Soon to be debt Free now it's time to save

ColdIron

barcabod wrote: »

I think I understand what you mean with risk
If inflation is say 3 per cent I need to earn over 3 per cent to not fall behind what the money is actually worth? right?

If you pay basic rate tax it actually needs to be 3.75% interest to match 3% inflation, HNY

Archi_Bald

barcabod wrote: »

Thanks Plantera

I have been looking at the Nationwide flexi which allows £500 per month to be deposited.

What account is this?

Nationwide have a few accounts that might be of interest - e.g. the FlexDirect current account which pays 5% for a year, provided you deposit £1,000 a month into it. This shouldn't be difficult since you have the money that you could pay in from another current account and out again. You can each have one of these plus one joint account. This would take care of £7,500 for 12 months - if the account is still available then.

There are other current accounts that pay less but could still be of interest. Just check out the forum.

You should seriously think about upping your pension provisions. If your employer has a pension scheme and you can increase your, and your employer's contribution, you should do that. Otherwise consider an S&S ISA or a SIPP for some of the money you can put aside.

barcabod

ColdIron wrote: »

If you pay basic rate tax it actually needs to be 3.75% interest to match 3% inflation, HNY

Cheers Coldiron

I am thinking of using a regular saver account paying a high rate for a year then just keep moving it after the year is up and move it to another deal.
I am also thinking of paying into an ISA can I do 2 of these in my name and wifes name? Is this the best way to go
Can I then open 2 accounts with the same company paying in a regular amount in wifes name and a regular amount in mine

jimjames

barcabod wrote: »

I think I understand what you mean with risk
If inflation is say 3 per cent I need to earn over 3 per cent to not fall behind what the money is actually worth? right?

Yes that is correct.

But very few if any savings accounts pay this amount.

In contrast the FTSE100 returned over 14% last year. That isn't guaranteed and will go up and down over time but should give a better return than cash.

If you are saving monthly then a drop is even better as it means you are buying more with the next payments. A good quote to consider is legendary investor Warren Buffett

"To refer to a personal taste of mine, I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying -- except stocks. When stocks go down and you can get more for your money, people don't like them anymore."

ColdIron

barcabod wrote: »

Cheers Coldiron

I am thinking of using a regular saver account paying a high rate for a year then just keep moving it after the year is up and move it to another deal.
I am also thinking of paying into an ISA can I do 2 of these in my name and wifes name? Is this the best way to go
Can I then open 2 accounts with the same company paying in a regular amount in wifes name and a regular amount in mine

If you have a regular amount to save, rather than a lump sum, then a regular saver is probably the best way to go to begin with. Don't ignore ISAs though, just because interest rates are low now they won't always be and you can build up quite a large sum tax free over the years

What a lot of people do is to pay into a RS for a year and then when new ISAs, with the best rates, are announced in April transfer the money from the RS into a new ISA and get the best of both worlds. Since this is now Jan you are well placed to get this going in the next few months ready for April 2015

You and your wife can have an ISA each but the best ISAs and RSs are rarely offered by the same company so just look for the best deals. Do have another read of Archi's post above as it also makes some very good points

Finally if you mean the Nationwide 2.5% RS this is quite a low rate and there are much better one available
http://www.moneysavingexpert.com/savings/best-regular-savings-accounts

jem16

barcabod wrote: »

I am thinking of using a regular saver account paying a high rate for a year then just keep moving it after the year is up and move it to another deal.
I am also thinking of paying into an ISA can I do 2 of these in my name and wifes name? Is this the best way to go
Can I then open 2 accounts with the same company paying in a regular amount in wifes name and a regular amount in mine

One of your main considerations should be your pension yet you seem to be ignoring this.

What do you plan to do for income in retirement?

atush

My wife and I will soon finish our mortgage
So from October 2014 ( after all other debts are cleared including a big holiday)

Ok, a big holiday and yet you say you need to save?

What exzctly is your OH's FS pension? Publice service? Who and how many years?


Your pension requires further clarification. 30 a week is neither here nor there, if we dont' knwo how this can change/grow in future. Who si the pension with? Value?

Do not want to risk any money

This is nonsense, though I do understand. As said above, there are many risks, and keeping your money in cash now guarantees you will fall foul of out of three, yet are are afriad of the 3rd?


You are npt geeting enough in cash to beat inflation- which gurantees you are lsoing money. Add in shortfal risk (ie the risk you won't have enough to live on) and you afe doomed if yolu save cash only.

Investment carries risk- I know this. but it also balances risk in that you have a chance to earn more than inflation or cash deposits (I don't invest in t he Ftse 100 as I consider it high risk, yet it has earned 12% this year).

I prefer to invest elsewhere, and with more diversification but have seen growth overall far exceed that this year. My cash deposits (substantial as I need an emergency fund are drawing less than 2% overall. But this would be diaser t me if it was all I had.

I think you need to read up on risk (all kinds) and portfolio structure/

barcabod

jem16 wrote: »

One of your main considerations should be your pension yet you seem to be ignoring this.

What do you plan to do for income in retirement?

I think even if I pay into a pension fund now at my age I will not get a good return on it.
I am willing to be persuaded otherwise though.
We have worked out that with savings and my and wifes pensions+ state pension we will be comfortable

barcabod

atush wrote: »

Ok, a big holiday and yet you say you need to save?

What exzctly is your OH's FS pension? Publice service? Who and how many years?


Your pension requires further clarification. 30 a week is neither here nor there, if we dont' knwo how this can change/grow in future. Who si the pension with? Value?




This is nonsense, though I do understand. As said above, there are many risks, and keeping your money in cash now guarantees you will fall foul of out of three, yet are are afriad of the 3rd?


You are npt geeting enough in cash to beat inflation- which gurantees you are lsoing money. Add in shortfal risk (ie the risk you won't have enough to live on) and you afe doomed if yolu save cash only.

Investment carries risk- I know this. but it also balances risk in that you have a chance to earn more than inflation or cash deposits (I don't invest in t he Ftse 100 as I consider it high risk, yet it has earned 12% this year).

I prefer to invest elsewhere, and with more diversification but have seen growth overall far exceed that this year. My cash deposits (substantial as I need an emergency fund are drawing less than 2% overall. But this would be diaser t me if it was all I had.

I think you need to read up on risk (all kinds) and portfolio structure/

My wifes pension is a civil service one as I stated above she is 44 she has worked in the civil service since she was 17 so far thats 27years.

Big holiday is being paid for out of other monies we have spare from our monthly incomes also small debts on credit card. The £1200 per month we will be saving is spare .We still have £1200 to spend on treats after all the household bills and food are paid out

Why do you say this is nonsense I dont understand, as I said at the stat I am totally new to saving really and just wanted a little help in putting something away for the future and earn as much interest as possible( I know what you mean about risk its just scary).
I also do not see why we are doomed if we save 14k ayear for the foreseeable future as long as we still work thats a fair amount in my book

barcabod

I have been reading about share ISA's today and am finding it a bit of a struggle to be honest
As I said in previous post I am not really up with investments at all
and I am now thinking about going to see the bank manager to see ig he can give me a basic grounding in all this.
I would like to thank everyone for their imput and advice so far. I am finding all this a little confusing