Need to save but confused as to how

LittleMissAspie

I want to make two savings pots:
1. £100 per month for the next 25ish years. I have a good company pension but I can't take it until I'm 68 so I want to save an amount so that I can retire maybe 5 years early and live off it until I can take my actual pension.
2. £500 per month for the next 5-10 years. This is for a house deposit.

Am I right in thinking that a stocks and shares ISA is the best idea? I looked at cash ISAs in the first instance but the rates are dire. I've read the MSE guide to S&S ISAs but I'm not any clearer on how to go about opening one. What I want is to choose a package with a risk rating that's been put together by someone who knows what they're talking about (ie not me). So my pension pot can be high risk while my deposit pot will be medium risk.

The guide suggests a couple of companies that have low fees, but when I go to their websites they don't explain what their packages are, they mostly just have lists of strangely named things like "7IM Unconstrained C Acc" and strange codes like "OCF/TER%". These mean nothing to me. The guide also mentions trading fees but doesn't say what these are... as I will be putting an amount in each month does that count as a trade? So I'll be doing 12 trades a year?

Is there a guide anywhere that actually explains it all?

Edit: I've found this! http://www.hl.co.uk/funds/portfolio-plus This is the sort of thing I want, don't all companies do this?

Archi_Bald

Try these:

1. http://viewer.zmags.com/publication/69a113e2#/69a113e2/1. Gives a great intro into S&S ISAs but is a couple of years old, and sponsored by F&C. So take their product recommendations with a large pinch of salt, or ignore their product recommendations entirely
   
   
2. http://monevator.com/category/investing/passive-investing-investing/ - great suggestions for easy portfolios. Something like Vanguard Lifestrategy may be right for you
   
   
3. http://monevator.com/compare-uk-cheapest-online-brokers/ - supper summary of ISA providers (don't be lured by websites that only list providers that pay the website a commission!)
   
   
4. http://www.comparefundplatforms.com/ - lets you model which of the providers is probably best for your needs. Top of my head, I would think Charles Stanley might suit you

Archi_Bald

LittleMissAspie wrote: »

Edit: I've found this! http://www.hl.co.uk/funds/portfolio-plus This is the sort of thing I want, don't all companies do this?

You can use this as a guide but in all likelihood, the TER of the proposed funds will be rather high. High annual costs will badly eat into your investment. You should be able to find perfectly good funds with TERs below 0.5%.

All the HL suggestions are for "HL Multi-Manager" products. These are collections of funds that HL re-balance according to their views, and you have to pay them for that (in addition to the costs of the underlying funds). Something like Vanguard Lifestrategy will be way less costly.

atush

S&S isa for half your house deposit, regular savers for the rest. Will spread risk. Would reduce the cash if you are sure you will be more towards the 10 than the 5?

Dc/personal pension for the long term retirement 100. This will see you retire early, w/o taking your DB pension reduced. and you dont want it in cash.

xylophone

You might consider starting a personal pension which you could draw down before you reach your scheme pension age.

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

http://monevator.com/cheapest-pension-diy/

Saving for a deposit over five years - you could do worse than using high interest current accounts to begin with.

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

You might open a TSB Classic Plus - you need to fund it with £500 a month but this can be in and out.

When this has reached £2000, you can open a Nationwide Flexdirect - £1000 in and out a month but just move money back and forth -you can transfer the interest from the TSB there as well until you have £2500. You'll move the money on after a year.

You might think of using the Santander 123 as your standard current account - interest up to 3% on £20,000.

You need to read the terms and conditions and comply with them but these three accounts should keep you going for a while and give you a lump sum close on £25,000 plus interest after a couple of years - then you can rethink?

LittleMissAspie

Archi_Bald wrote: »

Try these:

1. http://viewer.zmags.com/publication/69a113e2#/69a113e2/1. Gives a great intro into S&S ISAs but is a couple of years old, and sponsored by F&C. So take their product recommendations with a large pinch of salt, or ignore their product recommendations entirely
   
   
2. http://monevator.com/category/investing/passive-investing-investing/ - great suggestions for easy portfolios. Something like Vanguard Lifestrategy may be right for you
   
   
3. http://monevator.com/compare-uk-cheapest-online-brokers/ - supper summary of ISA providers (don't be lured by websites that only list providers that pay the website a commission!)
   
