Need some savings advice

indierocker85

Hi Guys

I am wondering if anybody would mind giving me some advice on a good savings strategy.

For information, I currently have a joint mortgage, at 2.51% fixed for the next four and a half years, and have just about maxed out our first years overpayment allowance, and have knocked off 3 years off the term as a result.

I know they say if savings percentages are below mortgage rate, overpay. But we would now pay a 5% EPC if we did, so with that factored in, am I better waiting?

I run a limited company, and take approximately £45k per annum out of the business.

I currently have a Nationwide Flex Plus account, which has the £2500 in for the 3% interest

I also have a Flexclusive regular saver, in which I put £250 per month.

I have already had a Flex Direct account, so I don't think I can go down that route.

Wondering what options I have? I don't really want to get a LISA just yet, any suggestions? I am seeing a lot about bank account savings etc, it's just so broad and daunting.

Thank you all in advance for your help

p00hsticks

What are you saving for ?
The timescale in which you are likely to want to spend the money will affect the answers people give.

One thimg I noticed is that you don't mention a pension - is your company putting money into a pension for you, as this is very tax effective ?

Dazed_and_confused

Where are you resident for tax purposes?

indierocker85

Not saving for anything in particular really, just wanting to make sure my money is earning, something.

No, not started a pension as yet

indierocker85

Dazed_and_confused wrote: »

Where are you resident for tax purposes?

England, United Kingdom

Zero_Sum

indierocker85 wrote: »

Not saving for anything in particular really, just wanting to make sure my money is earning, something.

No, not started a pension as yet

Going by your user name, im guessing your 34?
If so, think you really need to start looking at pensions

AnotherJoe

You are paying way too much tax because you haven't got a pension.

indierocker85

How so? I don't really understand it all, pensions I mean.

katsu

Hiya Indie,

Pensions are a way of investing in the stock market (as you get older and closer to accessing the money from your pension then it will usually be changed from being invested in stocks and shares to being invested in cash, like a bank account, but when retirement is decades away the money is generally 100% invested in shares).

A pension and a stock and shares ISA are both ways of purchasing shares that are more tax efficient than just going out and buying shares. The main difference is that money invested in a pension can't be taken out again until you are nearer retirement age (currently age 55, expected to be 57 by 2028) unless you are terminally ill.

Pensions are good because they are income tax efficient. As a higher rate taxpayer, you can claim back the HR tax you pay, so you get £100 in your pension but it only costs you £60.

The reason people have asked you what you are saving for, is because if you are planning on needing money in say the next 2-5 years, it is generally not a good idea to invest it in the stock market, as the stocks can go down and you could have less money when you needed it (eg if you are saving for a new car or house deposit).

There are a lot of other regular savings accounts, so they are worth looking into as you do not want to look at a LISA. You can get up to 5% if you can use First Direct or M&S - the main site has an article on them (and other savings accounts) or you can get say 3% if you can get to a Virgin Money store. There is a great thread here full of regular savers.

If you have a lump of cash you can open an account like a Marcus account that pays 1.5% - again there is a good article on them on the main site. You can take money from an account like Marcus and pay it into a regular saver each month, so that over time it earns more interest.

Don't be daunted, saving is a great idea and there is lots of help here

xylophone

I run a limited company,

Some information from one pension provider here.

https://www.pensionbee.com/pensions-explained/pension-contributions/contributing-to-your-pension-from-your-limited-company

You have a wide choice of pension providers.

adatherton

Looks like you are approaching it by trying to get all the max-out special deals. But 3% isn't great.

Definitely look into pensions (particularly a SIPP where you can change [but not withdraw] the investment, which is usually shares or a fund which contains shares. Long-term shares savings would normally be in a fund (where an expert picks the shares). Virtually all funds make a lot more than 3% although unlike cash savings they can go down.

You also don't mention an ISA. £15k a year savings, any interest/profit is tax free. You can withdraw from those any time. Flexible ISAs let you withdraw/resave up to the £15k max. As you pay 40% tax, a 2% cash ISA is better than a 3% ordinary account.

For (almost) cast-iron capital preservation, you could look at peer-to-peer lenders such as Zopa. They have risk levels, but even the lowest pays about 4.5%. They have insurance built in for bad debt.