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Novice Saver

Tadpole78
Posts: 46 Forumite


Apologies in advance for being completely clueless, but I've never really been in the position before to have to consider saving (at least not long term).
I've recently come into £20k (redundancy), and am basically wondering how best to invest/save to maximise it. (As an aside I am due to inherit another £25k approx. in the next few months, but this is still going through solicitors etc, as it's from outside the UK).
I've got another permanent full-time job straight away on a higher salary, so will be in a better position financially going forward.
I'm in my employers Career Average Earnings (defined benefit) pension scheme, but I'm thinking of making some AVCs too (maybe about £100 per month).
I'm married (both basic tax rate) with 2 kids (9 and 7), with a mortgage of approx. £42k with 9 years remaining, on a 5 year fixed @ 1.79%. We're both 39 years old.
I've looked at the sections of website re saving, but nothing seems to give more than about 1.5%. I don't currently have any ISA's etc, only a short-term savings account (for the likes of Christmas/Holidays etc).
I'm not even sure of what I want to be honest, just to maximise the money...maybe have something to help the kids out by the time they're buying a house. I don't think I'd want to 'lock away' all 20k, maybe have access to approx. £5k in case of emergencies (though on my new higher salary, I'm hoping to improve my general savings). I've seen talk of S&S ISAs etc, but as I said I'm clueless.
Anyway, any advice much appreciated, or even a point in the right direction, to guides etc. Or if I've missed out any infor that might help, just let me know. Thanks!
I've recently come into £20k (redundancy), and am basically wondering how best to invest/save to maximise it. (As an aside I am due to inherit another £25k approx. in the next few months, but this is still going through solicitors etc, as it's from outside the UK).
I've got another permanent full-time job straight away on a higher salary, so will be in a better position financially going forward.
I'm in my employers Career Average Earnings (defined benefit) pension scheme, but I'm thinking of making some AVCs too (maybe about £100 per month).
I'm married (both basic tax rate) with 2 kids (9 and 7), with a mortgage of approx. £42k with 9 years remaining, on a 5 year fixed @ 1.79%. We're both 39 years old.
I've looked at the sections of website re saving, but nothing seems to give more than about 1.5%. I don't currently have any ISA's etc, only a short-term savings account (for the likes of Christmas/Holidays etc).
I'm not even sure of what I want to be honest, just to maximise the money...maybe have something to help the kids out by the time they're buying a house. I don't think I'd want to 'lock away' all 20k, maybe have access to approx. £5k in case of emergencies (though on my new higher salary, I'm hoping to improve my general savings). I've seen talk of S&S ISAs etc, but as I said I'm clueless.
Anyway, any advice much appreciated, or even a point in the right direction, to guides etc. Or if I've missed out any infor that might help, just let me know. Thanks!
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Comments
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Hello Tadpole!
Firstly I think that you are definitely doing the right thing by having a look around with what you are doing. Very wise, So many people out there, including myself would probably go on a crazy shopping spree or book a dream holiday! But I digress.
I came into a similar sized amount about a year ago, and was also unsure with what to do. I would recommend an ISA with NUTMEG.
Being an ISA your money is in a Tax Free wrapper and your not really locking it away. You can have the money back within a few days if you need it. I'm up around 7% over the past 14 months which I think is fantastic.
You are right, there are very few places to put money these days to earn a decent interest. I initially bought the maximum amount of premium bonds which is another option for you. Its 100% safe, but the return was low / unpredictable.
Hope this helpsGreat things are done by a series of small things brought together.
If you cannot do great things, do small things in a great way.
The greatest good you can do for another is not just to share your riches but to reveal to him his own.0 -
Hi
I'm also 39, 2 kids 7&9 and just opened a S&S ISA with https://www.vanguardinvestor.co.uk
Took lots of info from this forum and I felt this was best option for me for better returns but access. I don't have that amount of cash so others may advise different?
AVC good option and also poss overpaying mortgage but yours is quite low as it is? I'm not an expert, just a mum trying to figure it out herself.
Lots of people on here with good knowledge so sure you will get some tips0 -
Forgot to add some banks such as Santander have 5% regular savers with fixed deposit each month could be option.0
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Thanks! Medihv, believe I have blown some of it (it started at 25k!), so I'm determined to save this portion of it.
I'll have a look at the Vanguard stuff louloubelle79, thanks, you sound like you're in pretty much the exact same situation as me!
I had seen some of 5% accounts, but I'm terribly lazy and the thought of switching was putting me off (plus I'm happy with my current account, Nationwide), but I suppose there are ways to do it...I've seen some mention it here.0 -
First thing to consider I think is do you want to "save" it and earn "interest" or "invest" it and see the price go up and down as markets move around (whilst expecting to be up over the longer term)?
Or a combination?
If saving then the current accounts / regular savers are the best paying options. A bit of time to set up but then fairly automated DDs/SOs each month - lots of threads on here discussing best deals.
If investing then more choices - pension or S&S ISA? Your name or other half's, or split?
Each has advantages and disadvantages, different risks for each and suited to different timescales.
While you think about things I suggest you open a LISA for yourself and your other half as you can only open one if you are under 40. You might not use it, but who knows what the future holds.0 -
I'd recommend an S&S ISA with your money invested in a multi-asset fund, such as Vanguard LifeStrategy; HSBC Global Strategy; Blackrock Consensus. I wouldn't use Nutmeg or any of the other robo-advisers as their fees are high and they demonstrate no benefit for that extra cost. You will need to choose the fund first and then a platform to hold it on. The fund charges a fee (OCF), but this is paid out of the investment and reflected in the NAV (the price of a unit in the fund). Fund OCF's for multi-asset funds are around 0.2% - 0.25%. You will also pay a platform fee. With the kind of sum you have to invest (and assuming that you might start regularly adding to it out of your income) then you are probably best off with a per centage fee platform. I'd suggest looking for a decent cheap option, so don't pay more than 0.25%. If you decide to go with a Vanguard fund then their own platform fee is super cheap at just 0.15%. You pay the platform fees out of cash. If you won't be regularly adding to the investment then a fixed fee platform like iWeb might be a better option.
