short term, easy access options..

    Normal ISA rates are less than 1% at the minute so I would go for a Nationwide account.

    You get 5% interest for the first year (then it drops to 1%) on savings up to £2500 as long as you pay £1000 in per month. I pay my £1000 in (cannot be paid in from another Nationwide acc) then take it straight back out the same day and just leave £2500 in all of the time. If you open it when you have £2500 already you will make £125 for the yr. Interest is paid monthly.
    I also have a joint account with them and my partner has an account with them where we do the same thing.

    I have also recently opened a Santander 1-2-3 account which pays 1.5% on savings up to £20k - this account won't work for everyone but if you rent or own your property you can get cashback on all of your bills if you set direct debits up - you get 1% for council tax and water rates, 2% for gas and electric and 3% for mobile and home phone bills, broadband and paid for TV packages. You can get cashback on your mortgage payment as well if you're a Santander mortgage customer.
    The account costs £5.00 per month, but my cashback from bills will cover that. The cashback arrives the same day that the account fee is taken and you also receive your interest monthly on that day.
    You have to have at least 2 direct debits from the account even if they are not bills.
    I only set up the 6 cashback specific bills from that account so I know near enough the amount that I need to pay in each month to cover them and make sure I know what is savings and what is bill money.

    Good luck!
    • xylophone
    • By xylophone 20th May 17, 7:42 AM
    • 22,869 Posts
    • 13,229 Thanks
    xylophone
    • #4
    • 20th May 17, 7:42 AM
    • #4
    • 20th May 17, 7:42 AM
    You might wish to consider a LISA.

    http://www.skipton.co.uk/savings/isas/lifetime-isa

    Build an emergency fund using interest paying current accounts/regular savings.

    You might look at Nationwide Flexdirect and the associated Flexclusive monthly saver.

    You might also look at a Tesco current account.

    You might consider starting a stocks and shares ISA.

    http://monevator.com/using-vanguard-lifestrategy-funds-life/

    http://monevator.com/compare-uk-cheapest-online-brokers/
    • DiggerUK
    • By DiggerUK 20th May 17, 8:26 AM
    • 2,748 Posts
    • 2,616 Thanks
    DiggerUK
    • #5
    • 20th May 17, 8:26 AM
    Do little now, apart from learn
    • #5
    • 20th May 17, 8:26 AM
    First lesson to learn is that life is for living, so don't become a miserly hermit. Splash out now and then.
    Put money in accounts that put you up on inflation, not easy, and might not get any easier. But doable. Use Premium Bobs for easy access readies, and who knows.

    Early in life you can take risks, research equities with a fine tooth comb. If they blow up in your face, you can recover. But tread lightly.

    Your first target is a property I would imagine. That will need a hefty deposit, perhaps make it your first major goal. So don't take too many risks with any equities.
    Medium goals will include developing your career, paying your mortgage, and expenses of a family. Frightening yes.
    Long term is retirement funding. If you get offered a final salary pension, take it. Otherwise don't bother with private or company pensions, too inflexible, too risky, too expensive.

    Gold is not the first thing to come to mind at your age, I just want to plant that seed in your thinking. Have a look at this article for now..._
    http://moneyweek.com/beginners-guide-investing-in-gold/
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • enthusiasticsaver
    • By enthusiasticsaver 20th May 17, 8:43 AM
    • 4,244 Posts
    • 7,662 Thanks
    enthusiasticsaver
    • #6
    • 20th May 17, 8:43 AM
    • #6
    • 20th May 17, 8:43 AM
    HTB ISA or LISA if you are wanting to buy a property
    High interest current accounts and regular savers if you need immediate access.

    My personal preference would be to split it. Some into an emergency fund and easy access money until you have decided on your aims - are you saving for anything in particular? Will you need to go back to post grad study or do you want to travel? New car or take up driving lessons? Presumably your new job has a pension so you might want to look into overpaying on that to maximise employer contributions. Pensions are the most tax efficient way of saving long term. Stocks and shares isas are another option.

    There are lots of places you can save your money but you need to be clear on a few things, the most important being do you need your money to be accessible for anything in particular and when or are you saving for the future for no particular reason at the moment? Most people want a bit of both so splitting it would be the best option and put say £600 a month into high interest current accounts, regular savers (Nationwide, Tesco, Bank of Scotland) £200 into Help to Buy ISA or LISA and £200 into pension or stocks and shares isas.
    Countdown to early retirement on 21.12.17 3 months to go.
    • ruperts
    • By ruperts 20th May 17, 9:05 AM
    • 591 Posts
    • 938 Thanks
    ruperts
    • #7
    • 20th May 17, 9:05 AM
    • #7
    • 20th May 17, 9:05 AM
    Otherwise don't bother with private or company pensions, too inflexible, too risky, too expensive.
    Originally posted by DiggerUK
    Controversial advice.

