Most efficient savings

mechzico

Hi, i'm a regular reader of the forums, but a new member, and would like peoples opinions on the following.

After all bills (which I have minimised thanks to this website!), I have around £900 pcm to save.

I currently save £250 to a cash ISA, £200 to a good stocks and shares ISA, £150 into a high interest savings account for house/car bills, holidays etc, and overpay the mortgage by £300.

(The mortgage is halved from 20 to 10 years by doing this)

I know I should probably pay more off the mortgage, but am trying to get to a set savings figure for the future. (Around 15k hopefully)


Would anyone do this differently, and can they recommend good products?

Many thanks!

dunstonh

Would anyone do this differently, and can they recommend good products?

You havent told us what you have (i.e. what ISA provider and which funds, in case of investment ISA). So, we cant tell if you have good products already or if there are better.

oldfella

personally I would divert more into paying off the mortgage

Mike

dunstonh

I would divert more into the equity ISA

However, my risk profile and tax position suit that. Everyone is different.

mechzico

Hi oldfella, dunstonh, thanks for the replies.

The Halifax is my choice for cash ISA and savings account, at 5.25% and 5.00% each. I know I could squeeze a little extra interest elsewhere, but it is very convenient. (All online, same login etc)

My equity ISA is with Sterling, investing between Fidelity special situations, HSBC UK Growth, Newton managed, Merryl Lynch, and JPM premier.

Hope this helps, Mechzico

jamesd

This is an extremely cautious setup unless you're already retired and worried about your future.

Mortgage first. You're paying off the mortgage and saving interest at perhaps 5% when you can expect 7-11% or more from fund investing in an ISA. It's completely safe to pay off the mortgage but it's not going to make you much money. All of this could really go to investments unless you're really so very cautious - and even then, you can pick a cautious mix and do better.

Cash ISA is good to accumulate your savings target but it's better to use all of the ISA for stocks and shares.

What I suggest you do is:

1. keep the 200 in investments and raise it to 583 a month to use the maximum 7000 a year for stocks and shares, using the cash ISA money and part of the mortgage money.
2. keep the 150 a month into a high interest account
3. the remaining 167 a month into a high interest savings account or into your mortgage if it allows overpayment and drawdown of overpayments. Or use a regular saver account to get a bit more interest if it doesn't.