Best place to keep savings?

gabyjane

I have a new job starting in a couple of weeks and was wanting to save quite a lot of it..just not sure where!

I am looking at putting a minimum of £1500 per month away..wheres the best place to put it? the only thing i dont realy want is non access to it like a 5 year bond etc?

thanks x

lisyloo

Do you have plans for your retirement e.g. a pension?

gabyjane

Hi lisyloo. No I/we don't have anything saved up for when we are old..i'll be completely honest and say firstly i dont really understand the way they work and secondly i am a bit wary of them after seeing 2 elderly friends ripped right off! I am self employed does that make a difference to how you pay into them and also employed but wouldnt let them loose with my money!

The rest of the money we can save each month will go towards the mortgage and the above i have no idea what for. I am 31 so youngish but i know time flys and would like to make the most of this income as wont last forever unfortunately!
Thanks

lisyloo

Being 31 means you've lost out on at least 10 years of putting into a pension.

A pension is merely a wrapper. Inside it you can invest in pretty much anything you like these days. The big advanatage is that you get tax relief. this is particularly good if you pay 40% tax, because you will most likely pay 20% income tax when you retire therefore it's a a great tax break. However in return you have to agree to tie your money up until retirement (or death) so it's a long term thing. You don't get the tax break for nothing.
If you have no retirement savings then I would urge you to strongly consider some sort of plan (some people buy houses). It doesn't have to be a pension but you are now 10 years behind other people and we are all living longer which means you need more money for retirement than in the past unless you want to work into you 70s.

If you have debts then it's generally a good idea to pay those off.

You could save in an ISA - either cash or stocks and shares.

With £1500, personally I woud put some in a pension, some into debt repeyment, some into cash ISAs, some into stocks and shares ISAs and possibly some into NSI index linked saving certificates.

gabyjane

Hi thanks, like i said i dont really understand the whole pension thing and what i have heard doesn't make me want to put my money into it! A friend of mine lost thousands with his and not the only one..being 31 i may be 10 years behind but i certainly dont want to work while i am young to have it all go up in a puff of smoke! My employers sont offer it as far as im aware and i am generally self employed so how does it work for me to do myself?

Other ways of saving which i can use as pension funds would be good so i can keep an eye on it would be of interest. Without sounding picky the whole stocks and shares thing is a bit of a pain for me too as dont understand it at all and dont have the time to keep an eye on it..my dh had some and cashed them in at a good time..his brother didnt and lost it all..as you can guess im not one for gambling tbh! a savings account with an ok interest will suffice.

We have no debts other than the big one being the house, our mortgage runs out in August so saving till then, then hopefully will overpay what we have to pay each month, we have a mortgage pig too to pay off a lump sum at some point. The other our car which has roughly 1 year ish left to run..would like to pay it off but unsure if we get charged a penalty or not..going to look into this and get rid if not as only a couple of grand.

I already have a cash ISA and so does dh, we have 2 savings accounts as well, one is for usually the car bits and one just for dd's school bits or holiday funds..this gets regular amounts in it anyway so they are covered.

Thanks for the reply.

lisyloo

and what i have heard doesn't make me want to put my money into it!

That's fine, if you have an alternative plan.
But assuming you want a retirement that's not on benefit level then you need to make some sort of plan. Let's call it a "retirement plan" rather than a pension becuase it doesn't have to be a formal pension. Some people have invested in Buy to Let so they have property to sell when they retire.
I don't think throwing up you hands and refusing to face the facts will help. It will just mean you'll spend your retirement on a low income.
You aren't inspiring me with confidence that you have put any other plans in place to fund your retirement.

A friend of mine lost thousands with his and not the only one

Lots of people have lost money. I lost about £35K last year because the stock market went down, however that have recovered a lot of ground.
There are a variety of things you can invest in.
The chances of it all going up in a puff of smoke over 37 years are fairly low (I think your official retirement age will be 68).
What people generally do is when they get closer to retirement (say 5 years) then they start to move their investment from riskier stocks & shares into less risky gilts/bonds and even cash. This means the chances of facing a big loss from a crash just as you retire is small.

My employers sont offer it as far as im aware and i am generally self employed so how does it work for me to do myself?

You can have a private pension on your own.
You can make your own investment choices and yes at times they might go down.
Other alternatives are to shun traditional investments altogether and invest in something else e.g. some people have done BTL and invested in property, some people art, some gold.
Whatever you do, you should not ignore the problem otherwsie you will have no income in retirement other that what the state provides, which unfortunately won't be great for someone your age (we have a demongraphic problem)..

Other ways of saving which i can use as pension funds would be good so i can keep an eye on it would be of interest.

You can use ANY savings/investment for retirement. You just have to not spend it. It really is as simple as that.
You could put it under the mattress or in an envelope called "pension" or in a bank account.

a savings account with an ok interest will suffice.

Interest rates are really quite low at present.
Unfortunately that's something we are all stuck with for the time being.
So if you don't want stock & shares then I'm afraid the returns will be low (a few percent). Im getting 3% on my cash ISAs and there's not much that's better than that at the moment.
The problem that you (and everyone else) is facing is that reward (in terms of greater returns) come with risk.
This is very true right now because you cannot get decent returns on savings accounts, in fact they are probably less than inlfation and actually going DOWN in real terms.

Your problem (and I completely understand because I used to be the same) is that playing it too cautious is als a RISK. You risk your money reducing in real terms and over the long term not making a decent retirement fund.
So I think you need to consider it carefully because being too cautious is a RISK.

I did hint earlier that you could go for a mixed approach.
You do not have to put your £1500 in one place.
Having a diversity of assets is good.
If you only put 20% in stocks and shares then the risk of a big loss becomes less.

I think you need to think about how you are going to fund your retirement. It doesn't have to be a formal pension or stocks and shares but you do need to do SOMETHING if you want a decent retirement.
You also need to think about a balance of savings/investments.

I have cash, stocks & shares, pension (invested in lots of funds to spread the risk), gold, NS&I certificates and property.
Yes some of it goes up and down, but if you play it too safe you really do risk loosing your money quite literally because it will deflate in real terms in the current environment.

Also worth mentioning that you should keep an emergency fund in case your roof leaks, boiler breaks down, get sick, car crash, lose job etc.
Personally I am happy to use my cash ISa savings for that, so if you have cash savings you don't need to do anything special, but you do need some money that you can get your hand son in an emergency.