    Every company pension I've had has offered significant flexibility in terms of what you can invest in. Risk is determined by those choices. I can't think of a cheaper way to invests than pre-tax even without a free company contribution on top.

    There may be a risk of the government moving the goalposts at some point down the line but any significant theft of people's pension pots would be political suicide, so probably won't happen. It's worth spreading pots of money around but ignoring company pensions altogether is a bad idea imo.
    • atush
    • By atush 20th May 17, 11:12 AM
    • 16,241 Posts
    • 9,911 Thanks
    atush
    • #8
    • 20th May 17, 11:12 AM
    • #8
    • 20th May 17, 11:12 AM
    Join Workplace pension

    Emergency savings. While 6 months is good, you could get away with 3 at first

    S&S isa of some kind (be it LISA or whatever).

    You can split your 1K and do all 3 at the same time or do 1 and 2 first then start no3
    • steampowered
    • By steampowered 20th May 17, 6:16 PM
    • 1,683 Posts
    • 1,611 Thanks
    steampowered
    • #9
    • 20th May 17, 6:16 PM
    • #9
    • 20th May 17, 6:16 PM
    Otherwise don't bother with private or company pensions, too inflexible, too risky, too expensive.
    Originally posted by DiggerUK
    People who don't contribute into a pension are throwing away free money - £1 in your pension only costs 20p for basic rate tax payers or 40% for higher rate tax payers, plus in many cases people are throwing away an instant 100% bonus by losing out on employer matching.

    There is no particular reason for a pension to be expensive or inflexible. You can use a self-invested pension if you so choose.
    Last edited by steampowered; 20-05-2017 at 11:16 PM.
    • chockydavid1983
    • By chockydavid1983 21st May 17, 7:43 AM
    • 422 Posts
    • 237 Thanks
    chockydavid1983
    Certainly make sure you're contributing enough into your pension to get the maximum that your employer to match.
    3-6 months expenses in top current accounts/ regular savers
    If buying a house within 5 years, HTB Isa or LISA (others will know which is most suitable)
    • badger09
    • By badger09 21st May 17, 10:13 AM
    • 5,122 Posts
    • 4,337 Thanks
    badger09
    People who don't contribute into a pension are throwing away free money - £1 in your pension only costs 20p for basic rate tax payers or 40% for higher rate tax payers, plus in many cases people are throwing away an instant 100% bonus by losing out on employer matching.

    There is no particular reason for a pension to be expensive or inflexible. You can use a self-invested pension if you so choose.
    Originally posted by steampowered
    I think you mean '£1 in your pension only costs 80p for basic rate tax payers or 60p for higher rate tax payers'
    • Pincher
    • By Pincher 21st May 17, 11:05 AM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    You can't use the money in a pension for mortgages, etc.

    If you are likely to pay higher rate tax later on, I would keep the money within reach, like a LISA, or HTB ISA, and start contributing to pensions later to get the higher rebate.
    • atush
    • By atush 21st May 17, 11:54 AM
    • 16,241 Posts
    • 9,911 Thanks
    atush
    People who don't contribute into a pension are throwing away free money - £1 in your pension only costs 20p for basic rate tax payers or 40% for higher rate tax payers, plus in many cases people are throwing away an instant 100% bonus by losing out on employer matching.

    There is no particular reason for a pension to be expensive or inflexible. You can use a self-invested pension if you so choose.
    Originally posted by steampowered
    Ridiculous advice again from Mr Goldbug.

    Throwing away an employers contribution is a daft idea.

    If looking to buy a home soonish, then just put in enough to get the max employers contribution.
    • jelliott94
    • By jelliott94 23rd May 17, 1:54 AM
    • 2 Posts
    • 0 Thanks
    jelliott94
    Hi Guys,

    My current thought process is that if in two years down the line I'm not getting where I want to be or getting the opportunities I've been offered, I will try to get onto a graduate scheme with a bigger company, but will have to take a smaller salary. With a bit of money behind me I won't have to worry about the pay cut so that won't hold me back.

    There is also the chance that I decide I want to head off for a few months travelling! But the key thing being that I have a bit of money available so I have options, and if I'm going to put away £1000 per month I might as well do something productive with it.

    So thanks for all the great advice, this gives me a number of things to look into which is why I started the thread!
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