Thinking of setting up a savings plan each year for £20 lasting 10 years each

Bernard

Hi,

A friend of mine told me that 15 years ago he set up a savings account each year saving £20 per month. He set one of these up every year and that they matured or ended after 10 years. Resulting in him getting a cash sum 10 years later for 10 years. He told me I should think of doing the same.

So my question is in this day and age what is the best savings/investment vehicle to do this? I immediately thought of ISA's but not sure as to whether I should go for cash or shares? Are there better options rather than an ISA?

Any advice gratefully received.

Thanks

Bernard

vandanfc

Who is the account with ? If it is AXA have a look for the threads on here about there savings plans first.

Broke_Student

If your friend set up his regular saver 15 years ago maybe you should deposit £30/£40 into yours to take inflation into account.

Just a rough idea of what to expect:
£40 per month earning 4.5% interest would yield £6048 in 10 years.
£40 per month earning 6% interest would yield £6555 in 10 years.
But your money will be worth much less than the amount at the time due to the effect of inflation.

Bernard

vandanfc wrote: »

Who is the account with ? If it is AXA have a look for the threads on here about there savings plans first.

My friend told me he used different companies each year (so his egg weren't in one basket). I will have a look at the Axa savings plan you mention.

Cheers

LongTermLurker

Bernard wrote: »

My friend told me he used different companies each year (so his egg weren't in one basket). I will have a look at the Axa savings plan you mention.

Cheers

I think that might have been a warning, rather than a recommendation...

nicko33

Bernard wrote: »

He told me I should think of doing the same.

Are your circumstances the same as his were 15 years ago then?

Bernard

nicko33 wrote: »

Are your circumstances the same as his were 15 years ago then?

Hi, funnily enough my circumstances are similar in that I have two children aged 8 and 9, and when he began his savings plans his kids were 7 and 9. Other than that I cannot see any other similar circumstances.

welshgirl78

My father always talks about this too but I have never been very clear what he is on about! However I know he didn't just put in the bank as such but it was almost a type of insurance that paid out after 10 years (or 20 or whatever) if you didn't have to claim previously - and he ended up with much much more than he was paying - even taking interest into account...

Any ideas what this may have been? Much appreciated!

dunstonh

Endowments like this are obsolete and its only execution only providers that offer them still mostly.

The modern way of doing it is to use a stocks and shares ISA. They are more tax efficient, cheaper and more flexible.

opinions4u

Probably worth looking at low charge stocks and shares ISAs. Legal & General used to promoted one that was a simple FTSE 100 tracker.

Minimum investment was £50 a month or thereabouts. http://www.fool.co.uk/isas/MoreInfo.aspx?ISAID=LegalGeneralUKIndexTracker&Product=ISA_IndexTracker&PlacementRank=DCMainMoreInfo_1&source=&hop2placement=

You won't have to specify a term with one of these, which will give you flexibility should you need the money before you think.

Consider whether you are prepared to see the value of your investment go down and up on a daily basis with the probability (not guarantee) of a higher return than in a bank account.

Good luck!