What to do with my savings - 10k

Jacka87

Ok current situation is that I have a cash ISA at 3% (if I remember correctly), that is not full for this year at present but I am putting money into it each month. Note not instant access.

I also have about 7k in a Lloyds classic vantage current account, thats 4% interest gross if I pay 1k in each month which I can do with a direct debit drop in and out again. This allows instant access.

On top of this I have about £500 in NSI savings account, dont know what the interest is or anything about it, forgot about that money to be honest. Along with some money sitting in premium bonds, again not sure how much prob about £500 again.

So thats the savings, I also have a tracker mortgage which is always likely to rise soonish, as well as that I have a 20k loan thats on a tracker rate currently sat at 1.6%

Normally I would say pay off any debts (except mortgage) and then start saving in ISA and pay off what you can from the mortgage however with the current rates being so low paying off the debt is prob not a great benifit to me.

I was thinking leave 7k in LLoyds, that can be used to through at loan when rates go up. Take NSI savings and put them towards ISA, and fill that up next. Any spare from the two of them sources and I was thinking I could be a bit riskier and have a go at lending on Zopa or similar site.

I am not an overlly risky person but saying that I took a gamble buying a flat when I had no job (just graduated - now have a job tho for 2yrs) so willing to take some risks. I am however aware that if interests rates change it may be best to quickly through money at my tracker loan and mortgage so dont want my money tied up too long.

Suggestions please.

Baldur

As you already have an LTSB Vantage account, you could open two more, put £5,000 in each and benefit from 4% on each with the benefit of easy access. Many of us have three Vantage accounts (maximum permitted per customer) and simply rotate the £1,000 minimum funding around them by Standing Order or Faster Payment - better rate than any currently available easy access Cash ISA.

psychic_teabag

Vantage is good as a short-term thing. But you should also consider the long-term disadvantages of missing out on your ISA allowance. See https://forums.moneysavingexpert.com/discussion/comment/38519404#Comment_38519404

You're adding to your ISA each month. Unless it requires monthly deposits, consider getting yourself a Lloyds regular saver and put what you can into that instead, at 5%. Come March, fill up your ISA (unless perhaps you expect to withdraw the ISA money within a year or two). The LLoyds RS allows unlimited access to any funds in there, though obviously better to leave what you can in there earning 5% if you can fill the ISA from other funds (and striving to keep your vantage accounts over 5k).

Could also get yourself a Halifax reward current account : bouncing your £1k through that once a month gives you an extra £5/month pocket money (after tax) - money for nothing, really.

Loughton_Monkey

Nothing wrong with the strategy you have outlined. Work towards building up a store of 3 to 6 months income to tide you over. But more long term suggestions:

1. DO keep meticulous accounts/spending records. It's vital to keep a check on your overall income and outgoings and aim to keep the 'net worth' expanding. Aim for 20% of your income 'not spent', on average, every year.

2. Once you have enough cash, DO get some pension contributions behind you. HMRC happily pay an extra 25% on top of anything you put in, and over a long period (being in equities) it should provide solid (if volatile) growth. It will also help prevent you having to live on Baked Beans in your retirement.

Jacka87

Loughton_Monkey wrote: »

Nothing wrong with the strategy you have outlined. Work towards building up a store of 3 to 6 months income to tide you over. But more long term suggestions:

1. DO keep meticulous accounts/spending records. It's vital to keep a check on your overall income and outgoings and aim to keep the 'net worth' expanding. Aim for 20% of your income 'not spent', on average, every year.

2. Once you have enough cash, DO get some pension contributions behind you. HMRC happily pay an extra 25% on top of anything you put in, and over a long period (being in equities) it should provide solid (if volatile) growth. It will also help prevent you having to live on Baked Beans in your retirement.

Thanks for the advice on the keeping 20% of your income, I keep meaning to do something like that but to be fair thats where my monthly savings that drip into my ISA come from so have already done it in a strange way.

With regards to the pension, I already contibute money into a work FS scheme, I doubt that it will be still going long term but is at the moment. Would you suggest further pension contributions via a private pension?

Jacka87

psychic_teabag wrote: »

Vantage is good as a short-term thing. But you should also consider the long-term disadvantages of missing out on your ISA allowance. See https://forums.moneysavingexpert.com/discussion/comment/38519404#Comment_38519404

You're adding to your ISA each month. Unless it requires monthly deposits, consider getting yourself a Lloyds regular saver and put what you can into that instead, at 5%. Come March, fill up your ISA (unless perhaps you expect to withdraw the ISA money within a year or two). The LLoyds RS allows unlimited access to any funds in there, though obviously better to leave what you can in there earning 5% if you can fill the ISA from other funds (and striving to keep your vantage accounts over 5k).

Could also get yourself a Halifax reward current account : bouncing your £1k through that once a month gives you an extra £5/month pocket money (after tax) - money for nothing, really.

The idea of losing the ISA allowance does seem stupid for long term savings. My issue is tho that if rates go shooting up then my loan and mortage will go up and I would prob be best paying off my mortgage or loan as that will no doubt be more than my ISA. If thats the case then the short term advantage of the Vantage is better than the ISA.

