Saving in cash (i.e. in a safe deposit box or safe)

Parsimonia

As for my tax bracket, I earn between £32,000 and £150,000, so I assume that makes me a higher rate taxpayer...

Parsimonia

Wilkins wrote: »

Don't worry. You are basically on the right track. You can't go far wrong by saving aggressively into cash, though it may be suboptimal in due course. Continue to make use of the MSE forum and try to learn about investing, which might be something to consider when your endowment comes up.

I will do, thank you! I think the best thing I've done so far is to join this site. At least it's shaken me out of my complacency and highlighted my shocking ignorance! I will try to educate myself so that I feel less appallingly unprepared!

Archi_Bald

Parsimonia wrote: »

As for my tax bracket, I earn between £32,000 and £150,000, so I assume that makes me a higher rate taxpayer...

That doesn't sound like an NHS employment to me. But please educate me.

Parsimonia

Archi_Bald wrote: »

That doesn't sound like an NHS employment to me. But please educate me.

Sorry, I didn't make myself clear - I meant that I fit into the bracket '£32,000 to £150,000'...I actually earn £46,000.

CLAPTON

Parsimonia wrote: »

As for my tax bracket, I earn between £32,000 and £150,000, so I assume that makes me a higher rate taxpayer...

40% tax starts at 41,450 plus any payments to your pension

so if e.g. you pay 3,000 per annum into your pension then your would only pay 40% tax on the amount over 44,450 per annum

Archi_Bald

Parsimonia wrote: »

Sorry, I didn't make myself clear - I meant that I fit into the bracket '£32,000 to £150,000'...I actually earn £46,000.

Off the £46K, you can subtract your personal allowance of £9,440, so you are down to £36,560. The maximum you pay 40% on is therefore £4549, which equates to £1, 819, £909 more than you would pay if you were on basic rate tax.
http://www.hmrc.gov.uk/rates/it.htm

You can most likely make some extra payments into a pension - either your employer's scheme or a SIPP - that will receive tax relief of 40%. This may or may not be of interest to you - the contributions are locked away until you are 55, and you will have to tax all but 25% of the extra pension fund.

paddyrg

Back to the original question, there is some value to holding cash notes and the like, but not your whole savings. If there is any chance of a run on your bank, say, and accounts get frozen temporarily, your access to cashpoints would dry up and in-hand cash might be useful. Or if the police/courts freeze your accounts on suspicion of massive organised crime of course!

In your safe you could also always store gold bullion. Since last year's ramping of gold, it's down 30%at the moment. Will it go up or down from here? Nobody knows. But in any kind of apocalypse scenario, gold typically appreciates, make of that what you will.

Downside, safes can get stolen/broken. Worst case someone spots it/hears of it and uses force to get you to open it. Very hard to insure against. Alternatively your local bank might have a deposit box scheme for a price.

Hermann

Parsimonia wrote: »

OK, I think I need to educate myself a bit more to reduce the risk of me doing something foolish. I'm not usually such a numpty, but savings has never really been something that I've paid much attention to...

I think I pay tax at 40%...I'm not sure...and I'm in the NHS pension scheme. I plan to retire from the NHS at 55 (after 26 years in the pension scheme) and to take a lower paid charitable job from 55 to my official retirement age of 67.

As I won't get my state pension until I'm 67, I need to have built up a sufficient fund to tide us over from 55 to 67....

My husband has a small, frozen personal pension, and he's been on incapacity benefit for the past 10 years (prior to that he was working and paying his NI contributions). Not sure what happens to him pension-wise from January when he will no longer get his incapacity benefit - unsure if he'll be entitled to receive a state pension when he hits 65 in 2027. It's unlikely he'll be able to find work given his complex health problems...

At the moment we don't have too much in the way of savings, but I intend to knuckle down and start saving properly from January. We will be mortgage free in 4 years, so will be able to save considerably more from that point onwards (our mortgage payments are £700 pcm). We also have the endowment maturing then...

I need to avoid making costly mistakes....

You mention the mortgage being paid of in 4 years and also an endowment. Is the endowment being used to pay off the mortgage?

If so, have you checked it's performed well enough to do so? Some haven't done as well as planned and leave a shortfall that still has to be paid from elsewhere.

Archi_Bald

paddyrg wrote: »

Back to the original question, there is some value to holding cash notes and the like, but not your whole savings. If there is any chance of a run on your bank, say, and accounts get frozen temporarily, your access to cashpoints would dry up and in-hand cash might be useful.

No need to hold any cash to make provision for this sort of situation. Just have accounts at more than one financial institution.

Parsimonia

Hermann wrote: »

You mention the mortgage being paid of in 4 years and also an endowment. Is the endowment being used to pay off the mortgage?

If so, have you checked it's performed well enough to do so? Some haven't done as well as planned and leave a shortfall that still has to be paid from elsewhere.

The endowment was forecast to fall heavily short, so we changed to a repayment mortgage ten years ago, but kept paying the endowment as a savings fund. It's forecast to pay out about £18,000 (against an original mortgage of £38,000,so about £20k short). But £18000 will be a nice lump sum to squirrel away for our retirement.