Long Term Saving Starting From Nothing

SCowley88

So...

I've been thinking about starting to save for my future. I am 26 in a job where I earn a decent amount that allows me to both save and live a fairly nice life.

I am also lucky enough to own my own place (with mortgage) so my rent money is actually being put my bricks and motor rather than someone elses.

In January I will be starting to save 25% of my income so that I can go travelling for a year in 2-3 years time. Meanwhile I think I should be looking at a longer term savings plan (i.e a pension).

I work for a small company that doesn't offer a pension and by the time the company has to offer us pensions (likely one of the last so 2018) I will either be abroad or, if not, likely changed jobs.

So if I wanted to put £50/month away with a few to it being available in somewhere between 5 and 30 years time what should I do?

Is it an Stocks and Shares ISA - just a 5 year fix cash ISA or is there a better way to do it? I'm a little nervous locking away money until I'm 55 thinking I might need it sooner - also I don't like the idea of having hundreds of little pension pots when I'm older - which is fairly likely as I'll probably change jobs every 3 to 5 years.

Also do I need to take in to account the fact that for 1 year I won't be earning and so would have to pause monthly payments.

I should note that for my travelling fund I will be saving most of it in the First Direct 6% account and then doing some jiggery pokery with a TSB account to maximise interest in the long term.

Thanks in advance!

atush

You say long term, but you seem to have a mix of short and long term objectives.

First of all, yes pension is important. And although you are saving for a trip, 50 quid a month at your age isn't enough. it should be ideally, 13% of your pension incl tax relief.

Third you have medium term savings needs. for reducing mtg if rates go up. to paying for weddings and children or movig up the ladder. So consider 50 quid a month into a s&s isa alongside your cash and pension needs.

Mistermeaner

Your worrried about locking money away until you're 55 but where is your money going to come from at this age and beyong?

Ken68

You need to NOT spend on such things as travelling, which is money gone for good.

lalman

Will you be saving 25% of your after tax or gross pay? Maybe have separate pots for the different goals that you have and what about over paying for your mortgage?

Just remember whilst your away gallivanting the world and suckers like me are working... you will still need a contingency fund in case you return to bad economic times and need to pay your mortgage etc.

Also, remember the effects of compound interest... very powerful tools for the very long term!

black_taxi_2

life experience travelling sounds good to me

1 year,go for it

SCowley88

Thank you for all your replies.

The travelling thing is very important to me - more so than spending the same amount on a wedding in the same time frame so I will definitely be doing that.

What you have all made me realise is that i should just suck it up and get a pension - plus pay as much as possible in to it while i can.

It's so hard to think of needing money at 55 but the time will come!

Any recommendations on personal pensions since my employer won't be contributing?

HarryD

The time to start the savings habit is now. Maybe open an ISA with someone like Hargreaves Lansdown and stick £50 a month into an index tracker unit trust - to get experience of using an online platform and see how it all works. It'll take you about 15 minutes to set it all up online with a direct debit going in each month.

Kendall80

Bestinvest have a good value SIPP. Gets a little more expensive comparatively when you exceed 100k.


Starting as early as possible is important. I wont bore you with my exact figures but I worked out earlier that if I saved into a SIPP for 10 years id get 145k. 20 years I'd get 260k. 30 years I'd get 740k. Assuming a constant average equity growth figure.

lalman

SCowley are you sure your company isn't offering any sort of pension scheme? Someone please correct me if I am wrong but I thought it was law that they had too.... we have had one set up at our firm which has 300 staff... so not huge because of legal requirements.

Kendall80 I would love you to bore me with the details please and your assumptions...

Kendall80

lalman wrote: »

Kendall80 I would love you to bore me with the details please and your assumptions...

I don't recall now im afraid. It was an online SIPP/monthly savings calculator (maybe thisismoney?). I put both 400 and 500 a month into it (aswell as tax benefit) and assumed either 6% or 7% growth over the stated time periods.