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  • FIRST POST
    • Imelda
    • By Imelda 14th Mar 17, 2:38 PM
    • 1,262Posts
    • 1,546Thanks
    Imelda
    Help for a complete novice!
    • #1
    • 14th Mar 17, 2:38 PM
    Help for a complete novice! 14th Mar 17 at 2:38 PM
    A bit of background, I am married with a 2yr old and one on the way.

    My husband is a top rate tax payer, I work part time and earn around £18k p.a (about to go on maternity leave).

    We share all of our money but I mainly deal with the monthly bill stuff and he deals with the "bigger picture" savings..... except he just isn't. We are wasting so much money every month and my husband just seems to be ignoring it all (the irony being he is an accountant!)

    We are mortgage free and save a significant amount each month (£5k or so). Broken down as follows:

    £65k each in cash ISAs 0.5% (just found this out today!) we haven't put in for this tax year yet
    £50k in an instant access savings account 0.5% - rainy day fund as my husband's job is always looking dodgy.
    £12k instant access savings for holidays/ house maintenance (we are in the final stages of a complete renovation project) 0.5%
    £2.1k regular saver (save £300 per month)
    £265k - ns&i (0.8%) this is ear marked to go towards school fees in the future (from 2019)

    All except ISAs are in my name for tax reasons.

    The ns&i and ISAs are my main concern BUT we also have pensions to think about. I haven't contributed for a few years as I changed jobs and my new employer has only just started to offer a pension (and my husband "didn't get around" to sorting out a private one). Anyway, my husband casually mentioned yesterday that he can't put as much into his pension as previous years without creating a tax liability, so we will have more cash to save....

    We really need to get on top of this. Where would you start? My husband refuses to employ an IFA because he can do it.....

    Thanks, any advice will be appreciated.
    Saving for an early retirement!
Page 1
    • xylophone
    • By xylophone 14th Mar 17, 4:59 PM
    • 22,881 Posts
    • 13,243 Thanks
    xylophone
    • #2
    • 14th Mar 17, 4:59 PM
    • #2
    • 14th Mar 17, 4:59 PM
    Are you planning private education for two children from kindergarten to age 18?

    http://www.independent.co.uk/news/uk/home-news/the-charts-that-shows-how-private-school-fees-have-exploded-a7023056.html

    Even if you wish to keep the cash ISAs there is no need to accept 0.5%.

    http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

    Time to consider stocks and shares ISAs for each of you?

    http://monevator.com/find-the-best-online-broker/

    Are you using the best current accounts for your needs?

    http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

    Have you and your husband taken out life insurance to cover bringing up your children in the event that either of you should die before they have completed their education?

    You and your husband have ill health/income protection insurance?

    Have you and your husband made wills which cover their guardianship should this prove necessary?

    Have you thought of saving into a pension of your own?
    • jimjames
    • By jimjames 14th Mar 17, 5:57 PM
    • 12,019 Posts
    • 10,459 Thanks
    jimjames
    • #3
    • 14th Mar 17, 5:57 PM
    • #3
    • 14th Mar 17, 5:57 PM
    We really need to get on top of this. Where would you start? My husband refuses to employ an IFA because he can do it.....
    .
    Originally posted by Imelda
    Without wanting to question his abilities too much, he might think he can do it but he's kept you in massive amounts of cash earning virtually nothing when you could have had part of that money in a S&S ISA and grown 25% over the last 12 months for example. Pension provision is another area that seems lacking. It's all very well doing DIY but you need to be fully aware of the options that you have and the risks you are taking. Another example, I assume you aren't paying school fees all in one go in 2019 so you don't need all of that cash in one go. Investments would help make that money last longer and help ensure it beats inflation. As you stand it's now decreasing year on year with the rates you're earning.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Imelda
    • By Imelda 14th Mar 17, 6:59 PM
    • 1,262 Posts
    • 1,546 Thanks
    Imelda
    • #4
    • 14th Mar 17, 6:59 PM
    • #4
    • 14th Mar 17, 6:59 PM
    Thanks xylophone and jimjames

    Regarding private school - we live in a grammar area so the current plan is for them to pass the 11+

    We have life and critical illness cover through DH's work

    Wills are being updated this week (I am nesting and have a long to donlist - this being one of them).

    I have emailed our work's pension provider for more information, to see if it's worth using the same pension or opting for my own private one.

    S&S ISA is going to take a bit of research.

