Where to start saving

Think_Fast_Mum

Hi.Three months ago my hubby was extremely ill and the doctor hinted that the cause could be lung cancer. To cut a long story short after loads of tests and a biopsy or two it turned out to be nothing more than bacteria infected with a viral infection!! He's now well and the future once again looks bright.


However this "touch with death" has made me think about the future. While we are doing ok day to day and hubby does his isa, if anything should happen to him life would very different.


I've read some of the boards and reckon we should have an emergency pot, a future pot and an everyday pot, but which one do I start with? We could probably save £500 a month with some changes, but what % would I put in each pot.


Any suggestions would be welcome.


Thanks.

Totton

The common approach appears to be - get a 6 month salary reserve, then a cash ISA followed by investments. So start by building a nice safety pot to get you over any sudden problems. If you need to dip into it then you can simply build it back up the next month or two.

It makes sense to build up some cash for those sudden shocks and to then put as much away as you can in tax free holdings. You should consider your attitude to risk before going down the stocks & shares ISA route although there is a huge variance in the risk that you can take on with that approach.

I don't see the sense in having three different cash pots, you just need the instant access and a Cash ISA for those safeish holdings imho.

Good luck with it,
Mickey

sleepless_saver

As well as thinking about savings, have you already got life assurance and wills sorted? If the worst did happen these would stop a very difficult time being made even worse.

kidmugsy

At £500 per month it may suit for you to put it into a Cash Isa in your own name (since you imply that your husband already has one). Another suggestion people make is to save in regular saver accounts and then when they close (often after one year) contribute the money into an ISA. A regular saver often mentioned is at First Direct, paying 8% per annum (but that is taxed).

A flexible idea would be to open a vantage current account at Lloyds TSB. It pays 3% p.a. if you have a balance in the right range, and you can access it by ATM, cheque book or electronically. Of course, the interest is taxed.

atush

Aside from Life insurance, have you both got pensions?

These pay out to a beneficiary/spouse if they die before commencing the pension. How much and how they pay will differ between company schemes and Personal pensions.

The money going in is uplifted by basic rate tax (HRTpayers can claim back more from HMRC) so for every 80 you put in, 100 will go into your pension.

So, emergency pot, pensions, then med term money in cash deposits (all cash in ISas where possible(possibly after being built up in a regular saver) then for longer term money-investments (typically equities in a S&S isa but other assets such as bonds and property are possible).

Think_Fast_Mum

Thanks everyone for taking the time to reply.

I think I will start my own isa, then once that's full I can move onto other savings. I guess it doesn't matter what I am saving for, just so long as I am saving. Stocks and shares don't really appeal a bit too risky for me!


Life assurance is not an option (I don't think) as hubby had a heart by pass at the beginning of year. Critical cover paid the small mortgage we had, but that was it.


We did wills years ago but as our eldest is 20 now I guess we should be re doing them.


I don't have a pension as I work part time through an agency, but will check the details of hubby's.


Thanks again for the help and guidance. I will be able to start the year knowing what to aim for and will start to feel a little more secure.


Thanks, and merry christmas xx

Think_Fast_Mum

Hi again. Just re read the help and realised I forgot to mention the vantage account. I already have a lloyds account so have looked at this and will be changing this in the next few weeks too. Thank you

greenface

If your eldest is only 20 i cannot see you being in your 80s but more like your 40s . You and your hubby have more that 40+ years left on this planet . (could be wrong) look to getting your pension pot in order as a matter of hurry. then fill up your iSa with what you can afford with ease .build up a fund that you can get at if needs must . Good luck to you and your fella in the future

atush

First of all, you don't need to work to have a pension. anyone can put in 2880, and the govt will make it 3600 overnight via tax relief (even for those who don't pay tax).

Second, you could have Life insurance, but premiums might be high for hubby if you opened one now. but he might have some attached to his work pension so do check his death in service benefits.


Third "Stocks and shares don't really appeal a bit too risky for me!"

S&S don't have to be risky or too risky, but can rise and fall. But cash and other assets carry almost the same or more risk as well. You are confusing all risk with investment risk.

There is Inflation risk (which eats cash away constantly as it is doing now). Do you remember when a loaf of bread was 50P? It is over 150p where I live which means your money will buy less in the future if you hold just cash.

There are also other risks incl shortfall risk in that yoru money does not grow sufficiently to your needs (incl inflation risk where it doesn't buy what it did last year).

opinions4u

atush wrote: »

First of all, you don't need to work to have a pension. anyone can put in 2880, and the govt will make it 3600 overnight via tax relief (even for those who don't pay tax).

Second, you could have Life insuirance, but premiums might be hugh for hubby if you opened one now. but he might have some attached to his work pension so check.


Third "Stocks and shares don't really appeal a bit too risky for me!"

S&S don't have to be risky or too risky) but can rise and fall. But cash and other assets carry almost the same or more risk as well. You are confusing all risk with investment risk.

There is Inflation risk (which eats cash away constantly as it is doing now). Do you remember when a loaf of break was 50P? It is over 150p where I live which means 300 from now will be worth only 100 in the future if you hold just cash.

There are also other risks incl shortfall risk in that yoru money does not grow sufficiently to your needs (incl inflation risk where it doesn't buy what it did last year).

Have you been on the pop?

Or got a new tablet and not adjusted to the keyboard yet?

ricky101

Hi,

Think the best advice would be not to put all your eggs in one basket / one account.

Use some instant access ones so you always have a ready supply if needed and then some isas with higher rates but for fixed terms.

Be prepared to move money around to get the best returns - not talking about every day or week, but perhaps sit down and review your portfolio every month or quarter.