Most effective way of saving?

jamesd

Have a look at Options: 10% tax free, 7% tax free, 11% taxable, 6% taxable and pick options that work for you. Peer-to-peer lending sites: MSE guide discussion is also worth a read, start at the end.

A blend of things is good.

ChopperST

What's the APR on your car finance? I'd get that paid off first? Unless you can beat it with savings?

VAGH

Put eggs in one basket, and then try your best to business your account

atush

ValiantSaint wrote: »

I do indeed have an emergency fund of three months outgoings (and various insurance polices!)

Sadly, without taking a bit of a risk, I fear I'll never be debt-free! I have been reading about stocks etc, after a very learned friend suggested that I should look into this area. Would it be wise to let someone deal in shares for me?

I have also seen a lot of here about the S&S isas - how much would I need to put into one, and where's the place to start? (I have about 4k, that I would be happy to leave be......)

Many thanks in advance

No it would not be wise to let some person invest in shares for you.

It would be wise to consult an IFA, or to invest in FUNDS and trusts that are collective investments so carry less risk than single shares.

green_man

jamesd Have a look at Options: 10% tax free, 7% tax free, 11% taxable, 6% taxable and pick options that work for you. Peer-to-peer lending sites: MSE guide discussion is also worth a read, start at the end.

A blend of things is good.

Hi James, it looks like the Albion trust is full for subscriptions on this offer period. I think their other 5 VCTs are available though. I was thinking of the Crown trust, but it does not seem to have the cash balance to guarantee the dividend longer term ( if I am reading the docs correctly), I know you were looking at this trust as an option, any thoughts on this.

jamesd

Yes, the Albion VCT is full for the 2014/15 year offering. Expected to be open again around November this year for its 2015/16 offer, with an early bird discount that'll presumably be 2-3%. If I was doing my buying again I'd have put more than I did into Crown Place even though it has a lower percentage of asset backing/secured lending, about 60%. I think that the higher dividend rate makes it of interest anyway. Just has that bit higher risk level due to the lower amount of secured lending it's doing. Like the Albion VCT, both Crown Place and Kings Arms Yard are allowed to invest in things like care homes and hotels that more recently launched VCTs can't use.

There's ongoing income for these VCTs so they don't need to have all of the cash for all future dividends. Usually VCTs also draw some capital to top up the annual dividend payments so it may do a bit of that as well, depending on how much growth and income it gets. I'm not expecting this to be enough to matter to my overall decision but it's something to be aware of. The Tax Efficient Review analysis mentions this on page 14 and also says that overall they have reserves to pay their dividends for at least the next three years.

So far as capital values go, one of the things I like about these is the unusually low discount target of around 5% for manager buybacks from investors. It's usually in the 10-25% range. Again this is something you need to allow for in your overall returns thinking.

From both discounts and dividends I'm assuming that the actual total return might be 1-1.5% lower than the pure dividend rate but sales might well reduce that. For me that's offset by the tax advantage of the tax free income aspect, which will save me a good deal more than that.

Best to decide if you want it then get a move on if you do want it before the new year because it's expected to be full before the end of September final closing date for this offer. If uncertain, just wait and think, no need to hurry. Though I am kicking myself for not getting started on VCT use a few years ago so don't wait years...

themanfromamarillo

There are a number of things you can look at.

Firstly look at putting your emergency fund into a high interest current account (or more than one). For amounts between £4-5k there's Club Lloyds and for less than £2k there's TSB paying 5%. Santander 123 paying 3% on anything above £3k is another option. Note Lloyds and Santander both need 2 DDs paying out (not sure about TSB). Lloyds also require £1500 per month paid in or you need to pay a fee (Santander it's £500 or no interest). Note also these accounts may require credit checks so if your debts gave you a low credit score you might get a rejection.