    I am really tempted by an IFA who could sort us out. Where would I look for a decent one? I assume they charge a rate rather than commission?
    Saving for an early retirement!
    • CBX1985
    • By CBX1985 14th Mar 17, 8:43 PM
    • 13 Posts
    • 10 Thanks
    CBX1985
    • #5
    • 14th Mar 17, 8:43 PM
    • #5
    • 14th Mar 17, 8:43 PM
    Yes, commission is banned for investments of this sort. We can only receive commission on insurance/mortgages.

    You will be able to get an hour at the advisers cost, but after that you pay an hourly fee/percentage of the amount you invest.

    BTW: JimJamies is spot on. You are invested too heavily in cash and this will destroy the value of your money in the long term - you are basically guaranteeing that you will lose money. Recognising the problem is half the battle
    • xylophone
    • By xylophone 14th Mar 17, 10:12 PM
    • 22,881 Posts
    • 13,243 Thanks
    xylophone
    • #6
    • 14th Mar 17, 10:12 PM
    • #6
    • 14th Mar 17, 10:12 PM
    I am really tempted by an IFA who could sort us out. Where would I look for a decent one?

    https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser#how-to-find-a-financial-adviser
    • Imelda
    • By Imelda 24th Mar 17, 2:12 PM
    • 1,262 Posts
    • 1,546 Thanks
    Imelda
    • #7
    • 24th Mar 17, 2:12 PM
    • #7
    • 24th Mar 17, 2:12 PM
    Just a little update:

    My husband completely rejects employing an IFA and insists he can do everything himself. So, we are where we are.

    I have started with pensions and am making a lump sum contribution to my pension to maximise my tax allowance for this year (i.e £10k to get the £2k tax relief).
    My husband has done the same and also used any unused allowance from 3yrs ago.

    So we now have £38k in our rainy day/ house fund.
    ISAs have been topped up with the 16/17 allowance so we have roughly £80k each in those.

    Next step is going to be looking into S&S ISAs - the guide on here is useful but roughly how many trades would you make a year? I assume every time
    We invest/ switch funds etc will be a trade. So would quarterly investment be best?

    Any other factors to consider?

    Also, LISA? My husband can't open one as he has just turned 40 but I can. If I max out what I can put into my pension each year then I guess this may be worth it as a top up? I think I will open one anyway before I turn 40.

    Current pension plans are: husband to put in his £10k limit, I put in my full allowance both to max out ISAs.

    The next thing I need to deal with is the £265k in NS &I - I have no idea what to do with this. Any ideas? Like I say, this is ring fenced for childrens' education, not needed for a few years.
    Saving for an early retirement!
    • xylophone
    • By xylophone 24th Mar 17, 4:24 PM
    • 22,881 Posts
    • 13,243 Thanks
    xylophone
    • #8
    • 24th Mar 17, 4:24 PM
    • #8
    • 24th Mar 17, 4:24 PM
    You will be starting the private education with kindergarten when your elder child turns 3?

    You plan kindergarten to 11+ at the same school and presumably now know which this is to be and the fees currently charged?

    Have you looked back over the fee increases for the past ten years?

    Does the school offer a "fees in advance" plan?

    https://www.moneyadviceservice.org.uk/en/articles/school-fees-plans

    How much, at a generous estimate, do you think that you will be spending on fees?

    You could look at saving some at least into fixed rate deposit accounts offering a better return than NS&I, but you could still be losing out to inflation.

    You could consider using stock market based investments for some of the cash, aiming at growth.


    http://www.schoolfeesadvice.org/landing/?gclid=CP_Olt3G79ICFW0A0wodohwGZQ

    Above might be worth a read.

    You mention local grammar schools but there is no guarantee that your children will secure a place - you may need to consider private education for one or both in the secondary years.
    • Imelda
    • By Imelda 24th Mar 17, 6:03 PM
    • 1,262 Posts
    • 1,546 Thanks
    Imelda
    • #9
    • 24th Mar 17, 6:03 PM
    • #9
    • 24th Mar 17, 6:03 PM
    Thanks Xylophone - we are in the process of looking at schools at the moment. Our current favourite is one that would start at 3 and the fees would be £12k a year up until yr 3. We can pay for nursery and pre prep in advance to secure current rates but not extras such as meals.

    I am also considering state school up until yr3 and then moving to private if it seems the right thing to do.

    I know grammar is not guaranteed and yes, we would need to consider private for entire schooling.

    For both children at private school with extras I have a figure of between £26 and £30k per year in mind. I also intend to increase my hours at work when the youngest starts school.
    Saving for an early retirement!
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