Absolute savings newbie looking for help

Archi_Bald

Diddle283 wrote: »

Would there be a reason for putting my money into a 123 account over an isa?

yes there is http://www.moneysavingexpert.com/news/banking/2015/02/should-i-save-in-santanders-123-account-or-put-the-money-in-a-cash-isa

Diddle283 wrote: »

I have read a little about them and realise I could put £15k in one for this years allowance and the rest next month. Would this not offer me a greater return than the 123 account option?

no it would not

Archi_Bald

Diddle283 wrote: »

Appreciate your help guys, it's been really useful.

I'm particularly interested in the investing with Charles Stanley or similar idea, but after reading the website, it seems very complicated and there seems to be an awful lot of fees! If any of you have time to simplify how this works and what I need to do I would really appreciate it. If not, thank you for the time you have already given me!

Investing can be baffling for newbies but it doesn't have to be complicated. There is plenty of excellent reading about, you could start with this.

But as has already been mentioned, if you are planning to buy a house in the next few years, you should probably stick with cash for now, and stay clear of investing. You don't want to have to sell when the market has dipped just because you need to put your deposit down. Best sort the house first.

Congrats for putting a fair wad into your pension, btw - I hope 8 of your 16% contribution come from your employer.

Mistermeaner

Charles Stanley (and others) are quite straight forward. I started from knowing nothing about 9 months ago to having a fair grasp of the basics, mainly from help on here hence the urge to share the little I have learned as a means of paying the forum back.

Basically you want to open a s+s isa with charles stanley: look up how to do this or ring them. It's very simple ans straight forward like any other bank account.

Once your account is open you need to put cash in it: this can be one off payments via a debit card or like me via a monthly direct debit.

Any money held in your account (or value of assets) is charged by Charles Stanley at 0.25% . This covers their admin costs and a small profit. This means for every 1000 you have with them you are charged 2.50 per annum.

Once you have cash in your s+s account you can then buy a myriad of investment products, be they shares unit trusts, funds etc.

I suggest until you know more you stick to funds.

A fund is basically a place where lots of people put their money together, under a manager (person or firm) who then goes and buys stuff with that pooled money, generally shares.

Each fund will have a theme or region or approach to suit the needs of different investors.

Someone like you (and me) with low value investments is generally best buying a "one size fits all" type General fund that covers lots of the available things you could buy in a simple and low cost way. Funds such as vanguard life strategy fit this but there are others.

As the fund manager is managing this fund for you and others he charges you a fee, I forget exactly but f o r the vanguard funds it's about .3% this is on top of your platform fee but you generally won't see it directly as its managed in the value of the fund units you have bought.

The value of each fund unit you have bought goes up and down as the individual shares held in the fund go up and down as the world spins.

Don't worry about this as generally your fund will trend upwards to give you a better return over enough time to beat both the charges, inflation and cash returns to make it the best return for your spare cash.

This is a very basic overview and more detail is on Google - I strongly suggest you take time to do your own research and c one back with any specific questions you have

xylophone

If you are going to want to buy a house within the next five years it might be wiser to stick with cash?

You might consider opening a Nationwide FlexDirect, a Lloyds Club and a Santander 123.

You could close the Nationwide Flexdirect after a year, either to an account with an opening bonus or to one with a better interest rate.

If you need Direct Debits, you could open one Tesco Internet Saver and one Instant Access Saver and set them up on those.

You would put £2500 into the NW (£1000 a month deposit required), £5000 into the Lloyds Club (2 DDS + £1500 a month) and £13500 into the Santander (£500 per account period +2DDs) - top up the Santander with your monthly savings and the creamed off interest from the other accounts.

When Santander is full, you could open up to three BOS Vantage accounts (£1000 a month deposit).

You achieve the minimum deposits by cycling money round your accounts using Faster Payments /regular standing orders in and out.

Diddle283

Archi Bald, on the pension thing. I am not sure if my employer pays 8% or not.... Do they have to pay half or just contribute a smaller amount?

Eco_Miser

Diddle283 wrote: »

Would there be a reason for putting my money into a 123 account over an isa? I have read a little about them and realise I could put £15k in one for this years allowance and the rest next month. Would this not offer me a greater return than the 123 account option?

If you mean a cash ISA, it's because certain current accounts pay more after tax than ISAs do untaxed.

If you mean an S&S ISA, that will probably outdo the 3% gross you could get from Santander in the long run, but at the cost of volatility, meaning the capital value goes up and down, and if you're hoping to buy a house in 5 years time, that's not good if the market is down then.

Before you put significant sums in investments you should have upwards of six months spending plus any planned one-off buys (car, house deposit, holiday) plus an emergency pot in cash, probably in those high-interest current accounts.

Archi_Bald

Diddle283 wrote: »

Archi Bald, on the pension thing. I am not sure if my employer pays 8% or not.... Do they have to pay half or just contribute a smaller amount?

No idea, you need to check your scheme. Employers often match the employee contribution, or if you are lucky, they pay even more than half. It could also be less than half....the important thing is to maximise your employer contribution if you at all can, as it is free money.

Diddle283

Seems I have a lot of learning and homework to do!

I have spent the last couple of hours looking at that Vanguard life strategy 80 and think I'm going to put some money into it.

I really appreciate all of your help. I literally had no ide what to do with my money and I feel like I am getting somewhere from reading advice from people in the know! I have a lot to learn but this is something I am now going to be taking seriously, probably for the rest of my life! So, again, thank you guys for pointing out a starting path for me!

Diddle283

I have another question before I go to bed!

I'm looking at the options of putting the bulk of my money into either an isa or an account like the 123 account. Obviously the 123 account is better right now, but is it only better short term? In the long run, would it be better to have this years isa allowance used with the expectancy that interest rates will rise, thus giving me more bang for my buck down the line?

Archi_Bald

You can put your money into cash ISAs as and if ISA interest rates are higher than what you will get in current accounts. This will probably take a very long time. Nobody is now expecting a basic rate rise before sometime in 2016.

I am surprised you want to dabble with investments at this stage. You do realise you should leave investments untouched for 7-10 or more years? How are you going to pay for your house deposit, the move, insurances etc etc if your money is locked up in investments?