Saving/Investing - hints and tips

dancingfairy

Hi. I am hoping to build up my savings and investments and I am looking for any hints and tips please.
Do you put away an amount every month?
Have you invested your bonuses?
Do you wish you had taken more risks when you were younger?
Have you lived on the same salary each year and any promotions - just invested the extra money?
Any courses/ books you have found really helpful and wish you had read/done earlier?
Have you been a stoozer?
That sort of thing.

Many Thanks
df

P.S What I don't want is I wish I'd invested in such and such a sector or you need to be buying x shares. I am looking at a long term strategy.

Broadback

Many moons ago, when I was still a worker and paid a wage I split any pay rises into 3 after tax. One 1/3 I used to increase my mortgage repayments, one I added to my pension fund in the form of AVCs and the last to my spends. My only mistake was that I increased my mortgage repayments, for in those days (I don't know if it still is) the interest was calculated and added annually, If I had saved that portion and then paid the resulting lump sum off my mortgage just before the annual date I would have benefited considerably.

dancingfairy

Arghh - oh no - you must have been disappointed that they didn't pay of the mortgage with the payments and change the interest. Good idea though. Thanks.
df

cos69

Long term strategies only work if they are something you can follow comfortably.

1) build up a savings pot equal to 3 months net income, and keep it topped up (more might be better for you)
2) use your cash ISA allowance each year to build up a tax free income stream for when you need it
3) use any other money to par down loans including mortgage. Paying interest from taxed income is often not as good as the net interest received on savings, but worth shopping around if you have to borrow
4) when the stock market is very low like now, worth considering investing some money; not all at once but drip feeding some each month since it could go lower or start to rise.
5) Spend some money on yourself, its no good working hard without also improving the quality of life you experience.

MrMicawber_2

I'd be putting pension contributions hight on the list - slightly ahead of ISA's. I know others prefer ISA's to pensions but I like the fact you can't get at pension money. You can always do a bit of both.

Stoozing - You have to decide yourself whether you have the discipline and interest to keep going and keep an eye on things or you might get caught out.

Yes - regular saving (drip feeding) is a good approach. Try to put away a %age of your income every month.

If you get into the habit of trying to keep your expenditure roughly the same then as your salary increases you will be able to put by loads in a few years time (then children come along and you move house etc and that puts a bit of a dent in things). We have tried to do this.

Yes we try to invest bonuses - well mine get put by and my wife's tend to go on the holiday.

Do I wish I'd taken more risks when I was younger? I tried some shares when I was younger and came the the conclusion that I was speculating rather than investing. I was fortunate to come out even. I've generally preferred funds. My main wish is that when I was younger I'd known a bit more. I had some money for quite a few years in one or two funds which were advertised heavily but didn't really do very well. Doing you own research is very valuable and continually review. But do remember that you are in for the long haul.

Being sensible and reasonably frugal means you can save / invest more. But you need to find your own balance. Unless you are mad keen then trying to max out every last farthing could drive you nuts. As cos69 above says you need to spend some money on yourself.

Also doing a few hours overtime could gain you a lot more than some of the more esoteric moneysaving things.

As a rule of thumb at 25 you should be putting around 15% of your income into your pension (which includes your employers contributions). If you can do more than this you are laying yourself up for a good future.

Over the years I've personally preferred a balanced approach. My pension is final salary so I'm fortunate there but I aslo have a small SIPP as well. I've tried to put money by quite regularly into Stocks and Shares ISA's and I've also kept making repayments to the mortgage to bring that down. It seems to work for me although I know it can be better financially saving rather than paying off the mortgage depending on the net interest rate compared with your mortgage rate. But I make my mortgage overpayments for peace of mind.

Don't forget insurance though. Some say your life insurance should be for 10 times your income but that's a huge oversimplification. Work out what you really need and pay for this.

Hope this is some help.

dancingfairy

Thanks very much. It's good to get some ideas on how other people have approached things. I suppose to be a multi-millionnaire I have to start young. Oh well - I can always dream! I want to be a super saver extraodinaire.
df

Blah99

To answer your questions:

Do you put away an amount every month?