With regards to the regular saver, is that defo a better option than the vantage? The vantage obviouslly gives 4% and the regular saver gives 5% but needs money drip fed in.

So is it best to just feed money to the regular saver from the vantage then at the end of the year put the money in the ISA if its long term savings and the money kept aside for the debts that I will need to repay when rates rise.

psychic_teabag

I was actually suggesting using the money you are adding monthly to the ISA into the RS instead. (Or equilvalently, drip-feeding from vantage to RS, but then topping up vantage rather than the ISA.) Drip-feeding from the vantage does give a small benefit - see the drip-feed calculator at http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculator

Various scenarios:
If you will be saving at least an extra £1k over the year (or withdrawing £500 from each of NSI and premium bonds), you can drip the max £250 per month and still end up with 5k in the vantage.
If you're not saving any more, you could drip £166 per month so that after 12 months vantage still has £5k and reg saver has 2k. But slightly better than that would be to drip £250 per month for the first few months, then drop down to the minimum for the remainder, to get the money earning 5% as soon as possible. (I haven't done the sum to see if it's better to drip 3k into the RS even if it lets balance on the vantage fall below 5k.)

The calculator says that dripping £250/month from 4% account to 5% account gives you an extra £13 interest (net) over the year. So it's fairly small fry, but little effort. (In contrast, halifax rwd gives an extra £60 net over the year.)

Loughton_Monkey

Jacka87 wrote: »

With regards to the pension, I already contibute money into a work FS scheme, I doubt that it will be still going long term but is at the moment. Would you suggest further pension contributions via a private pension?

That's good. Especially if it's a 60ths scheme. However, as you point out, it is likely to be stopped at some stage. Existing benefits can't be taken away, but the 'value' of it diminishes over time.

No harm whatsoever in having an extra pension 'on the side' and it might be a good idea to seek out a low cost one and get it started with a small amount. But the minute you find (a) FS scheme scrapped, or (b) you move jobs, then it's available to fund more agressively.

If not yet a house owner, you might eventually want to buy a house. That's a good investment too, but can only be 'spent' in retirement if you are prepared to downsize or partake of equity release schemes.

So aim to retire with a good 'mixture' of pension rights, cash and S&S ISA's, Savings, Property (mortgage free). My own 'mixture' allowed me to retire at 56 without detriment to maintaining spending, and history shows I spent just under 70% of my gross earnings (including company pension contributuins etc.) on average.

Jacka87

psychic_teabag wrote: »

I was actually suggesting using the money you are adding monthly to the ISA into the RS instead. (Or equilvalently, drip-feeding from vantage to RS, but then topping up vantage rather than the ISA.) Drip-feeding from the vantage does give a small benefit - see the drip-feed calculator at http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#calculator

Various scenarios:
If you will be saving at least an extra £1k over the year (or withdrawing £500 from each of NSI and premium bonds), you can drip the max £250 per month and still end up with 5k in the vantage.
If you're not saving any more, you could drip £166 per month so that after 12 months vantage still has £5k and reg saver has 2k. But slightly better than that would be to drip £250 per month for the first few months, then drop down to the minimum for the remainder, to get the money earning 5% as soon as possible. (I haven't done the sum to see if it's better to drip 3k into the RS even if it lets balance on the vantage fall below 5k.)

The calculator says that dripping £250/month from 4% account to 5% account gives you an extra £13 interest (net) over the year. So it's fairly small fry, but little effort. (In contrast, halifax rwd gives an extra £60 net over the year.)

I will have a look at the RS calculator and see what seems best for my numbers with regards to keeping 5k in at 4% rate as well. Thanks for the link. I think I will defo be setting up the halifax rewards and using the waterfall technique to pocket an extra £60 for nowt, been meaning to do it for ages and keep forgetting, lazyness I think but £60 for what will prob be about 10 mins work is defo worth it.

Jacka87

Loughton_Monkey wrote: »

That's good. Especially if it's a 60ths scheme. However, as you point out, it is likely to be stopped at some stage. Existing benefits can't be taken away, but the 'value' of it diminishes over time.

No harm whatsoever in having an extra pension 'on the side' and it might be a good idea to seek out a low cost one and get it started with a small amount. But the minute you find (a) FS scheme scrapped, or (b) you move jobs, then it's available to fund more agressively.

If not yet a house owner, you might eventually want to buy a house. That's a good investment too, but can only be 'spent' in retirement if you are prepared to downsize or partake of equity release schemes.

So aim to retire with a good 'mixture' of pension rights, cash and S&S ISA's, Savings, Property (mortgage free). My own 'mixture' allowed me to retire at 56 without detriment to maintaining spending, and history shows I spent just under 70% of my gross earnings (including company pension contributuins etc.) on average.

Allready have my flat thus the mortgage and the loan that i have aswell. My long term plan is to buy a house if / when I get married and keep the flat as an investment property, use my ISA every year and have that as my cash pension, join whatever company svheme replaces the final salary when it ends or I move job, and then to try a realativly small amount of shares.

Yet to start on teh shares and obviouslly need to start repaying my loan and some of my mortgage before I can invest in any other property. I might start looking at the idea of a private pension as well as shares soon to help create a nice general allround portfolio.