Second, if you still have a spare bit of money every month to save you could either pay more into whatever high interest curent account you went for or look at a good regular saver paying 4-6%. These typically require a current account with a particular bank (Club Lloyds RS pays 4% but requires a Club Lloyds account, First Direct 6% but requires a First Direct current account). Note regular savers often have a fixed term so will mature after a year or two. Then you'll need to find a new place for the money.

There's also the other possibility, of using spare money to pay down debt instead. Check the terms of your car loan or mortgage to see if you can pay a little more every month without incurring a penalty. This will lower the amount of capital you owe on the loan and decrease the amount of interest you will eventually pay out. Compare the rate of your car loan/mortgage with what you would get from a high interest current account. If the rate is higher, pay off the loan quicker.

Finally if you do decide to go for fund investing remember you can lose money as well as gain it so be cautious. Read about a bit, find low-cost ways of dripping money into funds (so you don't throw all your money into the market when it's really expensive) and look for ways to protect yourself from/benefit from the tax system (S&S ISAs, SIPPs etc.).

Thrugelmir

What rate of interest are you paying on the mortgage?

ValiantSaint

themanfromamarillo wrote: »

There are a number of things you can look at.

Firstly look at putting your emergency fund into a high interest current account (or more than one). For amounts between £4-5k there's Club Lloyds and for less than £2k there's TSB paying 5%. Santander 123 paying 3% on anything above £3k is another option. Note Lloyds and Santander both need 2 DDs paying out (not sure about TSB). Lloyds also require £1500 per month paid in or you need to pay a fee (Santander it's £500 or no interest). Note also these accounts may require credit checks so if your debts gave you a low credit score you might get a rejection.

Second, if you still have a spare bit of money every month to save you could either pay more into whatever high interest curent account you went for or look at a good regular saver paying 4-6%. These typically require a current account with a particular bank (Club Lloyds RS pays 4% but requires a Club Lloyds account, First Direct 6% but requires a First Direct current account). Note regular savers often have a fixed term so will mature after a year or two. Then you'll need to find a new place for the money.

There's also the other possibility, of using spare money to pay down debt instead. Check the terms of your car loan or mortgage to see if you can pay a little more every month without incurring a penalty. This will lower the amount of capital you owe on the loan and decrease the amount of interest you will eventually pay out. Compare the rate of your car loan/mortgage with what you would get from a high interest current account. If the rate is higher, pay off the loan quicker.

Finally if you do decide to go for fund investing remember you can lose money as well as gain it so be cautious. Read about a bit, find low-cost ways of dripping money into funds (so you don't throw all your money into the market when it's really expensive) and look for ways to protect yourself from/benefit from the tax system (S&S ISAs, SIPPs etc.).

Many thanks to you (and all the lovely people) for the help.

A little bit of background about me. My car is on a three year PCP deal. By the time I give it back, It'll be worth about £20, what with all the miles I put on it.

As for the mortgage, I don't think we can make heightened payments, sadly.

I do have a Santander current account (and about three others with them!) and I did look into getting a 123 current account with them. After factoring all the DDs and money that would be in there, they would be paying me about £150 in interest! A lot better than what I am getting, but not mind-blowing.

The other problem will be, me and my Wife want to start a family, which means, in the future the 123 account will become "dormant" due to all of my funds going into our joint account to fund our house and food etc - hence no money will be going in there, at all (Is there a way round this, so I can still get interest?)

We do have an account with Lloyds that is used for some of our savings, but it's just a bog standard account. With the ones that you've listed, they need to be "funded" this could be a problem due to the joint account housing most of our money. Could we swap our savings into another Lloyds account, and "flip flop" the payment every month into the savings and then into the joint account? (Both are with Lloyds........)

EDIT: What about a Money Market Account? (Stock market-linked account.....)

xylophone

You can have a joint Santander 123 for all your household outgoings.

You can have a sole 123 each as well if you wish.

The same applies to Lloyds Club, TSB Classic plus.....

With regard to funding accounts, you can move money in and out within minutes using FP - just check which accounts need external funding.