Am I Saving Right

SMARTY29A_2 · 2 November 2006 at 10:03AM

i am 35, married with 2 kids.

paid off our mortgage 10 years ago and built a new house 2 years ago which is paid also.

have no debts.

have various ISA's every year, PEPS from years ago, always look for best savings rates i.e. fixed rate etc etc so have many different accounts and 90 days accounts etc, have pensions but always have to paid tax on savings. i am now at a stage of wondering if there is anywhere better i could start putting our savings.

thanks for advice

ReportInvestor · 2 November 2006 at 10:11AM

Hi Smarty,

You are the first person on MSE to say saving when you probably meant investing

. It's usually the other way round.

You say that you haven't any tax free savings accounts. Is this because you always invest £7K pa in shares ISAs? If so, how do you go about choosing them and do you monitor your portfolio for performance and to ensure it has the balance you need.

Otherwise I would use your £3K pa Cash ISA allowance.

Also steer clear of 90Day accounts. You can get better rates elsewhere and you haven't got the flexibility of an instant access account. Fixed rate bonds can often be a good idea - I like the Coventry BS's 5.8% e-Bond at the moment.

To get a better idea of whether you're likely to be on the right track we'd need a bit more detail, an idea of your attitude to risk and your investment goals. And are you a higher rate taxpayer? And is your partner?

Bear in mind we can't advise. though. Just make some possible generic suggestions based on limited evidence - which you could consider.

SMARTY29A_2 · 2 November 2006 at 10:36AM

thanks for your help.

sorry i (we) do put 3K each before april each year into the CASH ISA's. I usually look on the moneysupermarket site and go from there. i think this year was A & L.

i earn about £ 18K p/t but also have earnings from one of hubby's businesses, getting about £ 90 odd per week and then the rest in dividends but am in the slightly higher bracket for dividends. hubby manages to stay out of the higher dividend bracket.

ReportInvestor · 2 November 2006 at 11:25AM

It sounds to me like you're on roughly the right track.

With cash to spare and the house paid off, you might consider £4K mini-share ISAs for yourself - perhaps investing in equity income funds since your dividends would not attract the usual extra tax even as a HRTaxpayer.

This is obivously not without risk, but going for a regular savings scheme into that ISA would spread the risk significantly in the early years.

Another possible approach for you, as a higher rate taxpayer, would be to increase your pension payments to bring you back into the basic rate tax bracket as this would effectively by buying £1 of pension for 60p (and you could still take 25p of each £1 as a tax free cash lump sum at age 55+).

SMARTY29A_2 · 2 November 2006 at 11:55AM

thanks, thats what i will maybe do, put a lump sum into pension before april. i work with NHS so have a pension there also.

and ofcourse enjoy life!!! go on holidays and more hols, just booked a cruise for next october as just been on one and enjoyed it so much. Life is too short to just totally save!!