Yes. I put a sum into savings accounts (call this "nominal value X". I put a further equivalent of 50% of X into funds or alternative investments. I put a further equivalent of 50% of X into my share dealing account (not necessarily buying shares, but available for buys). I then sometimes put 10% of X into my spread betting account if I need to make some trades. These percentages obviously vary over the months and years depending on the performance of savings accounts, investments, markets etc etc etc


Have you invested your bonuses?

Yes, again approximately 50% into funds and 50% into savings.


Do you wish you had taken more risks when you were younger?

No.


Have you lived on the same salary each year and any promotions - just invested the extra money?

No.

Any courses/ books you have found really helpful and wish you had read/done earlier?

Rich Dad, Poor Dad (author's name escapes me at the moment)
Naked Trader 2 (Robbie Burns)
Charting (Alastair Blair)
Spread Betting (Malcolm Pryor)


Have you been a stoozer?

Hell no. I think the whole stoozing idea is utterly insane. There is absolutely no reason whatsoever anyone should do it, and I think it's one of the most irresponsible things this site recommends.

Brian_Bullocks

MrMicawber wrote: »

Don't forget insurance though. Some say your life insurance should be for 10 times your income but that's a huge oversimplification. Work out what you really need and pay for this.

Hope this is some help.

I think you mean Life Assurance, and not "life insurance".

MrMicawber_2

I mean a policy where you take out insurance for a term and your dependents get a lump sum or income for life if you die within that term. So I mean term life.

So I think I mean Insurance - insurance against specfied contingencies (e.g if your house burns down or if you die within a term of years).

I don't think I mean Assurance - insurance against a certainty (e.g death whenever you die).

Definition - "life insurance
Promises the payment of an agreed sum of money upon the death of the insured within a specified period of time."


I don't mean a policy which pays out whenever you die.

Definition "Life Assurance
An insurance policy which pays out a lump sum on the death of the policy holder"

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opinions4u

dancingfairy wrote: »

Hi. I am hoping to build up my savings and investments and I am looking for any hints and tips please.
Do you put away an amount every month?
Yes. Religiously. This allows you to 'exist' on a lower income if your wage every drops.

Have you invested your bonuses?
Always. Never rely on bonuses for known expenditure (e.g. holiday, paying off credit card). It is an 'extra' and should always be seen as such.

Do you wish you had taken more risks when you were younger?
I actually wish I'd risked less. My mortgage endowment was a disaster, my AVCs were growthless in Equitable Life and while I did well out of share options these were relatively risk free until exercised. I did very nicely out of Egg and Man Utd shares when investing my overtime and lost lots in MyTravel and Marconi. The great promises of the financial services industry never quite lived up to reality. More recently I dabbled in HBOS shares believing they wouldn't go any lower! :eek:

Have you lived on the same salary each year and any promotions - just invested the extra money?
Always. Although this did eventually get transferred in to buying a bigger house - without increasing mortgage debt though. Lost £30k in the last year on that deal! On paper only though.

Any courses/ books you have found really helpful and wish you had read/done earlier?
No. Just the logic of analysing every expenditure. Boots Meal Deal £2.99 a day = £600-£700 a year. Home made butties probably £100 a year.

Starbucks in the morning £3 a day = £600-£700 a year. Water at work healthier and free.

Anadin £2 a pakcet. Tesco paracetomol 16p a packet.

Economy bin liners 3p a day, Brabbantia bin liners 9p a day.

Disposable wipes = expensive v reused cleaning cloth = cheap (this applies to anything that is disposable).

Turning the tap off while cleaning teeth = no water meter money down the drain.

Walking half a mile to the corner shop instead of driving.

Being organised enough to never need a corner shop at their prices!

Using discount sites like MSE, www.mysupermarket.com, www.quidco.com and www.Hotukdeals.com to maximise shopping discounts.

Keeping each and every discount voucher in an envelope until I go shopping - even if it's for something I'm not expecting/planning to buy. It's amazing how many vouchers you can eventually use.

The list is endless

Have you been a stoozer?
Yes, but as balance transfer fees have come in and interest rates in the banks are now dropping I see little value in this.


P.S What I don't want is I wish I'd invested in such and such a sector or you need to be buying x shares. I am looking at a long term strategy.

It's all about discipline. Not being tight - I like a decent meal out or a better quality car and the savings made from all the above help to deliver this.