5 years to save £60k, how?!

first98

Hi,

In the next 5 years my partner and I are hoping to have approx £60k in savings.

I earn £40k and she earns approx £30k.

We can save around 850 per month, some months over £1000 and I get a bonus each year of approx £2000. Plus any overtime we do.

Where's the best place for me to save this? I've looked into Stocks and Shares ISA's however we need our money to be safe at the end of the 5 years, we can't be down.

Invest for 3 years and then put it in cash ISA's?
Any advice would be much appreciated

Alistair31

first98 wrote: »

Invest for 3 years and then put it in cash ISA's?

Dangerous.

Given your short timeframe I wouldnt touch stocks at all.

What are you saving for ?

first98

Alistair31 wrote: »

Dangerous.

Given your short timeframe I wouldnt touch stocks at all.

What are you saving for ?

We have bought a house using the Help to Buy equity loan. After the 5 years we want to pay them off completely without paying the interest (interest starts after 5 years), or we would use the money as a deposit on a larger family home


EDIT: I suppose one of my options would be to overpay on my mortgage repayments and then once the 5 years come I remortgage (5 year fixed mortgage) and buy the government out that way?

Audaxer

first98 wrote: »

Hi,
Where's the best place for me to save this? I've looked into Stocks and Shares ISA's however we need our money to be safe at the end of the 5 years, we can't be down.

Invest for 3 years and then put it in cash ISA's?
Any advice would be much appreciated

If you can't afford to be down after 5 years, its too risky to invest it anywhere for 3 years.

AnotherJoe

I would do what yiu sugegsted in your ps, overpay.
Overpaying on the mortage would give you a tax free savings rate of whatever the mortgage rate is. I would do that but via higher interest regular savers.
Open up multiple savers at 5% rate until that's not possible because you've run out of direct debits etc. When the one year period on that regular saver ends, overpay the mortgage with that amount and start another regular saver.
(Unless your mortage rate is higher than regular savers or close to it, in which case perhaps its not worth the hassle just directly overpay )

Thrugelmir

What's the rate of interest on your mortgage?

jimjames

Wouldn't regular saver accounts do what you want and give vastly better interest rate than a cash ISA?

tacpot12

Regular saver accounts would be a good option, but there a limits on how much you can save into each, so the OP might have to split their cash over four or five providers. Not necessarily a bad thing, but just a bit more fiddly to manage. I'd say it was worth it for the extra interest.

Definitely steer clear of stocks and shares investments given your timeframe.

Terry_Towelling

A good way to improve your savings capacity is not to spend too much of your income in the first place. Could you save money by living a more frugal lifestyle - and would you be prepared to do that? A combined £70K (gross) income should enable you to reach your goals if your earning capacity continues without hindrance/misfortune.

I'm a big fan of getting the mortgage paid asap regardless of the rate you've got on it - but what do I know? Just ask some of the other contributors what they think of my approach to finance and life in general.

As for regular savers, Virgin brings out a new issue every couple of months so you can get around 6 or 7 of these going within a year. If you keep taking them (and if they keep offering them) you can have a constant supply of 7 going at any one time. The interest rate isn't the best (2.25%) and £250 is the max per month. The accounts can run for 14 months, are easy access and withdrawals are limited only by the amount of cash you have in them - if you need it. The other advantage is you only have to deal with one bank to get all that number going.

The down side to all this sort of saving is the spectre of tax on your interest as your pot increases and you find better rates, so don't discount tax-free savings accounts. I have a basic S&S ISA (unit trust style). That pretty much follows the FTSE All Share. I only pay into it when the price slumps which means you have to keep an eye on the FTSE All Share Index to get best value and there will always be an element of risk with anything linked to the stock market.

Best of Luck

ViolaLass

Terry_Towelling wrote: »

The down side to all this sort of saving is the spectre of tax on your interest as your pot increases and you find better rates, so don't discount tax-free savings accounts. I have a basic S&S ISA (unit trust style). That pretty much follows the FTSE All Share. I only pay into it when the price slumps which means you have to keep an eye on the FTSE All Share Index to get best value and there will always be an element of risk with anything linked to the stock market.

Best of Luck

You can each earn a grand tax-free per year.

Terry_Towelling

ViolaLass wrote: »

You can each earn a grand tax-free per year.

Quite so but you may receive pay increases (I wish) over the years and, despite tax threshold increases, one of you may nudge into the higher rate tax bracket which drops your tax-free interest allowance to £500 pa.

You still shouldn't discount Tax-free savings.