What do to with £30k savings 30 years old?

steampowered

Open a stocks & shares ISA. Put all of your money into a low cost, balanced investment fund (such as a Vanguard fund). Set dividends to be reinvested.

If you do not need the money in the short term, you are going to get much better returns through stocks & shares than through cash savings.

Unlike cash savings, you don't need to be constantly switching to get the best deal. You can just invest and forget.

Unlike a mortgage, the money would be easy to access if you ever did need it (and you'd be getting a better return than you are paying in mortgage interest).

Obviously with stocks & shares the value of your investment would fluctuate up and down from time to time, but over time you'd be ahead - the average long term return on stock markets is around 8%.

steampowered

Reed_Richards wrote: »

You will never find a savings account that will give you better interest than the interest you pay on your mortgage. If such a thing were to exist then all the smart investors would borrow to save and it would be fully subscribed within days.

A quick google search reveals that the best interest rate currently being offered on a 5-year fixed mortgage is 2.04% by Leeds Building Society or 2.09% by HSBC.

MSE reveals that the best interest rate being offered on a 5-year fixed bond is 2.67%, for which £30k is eligible.

So you can get a bit more interest with cash savings than you'd pay on a mortgage, though not a lot more. Higher rates like 3% or 5% are possible but only on smaller amounts and using special offers. This also obviously assumes you are on the cheapest possible mortgage, which won't be the case for many people (e.g. higher LTV will mean a higher mortgage rate).

However I think it should be recognised that achieving the best interest rate with cash savings requires keeping an eye on the best rate and moving your money around for special offers. Most people can't be bothered to do that, which I think is a real advantage to investing in stocks & shares rather than in cash savings.

Wobblydeb

I think Dr Eskimo has given a good, ordered summary for you to think about. :T

You've got the easy access savings bit sorted out. Now - do you have any high interest debts? What is your pension provision like?

xylophone

Whatever i don't use just stays in my current account

You might consider a switch to Santander 123.

https://www.santander.co.uk/uk/current-accounts/123-current-account

You might consider a couple of Tesco current accounts if you have the 6DDs.

You might also open a TSB Plus current account.

If you have never had a Nationwide Flexdirect account you might open one and get 5% for a year on £2,500.

Standing orders between the accounts deal with the monthly pay ins.

Or you might wish to consider a stocks and shares ISA.

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

http://monevator.com/using-vanguard-lifestrategy-funds-life/

Terry_Towelling

I think DrEskimo is just about right but the OP's written style is indicative of a lack of motivation to adopt such an approach. For £30K to build up over 2 years with no return/benefit whatsoever does suggest a degree of indifference to a multi-disciplined approach. Sorry, OP, I'm not criticising, it is just a feeling that comes across.

On the mortgage-overpayment front, 2 years have now been lost. It is important to understand that mortgage overpayment has a far reaching effect. It isn't just the % interest rate of the overpayment that you save. This saving continues to compound for however many years the mortgage has to run - and is a guaranteed saving.

At 2% for, say, 5 years followed by 5% for 20 years, a single £1000 overpayment two years in could have the effect of knocking £2800 (approx.) off the mortgage. In reality it doesn't work quite like this because the true effect is that the mortgage reaches a zero balance before the end of year 25 so you don't actually get the full 23 years of compounding. Someone shout if the maths is wrong.

It may also be important to service more debt when the rate is lower so that there is less to service when the rate is higher later in the term.

Without preaching, and assuming no high-interest debts because none are mentioned, the very least OP should be aiming for is 6 - 12 months emergency fund, proper pension provision and possibly some degree of mortgage overpayment (if permitted). Once established with the regime perhaps then consider some form of investment strategy.

Beyond that it is just a case of praying that the capacity to work, earn and save £15K per year continues.

swindiff

Reed_Richards wrote: »

"Stoozing", as I understand, involves borrowing at a "special offer" rate in order to invest at a better savings rate. True, I don't do this; I thought it typically involved borrowing on a credit card (with a 0% introductory offer) rather than a mortgage.

You might be able to beat the interest rate on your mortgage with a regular saver account but these always allow you to save only a limited amount per month. So if you set-up one a month for a year with 12 different providers each taking, say £250 per month that would occupy £3,000 in rotation. If you could find another 12 providers that might be another £3000; how many regular saver accounts exist?

We're still very short of £30K. So if what I wrote is



it would be helpful to the OP to give some counterexamples that would work with £30k, rather than just ticking me off.

I have £43,000, mostly stoozed borrowing at 0%, spread over many accounts ranging from 1.5% to 5%. They return on average 3.33% giving me an annual return of £1,453.

My mortgage is 1.99%

atush

10k savings in cash, 10k into pension, 10k into s+s isa

Reed_Richards

swindiff wrote: »

I have £43,000, mostly stoozed borrowing at 0%, spread over many accounts ranging from 1.5% to 5%. They return on average 3.33% giving me an annual return of £1,453.

My mortgage is 1.99%

I'm very impressed, not least by your high average percentage. But surely this must take some doing? For example if keeping track of all these accounts takes you, say, two hours a week, so about 100 hours a year that would represent a "wage" of £14.53 per hour. But perhaps you only spend an hour a month which would equate to £121 per hour?

swindiff

Once all the direct debits and standing orders are initially set up it takes no time to maintain at all, its all done automatically each month.

steampowered

Reed_Richards makes a good point that most people can't be bothered to set up multiple accounts and direct debits, changing them every 2 years or so, to get the best rate.

As the Op said he is awful with money, I think a standing order into a stocks & shares ISA is the best way to go. The Op can literally just set that up, forget about it and he would expect to get a good return.