Saving Now!

100saving

So lets start this off by telling you what I have now (see below). I'm not going to put a savings target down as I don't know how much I want to save. but I do know that by the time i'm 50 I want to be worth over a million (28 years time).

So as of May 2013 I am 22 years old and have the following:

Credit cards: (paid off in full each month from opening of both)
Barclays Platinum £1500 limit
Santander 123 £1900 limit

Current Accounts:
Barclays Current Account normally has around £200-£400 balance

Savings Accounts:
Barclays ISA - £8200 at 2.25%
Barclays Monthly Savings - 1500 at 3.20% less 20%tax

I currently pay the max into the Barclays Monthly Savings which is £250 this account gives more interest even after Tax. 6 more months and this account becomes maxed out at £3000 and the interest rate drops. I can currently save around £2800 more into the ISA before I fill up the 2013-14 allowance.

So now for my income 20k a year saving around £950 a month max.

innovate

You can use the calculator on the main site to get some idea about what is achievable. http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#calc

I hate to be the bearer of bad news, but unless you get some sort of major windfall, you won't be able to save £1m in 28 years. It might be possible with investments, such as funds in an S&S ISA.

Is the £1m before or after inflation, btw?

opinions4u

I suppose a net worth of £1m isn't out of the question.

But property value and pension funds are what get most "average" people there.

You've put yourself in a great position early in life. Balance the £1m desire with an enjoyment of life. And as you get the car / other half / house / kids etc look to move beyond deposit accounts.

Good luck.

Is the £1m before or after inflation, btw?

Excellent point in the post above. You want your returns to beat inflation. Otherwise you're going backwards.

I estimate my property and pension assets to be greater than £500k. I'd say its ok, but not quite enough to fund a top notch retirement. £1m in 30 years will be worth less than £500k today.

AlwaysLearnin

It looks like very early steps for you, but well done thinking about it so early in life. Always good to have a target, but I dare say things will change through your life (e.g. I guess you'll want some of the money to buy a house at some stage etc).

Three tips I'd give to start you off with:

• Look in to pensions. The sooner you start one the longer it has to build, and that compounding can have a big effect over time. Employers may match contributions too, effectively meaning they're adding more to your pot for you. Current legislation is that you can't get at the money until 55 at the earliest, but you appear to be looking at the long game so would really be worthwhile looking in to. The future you will thank you for it
• Look further afield than Barclays. Your current choices aren't too bad, but there are better offers out there.
• Get reading. With your mindset and ambition, the outlook could be very good. There is a lot to learn though, especially in the area of investments, and dare I say you sound a little green at the moment. You have plenty of time though, so you can get yourself a good understanding of it and still have a very long saving/investment lifespan.

Good luck to you

PS - you can't really count credit card limits as savings

YoungBusinessman

Reading is the best advice when this age. Dont believe it all but the more you read and clued up you are you will almst find it impossible to go wrong.

AlwaysLearnin

OP appears to have demonstrated their naivety on another thread, particularly on the subject of pensions:

Post 10 of https://forums.moneysavingexpert.com/discussion/4640833

OP - suggest you take heed of some of the excellent feedback on that thread to help educate yourself

atush

Indeed.

You are in good shape for being saving conscious at your age, but you do need to learn a bit before you tell others porkies.

To get where you want to be, you will need to not just save, but to invest as well. In pensions, In S&S ISAs and in a home to live in. As someone who has been where you are, I got to my first 'million' in property and investments.

Totton

One way may be to follow Lord Lee of Trafford, he gave a recent podcast where he talked about turning £136k into a million through investing in family firms and good income growers - I can't see your savings making it unless you discount inflation although interest rates are likely to rise sometime in the future.

Here's a link to his story - http://www.iii.co.uk/articles/72246/playing-happy-families-made-me-million

HTH,
Mickey

100saving

OK thanks all. I understand what you are all saying and am taking it all on board. currently I am on 20k but when I finish my training at work in the next 6-8months hopefully I will get a 3k pay rise. as mention above I am looking to have a net worth of 1m+ that could be made up of savings, property and investments. I understand credit cards are not savings! i am only putting down this so I am telling everyone my full situation now.

I do have a little plan that I would like to get some thoughts on and if you have any tips or other ideas I would love to hear them.

So at the moment I am saving as much as I can to build a fund to buy a property that I can rent out. I Want to do this as soon as possible as so I can get the mortgage paid off so every month it will be cash in the bank. but its knowing when to buy. I can't buy a 1 bed where I want to for less than £150,000 at best.

my current idea if to buy 4-5 properties to rent out. I am only really looking about 15miles radius from where I live now. I did think about buying property in places that are cheaper near to uni's and renting to students but am not 100% if this will pay off long term?

my idea is to put my eggs in a number of properties so I can eventually live off the rent/investments income rather than work. I am a very driven person as I know I will do this. if/when a wife, kids etc. happens I want to be in a place were I don't have to kill myself to pay for things.

p.s. thanks for all the advice so far!

innovate

As has been pointed out in the other thread you started about getting a mortgage, you are not likely to have anywhere near enough money anytime soon to get any mortgage.

Also, BTL is a lot more difficult than you might think. You still have insurances and maintenance costs to think about, and you have to budget with periods of no occupancy. More importantly, though, you cannot get any higher risk-wise than throwing all your money at one type of investment. Owning several properties isn't spreading your risk - - you'd still have 100% of your investment in property.

If you have your eyes set on property, work out a balanced portfolio of funds, one of which is property.

As has been suggested before - get yourself some books on investing and read, read, read.

opinions4u

A single buy-to-let property is a high risk approach. What demographic change or fiscal policy is going to drive prices up? When the Funding For Lending schemes end in 2016 I can't see a strong enough economy to deliver price growth. Yields are currently okay, but tenantless periods are a drain on cash. And if the area takes a dive your capital, all in bricks and mortar, goes south and can't be easily liquidated.

As for repaying the mortgage on BTL, you can get tax relief on the interest so it may be cost effective to retain debt and expand faster rather than repay.

Do some research. Many have done well out of BTL but I'd suggest building up more liquid assets first (stocks and shares ISA) and understanding the tax benefits of pensions, set against their inflexibility.