Advice for saving 1,500 per month

tofu

Hi,

I've recently moved to the UK and started my first job, which pays about 2800 GBP / month after tax and NI. As I have no plans to drastically change my relatively frugal "student" lifestyle any time soon, I believe I could save at least 1500 GBP / month, which I would not have to touch for at least 3 years (the term of my current contract). I am certainly not planning to buy a house or make a similar investment within the next 5-10 years.

I already have some money invested in ETFs, and I would like to invest my additional income in fixed-rate type products. As I already had a current account with Halifax, I opened an ISA account with them, which currently pays 3,2% (including bonus) tax-free.

I believe it would be wise to pay up to the maximum of 5100 GBP until April 5th, and another 5100 within ~ 3 months after April 6th.

After that, I am looking for fixed-term investments of 2-3 years. I saw several "pay monthly" plans, which seem convenient, but appear to pay a significantly lower interest compared to "lump sum" fixed-term investments. I also realize that the interest rates are more likely to go up than to go down in the future, so a three-year fixed-rate investment may possibly not be my best choice.

I would be very grateful for any advice you can offer.

Thrugelmir

tofu wrote: »

, which I would not have to touch for at least 3 years (the term of my current contract). I am certainly not planning to buy a house or make a similar investment within the next 5-10 years.

You need to consider when you will want to access the money in order to make the right investment choices. Invest part in a pension scheme, even S&S or Corporate Bonds to maximise your ISA allowance.

With 3 year time frame you might as well stay liquid.

tofu

Thanks very much for the reply. I don't precisely know when I will want to access the money. However, my expectation is that I will not want to access it within the next 10 years, and certainly not within the next three years, so this is a minimum.

I had considered a pension scheme, but the accumulation of pensions across different EU countries seems to be very unclear at the moment (this is a major concern for the EU, but they have not yet come up with a solution). Since I might not stay in the UK for more than three years, I believe it would be best to save privately for now, and start paying into a state pension scheme when I have a permanent job, which could be another 5-8 years from now.

Given the long-term perspective, your suggestion of S&S makes sense. However, I already have about 25k invested in ETFs (which I will keep), and would prefer less volatile fixed-rate investments in addition, at least up to another 25k.

Ilya_Ilyich

Santander offer a 'first home saver' regular savings account that accepts up to £5k as an initial deposit followed by monthly deposits of up to £300, on which it pays interest of 5% gross/4% net (no fixed term so you can continue as long as you like); this may be worth looking into for at least some of your money.

tofu

Thanks, I will look into the "first home saver", it looks very good on paper.