It is time!

Kidsan

I will get straight into my little money life story and if anyone could give me some help that would be great.

I have been accumulating money in my Natwest current account for a while now and it has got to £6000. I have got an ISA with Natwest too but that only has £200 in it and it 'died' about 3 years ago, as I have not reactivated it.

I earn about £1,700 a month (take home) and my fixed outgoings are no more than £250pm. My other outgoings are about £300pm and that is without trying to save, so I could get that right down.

My plan is to rent next year in June with my gf in Essex, to see if I can stand living with her. Then if all goes well we are going to live in another flat that we have had bought for us by her loving family, rent free. We are going to still pay them rent and at the end of a year they are going to give us the money back to put towards a mortgage.

What I am looking for is some advice on what to do with my current funds and what future earnings. I lack some serious knowledge in ALL areas of savings and ALL areas of understanding the simple thins i.e tax!

If you want to ask me any questions, please do. I am an open book.

Thanks
Kidsan

cwal

I would say the first thing to do is move the money from your current account where it's probably earning no interest to the best paying ISA you can find (interest is paid tax free), I would get your money out of the old 'dead' isa as well as it won't be earning you anything in there. You could also look at a regular saver account (you will pay tax on interest with this type of account) - FD still have the 8% one available I think but you need to open a current account with them to qualify. Alternatively if you can lock some of the 6k up for a while maybe look at a fixed rate ISA where you may get a slightly higher interest rate - though rates aren't great anywhere at the moment!

Eco_Miser

Consider an interest-paying current account like Santander 1-2-3 or Lloyds TSB Vantage, (both pay up to 3% with conditions), Halifax Reward (£5 per month for just paying in and taking out £1000 pm), then a Regular Saver account (First Direct 8% on £300 pm). All these have multiple threads discussing strategies for meeting the conditions and maximising the returns. At current rates these are likely to beat cash ISAs (but check for yourself).
You'll be saving aound £1200pm, so you could pay into 3 Regular savers (with different institutions, each have limits on how much you can save, and you can't get at the money for a year from when you start), and use the rest to grow your instant access emergency fund (currently £6000).
Read these forums, and the main site articles, and learn from others questions and answers.

DrudgeDread

Kidsan wrote: »

My plan is to rent next year in June with my gf in Essex, to see if I can stand living with her. Then if all goes well we are going to live in another flat that we have had bought for us by her loving family, rent free. We are going to still pay them rent and at the end of a year they are going to give us the money back to put towards a mortgage.

I think your plan depends rather more on whether your girlfriend can stand living with you, to be honest.

marathon_man_3

^^
You beat me to your post.
That is a very negative approach, by the original poster, to what should most definitely be a loving relationship, at this stage, if he is contemplating a life together with the girl.

JohnRo

Ignore the sniping, it's a good thing to be pragmatic about money and especially your own. Who knows what the future holds, there's nothing wrong with at least having a thought for plan B.

Your only realistic option is chasing after market leading rates in deposit accounts and fully utilising your ISA allowance. Any investments could get lucky short term but more likely imo to tank short term so any money invested would have to be a much longer term prospect.

jamesd

Given your property purchase plans, cash savings accounts are the only way to go unless you have a high risk tolerance for investments.

Longer term you should start to get practical experience of investing by using a stocks and shares ISA and fund investments within it. This is because long term such investments grow faster than savings accounts. The price is more ups and downs along the way. So it's good to get started on both the higher average growth and becoming used to the ups and downs as early as you reasonably can.

Then set yourself some financial objectives. Do you want to be able to retire at 55? Earlier? Do you want to spend more now rather than saving and inveesting to retire earlier? What balance do you prefer? What balance does your girlfriend prefer?

It's also worth having a read of the book The Millionaire Next Door to see whether you like its approach to money and life. It's a good description of how, in mindset, you can live to get to the point of being able to live as you need to even if you lose your job and never get another one, or if you decide you simply want to stop working to do something that doesn't make money.

gadgetmind

marathon_man wrote: »

That is a very negative approach, by the original poster, to what should most definitely be a loving relationship, at this stage, if he is contemplating a life together with the girl.

I took it as being tongue in cheek despite the lack of emoticons.

Kidsan

Thanks everyone for your replies, they have all been helpful. As for the Girlfriend thing, I was only joking and I love her unreservedly and as for 'If she can stand me' course she can I am amazing in every way! In answer to some of your other questions;

Yes I have always been a saver, my main objective like most people is to have enough money in 2 years time to have a good set of mortgage options in front of me.

I would never be out of a job (family businesses), so I don't require security in that way.

I am comfortable with the option of locking away the 6k for two years as I don't think I will need to touch it until then.

But as I am in saving terms 'thick' I have only recently found out we all get taxed on our savings on already taxed wages!! So starting from the beginning, when people mention interest saving rate is 8%. What exactly is it 8% of??

Also I read that if it is a fixed year long contract of X% and I had £10,000 in the account I would be earning a high interest rate per month. But they say if I took the money out a day before the year term ended, I would lose the high interest rate. But surely I have taken the £10,000 out plus any extra the interest gained??

I have MANY more questions, I thought id start of light!

Thanks again

gadgetmind

Kidsan wrote: »

So starting from the beginning, when people mention interest saving rate is 8%. What exactly is it 8% of??

http://www.moneysavingexpert.com/banking/interest-rates

marathon_man_3

Kidsan wrote: »

Thanks everyone for your replies, they have all been helpful. As for the Girlfriend thing, I was only joking and I love her unreservedly and as for 'If she can stand me' course she can I am amazing in every way!

Thanks again

I, being an old romantic, am pleased about that.
I do like a happy ending !