sIMPLIFYING SAVINGS

margaretclare

Hi all

First of all, many thanks to Martin - I have learned SO much from you!!

I decided to simplify my savings. Heard someone on Radio 4 'Moneybox' recently (think it was Paul Lewis - any relation?) define savings and investments thus: Savings are up to 5 yrs, investments mid-to longer term i.e. 5 - 10 yrs. At 69 I can't really look that far into the future, but I still do like some savings as extra security.

I recently opened a Yorkshire BS online ISA a/c - 5.25%. I had an ING a/c, but at 5%, Yorkshire is better. I still do pay some tax, so the idea of an ISA is better. I had a small equity ISA with Egg, have liquidated that, what's the point - as said before, I can't really look mid-to-long term. Everything I save from now on is going into the Yorkshire ISA.

Then I looked at the Family Assurance Family Bond. I've been paying in a total of £25 per month, and I looked hard at what this is providing. Again, this is equity-linked. Here's what I've written to Family:

'I am very disappointed that neither of these policies appears to have gained at all. For example: Between January 1999 and 2004 I paid a total of £900 to one of the policies and yet the value shown on 13th April 2004 was only £817.91. Between April 1998 and 2004 I paid a total of £720 into the other policy, yet on 13th April the value was only £645.45. On checking your website today I find that the bid price for Sovereign 3 Series 1 is only 105.87.

I do realise that ‘you may gain less than you put in’ and ‘your investment may go down as well as up’. But nowadays, with no earning-power left to me, every pound has got to work twice as hard as it did in the days when I could increase my income by earning. I would have done better to pay £25 a month into the building society all these years; I would at least have known the amount of interest I was earning.'

Now, I recently bought 2 NS savings certs @£100 each - index-linked Issue 8 - is it worth leaving them for the 3 years, or should they be liquidated and the proceeds transferred to the Yorkshire ISA too?

BTW I'm also paying into a Stakeholder @ £78 pcm, £100 when the taxman has added his contribution. This will mature in 6 years' time when I'm 75. I reckon we might be glad of a bit extra by then.

Any comments, advice etc welcomed.

Margaret

dunstonh

Family Assurance is equity backed so the returns will be based on how the stockmarket performs. We have recently had the biggest stockmarket decline in recent times so you shouldnt expect it to provide much in the way of bonuses.

In the short term, you would have made more in a deposit account but the family assurance plan is longer term and has greater potential to out perform on the banks and building societies in a 10-15 year period.

I had a small equity ISA with Egg, have liquidated that, what's the point - as said before, I can't really look mid-to-long term. Everything I save from now on is going into the Yorkshire ISA

The point is that you could have invested in the equity ISA in low risk funds like corporate bonds and gilts. You dont have to be invested in the stockmarket to have an equity ISA. Also, just because you are 69, it doesnt mean you dont have many years left in you.

You are correct in thinking that it would be pretty pointless saving in a long term savings plan but an Equity ISA should still be considered.

margaretclare

Hi

Thanks very much for your comments. Of course, the stakeholder is also equity-based (Friends Provident Stewardship Fund) so I do have exposure to equities that way.

For the time being, I will concentrate on building up the Yorkshire BS E-ISA. At 5.25% that seems pretty good to me.

What do you think of the NS&I certificates - £200 for 3 years? Are they worth leaving there (I only bought them a few weeks ago)?

Margaret

dunstonh

What do you think of the NS&I certificates - £200 for 3 years? Are they worth leaving there (I only bought them a few weeks ago)?

They are nice and steady and you really cant go wrong with them when you want it safe.

margaretclare

Thanks very much, DD.

What I had considered doing was to build up my NS&I holding (£200 at present) and then buy a Pensioners' Bond (minimum £500, I think) to eventually give me a little bit more income.

Advice and info very much appreciated.

M