Saving a small amount over a long period of time, need guidance please

khampson

Hi, I don't have much spare money but I am looking at saving around £5 a week + any spare over a long period of time (10 years+) I don't mind high risk but I am looking for a much better rate than what my bank is currently offering. Any suggestions what I can do with it, I was thinking a stocks and shares isa but with fees would it be worth it investing such a small amount.

Thanks in advance, I will consider all options
Regards Keith

vouch0r

For a little amount consider the 5% bank accounts available, even the Halifax offer 100 switch plus 5 a month .. But no interest .

Before you invest you ideally need 5-10 years for investments and savings for emergencies of at preferably 6 months.

bowlhead99

£5 a week or £21.67 in an average month (maybe £25 with top ups?) is not really enough to make investments.

As you say, with fees for dealing with your tiny contributions it will eat up your returns even if you can find a fund provider that handles such small amounts, and with the amount involved there definitely isn't any point having an ISA wrapper around it if you're investing in stocks and shares.

You can usually find accounts designed for children's long term investments that go as low as £25pm but adult products on investment platforms are generally £50pm minimum. Could you stretch to a bit over £10 a week instead of a bit over £5? Then you'll get a whole load of platforms or fund managers to choose from.

There are some fund managers that offer share plans or ISA plans where you just go to them directly via direct debit and not use a platform. Here's an example that starts at £20pm for an ISA. https://www.invescoperpetual.co.uk/site/ip/pdf/admin-it-keyfeatures.pdf

However, you are limiting your options if you can only make a small commitment, and any fixed charges you incur along the way if the scheme rules change or you want to transfer the ISA elsewhere, will be a relatively big chunk of your pot.

pearl123

It's great that you are saving. I always think of the phase. "Save it you've got it, spend it you've had it."


To be honest such a small amount is best in a savings account.
I only save low amounts as well, but it slowly builds up.

bowlhead99

pearl123 wrote: »

It's great that you are saving. I always think of the phase. "Save it you've got it, spend it you've had it."

To be honest such a small amount is best in a savings account.
I only save low amounts as well, but it slowly builds up.

I tend to agree, anything better than nothing.

I do think if you can find an investment you're comfortable with for a fixed amount per month (and if not the ISA plan linked or something like it, then perhaps some Friendly Society account that probably has a worse return and higher charges but still a likely better return than cash), then it's great to enforce the discipline of feeding something with a monthly direct debit from your current account. If you only save low amounts in your normal current account or a savings account it will get frittered away or you will accidentally miss a week every so often.

My bank Lloyds has a 'save the change' feature where if you spend say £4.76 on your debit card in a shop, it also moves £0.24 to your nominated savings account. A few of those a month and you could save quite a bit without really 'missing' it, but it does depend on how big your incomings and outgoings are. I don't actually use that feature any more as the novelty has worn off and the total amounts I am trying to save and invest in a year are much much bigger than those amounts. But it will work for some.

khampson

Yes I could stretch to £50 a month if it openes other options. Thanks for replying

CLAPTON

khampson wrote: »

Yes I could stretch to £50 a month if it openes other options. Thanks for replying

do you have a rainy day fund e.g. a three months spending total at least?

if not then that's the place to start : current a/cs give the best rates assuming you are well organised

only once you have a rainy day fund is it worth considering stock and funds

redux

I'd say investment trust savings schemes are worth a look.

JohnRo

If this is money surplus to all current requirements and you already have an emergency cash account then simply save weekly into a relatively high interest bearing account (TSB etc.) and then invest the balance annually into something like a Lifestrategy fund of your choice with a low cost platform.

khampson

My rainy day account currently is £400 and I pay £15 a week into this, I coukd put extra money to this and maybe pay and extra £5 to £10 a week into it. My rate is rubbish 0.25% in a isa. I am just at a point where I want to put money away and not miss it.

JohnRo

Why not use a Santander 123 account? I don't know your circumstances but the utility bill rebates seems to easily cover the monthly fee in most cases.

Having a cash ISA, with financial repression as it is, doesn't make a lot of sense unless you're already sitting on a balance that would take years to ISA wrap again if withdrawn, or you're putting in close to the limit each year.