How Much do you Save?

jamesd

elephantrosie wrote: »

how can you be a pound millionaire if you dont have a job in between now and then? is it through compound investment?

as for myself, i save around 65% ish of my take home salary (post-NI contribution and tax). I still wish i have a larger pot of savings. i started working FT in my mid 20s though. prior to that i was a FT student.

Yes, compound growth at a level higher than my current spending level.

Pretend that someone has half a million pounds and is making 4% plus inflation on it, so £20,000 a year. If they spend less than that £20,000 they continue to get wealthier even after inflation.

That's a really big effect for people who are very wealthy, say one of the 134 billionaires in Britain. 4% of that is £40 million a year so it starts to not matter how much they spend on themselves, just not getting richer can become a challenge needing them to spend £40 million a year before even thinking about how they can spend the original billion before they die. First class flights, fancy houses, servants, and all the rest still might not be enough to keep up with how fast death is approaching. One solution is to give a lot of it away to whatever causes they think are worthwhile, that can get rid of it while still making no practical difference at all to how much they can spend on themselves.

65% is very good going!

chockydavid1983

Jesus, I never though about it with actual figures before!
It's no wonder the rich just get richer...

martinsurrey

chockydavid1983 wrote: »

Jesus, I never though about it with actual figures before!
I's no wonder the rich just get richer...

ability to absorb risk is another big one.

you have £20k "savings investments and pension fund", which includes your rainy day fund, and you cant really accept too much investment risk so you get terrible returns short medium and long term

you have £1m "savings investments and pension fund", and you need it to fund your retirement in 10 years (modest £40k a year for millionaire), you can accept some risk, you get decent returns mid and long term

You have £1b "savings investments and pension fund", you could lose 75% of it and still live a lavish lifestyle, you can invest in the riskiest brackets of long term investments which overall WILL make a killing long term.

vacheron

I don't aim to save any fixed amount each month. I aim to spend wisely and minimise all unnecessary outgoings by switching suppliers, shopping around, cashback etc.

This maximises whatever is left from your income which, by definition is automatically saved.

The issues is then maximising the return on your savings. Currently for me this is (in order of priority):

• £500 pm into our work SAYE scheme (the maximum allowed)
• Workplace Pension contributions of any income above the Higher Rate Threshold
• £450 into Regular Saver accounts paying between 3-5%
• Any remaining money accumulates in our Santander 123 accounts.

Beyond this decent cash saving returns becomes more difficult and laborious without fiddling about with dozens of £2K max accounts, which is why the missus has decided to plan a house extension instead. :rotfl:

BananaRepublic

I save about £15,000 per year, most is going into the pension pot to get the tax rebate. I have no debts whatsoever, including no mortgage. I hate owing money, it's something I avoid.

STBarett23

My saving go up to 20% of income

Cotta

vacheron wrote: »

I don't aim to save any fixed amount each month. I aim to spend wisely and minimise all unnecessary outgoings by switching suppliers, shopping around, cashback etc.

This maximises whatever is left from your income which, by definition is automatically saved.

The issues is then maximising the return on your savings. Currently for me this is (in order of priority):

• £500 pm into our work SAYE scheme (the maximum allowed)
• Workplace Pension contributions of any income above the Higher Rate Threshold
• £450 into Regular Saver accounts paying between 3-5%
• Any remaining money accumulates in our Santander 123 accounts.

Beyond this decent cash saving returns becomes more difficult and laborious without fiddling about with dozens of £2K max accounts, which is why the missus has decided to plan a house extension instead. :rotfl:

What is the SAYE scheme?


Also with your setup surely you would be better off having some investments in the mix?

Whoknowskt89

Currently I don't save that much but only because it's going to pay off my debt a lot quicker than it should be but as standard I save 14% of take home for yearly bills and once the debt has gone, it'll be around 30 to 35% (on top of the 14%) plus Christmas money
So really it'll be around 49% off my take home into savings

edinburgher

We save very little, but have just increased our pension payments so that 30% of our gross income is invested each month. On a good day, it's like having 4 people working for us as opposed to just me and the wife

vacheron

Cotta wrote: »

What is the SAYE scheme?


Also with your setup surely you would be better off having some investments in the mix?

SAYE is a workplace savings plan which allows you to save from your salary with the intention to use the lump sum saved to purchase shares in your company at a later date, but at an earlier, pre-determined price.

In my case when my current scheme matures in 2020 I will be able to purchase shares in my our parent company at £5.20 each. The shares are currently trading at £14.20, so this would be a £173% return on every £ saved (if it stays at todays price).

My pension only returns the equivalent of 122% per take home £ sacrificed which is why the SAYE scheme is my highest priority for now.

As I can manage a portfolio of shares in my pension, additionally investing with take home pay doesn't make a lot of sense given the immediate doubling of my contribution which using the pension provides.

I do have a separate portfolio which I use for infrequent larger trades when i perceive a good market opportunity, but these are higher irregular amounts and so not part of my regular saving. In these cases it is useful to have the Santander cash savings available so I can buy relatively large amounts instantly when required.