Have a read of the following to improve your knowledge:
http://monevator.com/
http://diyinvestoruk.blogspot.com/
http://monevator.com/compare-uk-cheapest-online-brokers/
http://monevator.com/using-vanguard-lifestrategy-funds-life/
I'm not necessarily a huge fan of LISAs. For some they make sense, but you need to be conscious of how your money is restricted. As you are already a homeowner then you would not be able to access your money until you are 60. If that doesn't sound like an issue then it may be of use to you. If you do open a LISA then make sure it is an S&S one, and then make fund choices as above. Be aware that the number of providers is pretty limited. For S&S (giving you free choice over the funds invested in) then your only real options are Hargreaves Lansdown and AJ Bell.
For cash savings I'd look at making use of the interest paying current accounts and regular savers. You are already a Nationwide customer, so why not open a FlexDirect current account each and a joint one, which will give you 5% interest for a year on a combined figure of £7,500 (if you can't maximise that because of putting money elsewhere then I'd save the joint application for a year, as you can only get the 5% once)? Then also open two regular savers, allowing you to put away £500 per month (£250 each) at 5%. After the year is up, your current account interest will drop to 1%, which isn't brilliant, but don't completely ditch Nationwide. Keep the joint account open (or open it if waiting the year) and then you can renew the regular savers for another year (and keep doing it). The FlexDirect account doesn't require any direct debits, but does require £1,000 per month to be paid in from an account outside of Nationwide (if you want the interest). This is easily managed by opening another account with a different bank and just moving that £1,000 in and out via standing order, e.g. Salary comes in to your "main" current account -> £1,000 is transferred via standing order to alternative bank -> £1,000 is transferred to FlexDirect no.1 -> £1,000 is transferred back to alternative bank -> £1,000 is transferred to FlexDirect no.2 -> £1,000 is transferred back to alternative bank -> £1,000 is transferred to FlexDirect no.3 -> £1,000 is transferred to "main" current account. Allow a few days between each stage to avoid problems with weekends and bank holidays.0 -
Thank you both, very comprehensive information.
ValiantSon, that's made it all so much clearer. I am now veering away from a LISA, and thinking I'm more likely to go down the AVC route.
I'll have a read of those links, but the S&S ISAs are sounding appealing, just have to decide which platform (as I'm not sure if I'll save regularly with it, or just a lump sum, and use my AVC for monthly contributions).
I had noticed the 'high' interest current accounts, but was getting muddled as to how to set up the 'cycle', but you've set it out very clearly! I'm now being greedy and wondering if I can factor the nationwide refer a friend in there too (for my and my H). But that's all certainly food for thought. Thanks.0 -
Thank you both, very comprehensive information.
ValiantSon, that's made it all so much clearer. I am now veering away from a LISA, and thinking I'm more likely to go down the AVC route.
As I say, it suits some, but not everyone. I'm just about young enough to have opened one, but chose not to as I've been a home owner for nearly 20 years, and I have no interest in tying money up until I am 60 (I plan to retire before then so as a retirement savings vehicle it didn't really stack up for me).I'll have a read of those links, but the S&S ISAs are sounding appealing, just have to decide which platform (as I'm not sure if I'll save regularly with it, or just a lump sum, and use my AVC for monthly contributions).
Have a good look at the likely performance of the AVCs.
Even a relatively small regular contribution into the S&S ISA will most likely be worth it.I had noticed the 'high' interest current accounts, but was getting muddled as to how to set up the 'cycle', but you've set it out very clearly! I'm now being greedy and wondering if I can factor the nationwide refer a friend in there too (for my and my H). But that's all certainly food for thought. Thanks.
Glad to have been of help.
Yes, you can make use of the refer a friend, but you'll need non-Nationwide accounts with two direct debits on them to get it:
* You could both open an account with another bank (Best to pick one who don't have a switching offer that you might benefit from at some point, although you don't know what they may do in the future. I'd probably go for Santander - Everyday Current Account - as they've never had a switching incentive, although who knows. For the record you can get a small amount from them via some cashback sites for a switch, but I wouldn't worry too much).
* Set up two direct debits on each account (they only need to be there for the switch, although best if they've paid out once from that account). These can be moved from your existing account by contacting the relevant companies, and then moved back when you are done with switching.
* You, as the existing Nationwide customer, refer your husband who switches his Santander account to a FlexDirect account. He receives £100 and so do you.
* Your husband then refers you (yes, really) and you switch your Santander account to a First Direct account. You receive another £100 and so does he.0 -
If you are allowed to over pay on your mortgage, then don't ignore this as a strategy even if your rate is low (1.79%) for a few years. By overpaying you effectively get more debt paid at the low rate and less at the higher rate when the 1.79% deal ends.
Plus you never know if life is going to be kind to you in the future so debt reduction shouldn't be overlooked.0 -
Thanks folks. Terry, good point, I'm hoping with my (slightly) increased salary to overpay a bit every month, even if only £50.
ValiantSon, that's great info, and gives me a good basis to start from. Think I'm going to go with the Tesco 3% current account and ideally 3 FlexDirects (though have to read up on the bit about regular savings account @ 5% as wasn't aware of those). Just have to get all my ducks lined up so to speak re the current account cycling!0
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