Best way to start saving?

doublejd

I have no savings, but also no debt. I have been living abroad for 7 years and will be moving back to the UK next week. I need to find a job and room to rent. I will not have much money to save, maybe only £200 per month once I get settled. What is the best thing to do with this money?
I have no knowledge of banking and saving so abreviations such as ISA mean nothing to me.

Reaper

Then I suggest you start reading up on it as ISAs are one of the things you may well want. Click on the "Savings" tab at the top of the screen for the site articles.

Lokolo

ISAs are a type of wrapper for your savings. Normally interest on your savings is taxed at your work rate (so if you are a basic tax payer, 20%, higher rate, 40%, but 0% if you are not a taxpayer - but I assume you are). But if the money is in an ISA then the interest isn't taxed.

However, there is a limit of £5,100 in a Cash ISA each tax year.

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Usually, if you can put money in each and every month, a regular saver would be good

http://www.moneysupermarket.com/savings/regular-savings-accounts/

The best ones are here. However, these are all normal savings accounts so your interest will be taxed.

Asheron

Don't Save.................. Invest

jimjames

Asheron wrote: »

Don't Save.................. Invest

And some great investments can be started from £50 per month.

doublejd

jimjames wrote: »

And some great investments can be started from £50 per month.

What tyoe of investments would you recommend?

leahciM

You could get a taste for investing with low cost index tracker funds. HSBC does a FTSE all-share tracker for 0.27% TER.
This is just my idea though and you need to do your own research. Investments can go up as well as down.
(Sorry if I've forgotten any other disclaimer and broken any rules.)

Check the link below to have a look at the HSBC all share fact sheet.

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=MISFAP&univ=P

psychic_teabag

Since you don't have any savings, before you start investing, you should build up a bit of easy-access cash as an emergency fund. Some suggest 3 months salary or so, in case you lose your job, but it depends on your circumstances (eg whether you have relatives you can turn to in an emergency, that sort of thing).

The Lloyds monthly saver looks good to me : even though it's taxable, its net rate is higher than the gross rate you can get from most tax-free ISA's. And unlike some other regular savers, it allows you to withdraw money during the year. It does only only allow a single payment each month, and requires a standing order, so it's not quite as flexible as some other regular savings accounts which allow you to make several payments during the month (up to the max permitted). Not sure if you can vary the amount paid each month (by tweaking the standing order). I think it requires that you open a Lloyds current account, though you don't actually have to make the payments from that.

You could do things like move the money from the reg saver to an ISA in March, so you don't miss out on this year's ISA allowance. Whether that works out better for you depends on your circumstances.

santander have some sort of "first home" account offering 5%, requiring regular contributions. I don't know anything about that. Looks like you can access the money with no notice, but only by closing the account.

cashbackproblems

Asheron wrote: »

Don't Save.................. Invest

I agree.

With inflation your savings will mean you lose out long term.

Look at funds (the link to the hsbc tracker is a great safe investment and extremely low fees) others include Invesco Perpetual funds, sign up to iii.co.uk or hargreaves landsdown who are both the cheapest.

Alternatively to keep it simple pick a few safe highly paying dividend companies e.g. aviva, vodaphone, tesco etc and drip feed your money into there (iii only charge £1.50 for pre arranged trades).

jimjames

doublejd wrote: »

What tyoe of investments would you recommend?

If you have no cash savings then it could be worth building them up first but an ISA investing in a tracker fund like the HSBC one mentioned is a good place to start at very low cost.

Primrose

This doesn't mean to sound flippant, but the best way to start saving is not to spend. And until you're established in a new job, have somewhere to live and the basic essentials you need to survive, plus an emergency float of at least three months' expenditure, it may take you a little while to get some proper savings plans sorted.

Firstly, you may find it difficult to open a bank or savings account without the necessary money laundering identification you will be required to produce these days. (7 years out of the country may mean you're a little out of touch with the documentation needed, but you will need documentation, including passport or pdriving licence to prove your identity, and documents such as fuel or utility bills (not more than 3 months old) to prove your address, so firstly think about what documentation you'll be able to produce in the early days to open such accounts.