   
4. http://www.comparefundplatforms.com/ - lets you model which of the providers is probably best for your needs. Top of my head, I would think Charles Stanley might suit you

Thank you, these are all great. I've skim read them all and need to read properly and write some notes down tomorrow.

LittleMissAspie

xylophone wrote: »

Saving for a deposit over five years - you could do worse than using high interest current accounts to begin with.

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

You might open a TSB Classic Plus - you need to fund it with £500 a month but this can be in and out.

When this has reached £2000, you can open a Nationwide Flexdirect - £1000 in and out a month but just move money back and forth -you can transfer the interest from the TSB there as well until you have £2500. You'll move the money on after a year.

You might think of using the Santander 123 as your standard current account - interest up to 3% on £20,000.

You need to read the terms and conditions and comply with them but these three accounts should keep you going for a while and give you a lump sum close on £25,000 plus interest after a couple of years - then you can rethink?

atush wrote: »

S&S isa for half your house deposit, regular savers for the rest. Will spread risk. Would reduce the cash if you are sure you will be more towards the 10 than the 5?

Hmm I like the idea of some in cash and a bit in investments. I can't be doing with juggling accounts and payments, need to keep it simple, but I could max out a regular saver and put the rest in an ISA. I'd feel safer with that. I can't change my current account because it's offsetting against my mortgage but I happen to be with First Direct who have a 6% regular saver. What would I do with the money after a year though? Maybe interest rates would have risen by then?

LittleMissAspie

xylophone wrote: »

You might consider starting a personal pension which you could draw down before you reach your scheme pension age.

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

http://monevator.com/cheapest-pension-diy/

atush wrote: »

Dc/personal pension for the long term retirement 100. This will see you retire early, w/o taking your DB pension reduced. and you dont want it in cash.

This is interesting as I hadn't realised the rules had changed, I thought of an ISA because I don't want to buy an annuity but now you don't have to. So the government will actually fund 20% of my little savings plan? Sounds too good to be true, what's the catch?

And where it says the first 25% you take out is tax-free and the rest is charged as income tax, does that mean if I quit my job and take out an amount per year that is under the yearly personal allowance I wouldn't pay income tax on it?

Eco_Miser

You can have more than one current account, e.g. FD and Santander, AND have more than one Regular Saver, e.g. FD and M&S. At the end of the year, there may be reasonable fixed term deposits available, otherwise use the highest paying account you can find. The current accounts and their required monthly payments sound a lot harder than they are - once set up everything can be automatic.

atush

LittleMissAspie wrote: »

This is interesting as I hadn't realised the rules had changed, I thought of an ISA because I don't want to buy an annuity but now you don't have to. So the government will actually fund 20% of my little savings plan? Sounds too good to be true, what's the catch?

And where it says the first 25% you take out is tax-free and the rest is charged as income tax, does that mean if I quit my job and take out an amount per year that is under the yearly personal allowance I wouldn't pay income tax on it?

Both are correct, and the 25% is tax relief.

Purplesky_2

The 'catch' is that when you get to retirement, you still have to pay tax on your income. If you were fortunate enough to have pension income more than your personal allowance, then you must pay tax. But it's a nice little boost in the meantime, and remember that the income tax brackets tend to go up!

If you have a good company pension, are you taking full advantage? If you pay 20% tax, and you put in £100 'after tax' or 'net' wage, then you end up with £125 in after the tax refund and a company pension would usually add an amount to that too. Even if it's just £25/month, you've got £150 in the scheme having only sacrificed £100 of your take home pay! Make sure it's maxed out to make use of your company contributions. These are often matching your input to a certain percentage (I.e if you put in 4% of your income, they will add in the same amount). Details vary, ask your HR person. Think of it as salary that you are due, you just have to access it!
After all, you can start a S&S ISA later on for retirement or make use of it now for house deposit and then keep putting into it for (early) retirement!