Idea's for saving/investing in 2019?

[Deleted User]

Hi,

I am 30, and have saved up a fair bit in my savings account past couple of years, I've also spent the same amount on various things outside of normal expenditures.

I have £40K to my name and it's just dawned on me that this is money that depreciates in line with inflation the longer it sits in the bank. What do to do with it for a meaningful return?

5% on fixed savings accounts doesn't seem worth the hassle for me, having my money tied up somewhere for a few years, however investing in something long-term with high return (like property or shares) seems a good way to go.

I'l be able to put away around 2500 a month for savings soon, as I clear some outstanding debts and inherited mortgage to free up income.

MarkBargain

I would clear the debts, review your pension, keep some in cash for a rainy day, then look to invest £20k a year in a stocks and shares ISA. You can have a look at funds here. https://www.markets.iweb-sharedealing.co.uk/funds-centre/fund-supermarket/

[Deleted User]

MarkBargain wrote: »

I would clear the debts, review your pension, keep some in cash for a rainy day, then look to invest £20k a year in a stocks and shares ISA. You can have a look at funds here. https://www.markets.iweb-sharedealing.co.uk/funds-centre/fund-supermarket/

Thank you for your reply, do you think with recent performances of the stocks and shares ISA it offsets the UK inflation rate for the same period?

I.e savings won't depreciate ? I haven't really followed either inflation or isa rates.

pinnks

Over the longer period stocks and shares are likely to perform better than saving in the bank etc.

We invested in S&S ISAs in 2004 to 2006 - nothing particularly risky but not just an index tracker. They are currently worth about 3 times what we invested, so 200% growth over 14 years, despite the crash in 2008. I have not done the maths but I don't think aggregate inflation is at 200% over the last 14 years and interest returns are certainly not at that rate.

HTH

steampowered

The average long term return on the stock markets is about 8% per year.

So yes, over the long term the return on a diversified portfolio of shares will exceed inflation.

Some years stocks they will lose money, some years they will make money, but over a 10 year+ period it is pretty guaranteed that a balanced portfolio of stocks will do well.

If you want the low hassle route, simply open a S&S ISA, contribute as much as possible, and purchase a low cost diversified investment fund. Vanguard lifestrategy 60 would be fine. You then just leave the money there and forget about it.

Have a read of https://www.ig.com/uk/trading-strategies/what-are-the-average-returns-of-the-ftse-100--190318. Look at the bit "FTSE 100 performance over the past 10 years", with dividends reinvested. This gives you a good idea of how the FTSE 100 has performed - i.e. the return you would have got if you chose a FTSE 100 tracker (before fees). No doubt someone will be along in a minute to say you should choose something more diversified than just the FTSE 100 but it at least gives you an idea of how shares perform.

AnotherJoe

Adams18 wrote: »

Thank you for your reply, do you think with recent performances of the stocks and shares ISA it offsets the UK inflation rate for the same period?

I.e savings won't depreciate ? I haven't really followed either inflation or isa rates.

I think you need to do some reading. There's no such thing as "the" stocks and shares ISA. A S&S ISA is an empty "wrapper" into which you put investments so it's performance is entirely down to the investments of which there are literally tens of thousands to choose from.
Perhaps start here https://www.kroijer.com/ to look at some basics.

[Deleted User]

AnotherJoe wrote: »

I think you need to do some reading. There's no such thing as "the" stocks and shares ISA. A S&S ISA is an empty "wrapper" into which you put investments so it's performance is entirely down to the investments of which there are literally tens of thousands to choose from.
Perhaps start here https://www.kroijer.com/ to look at some basics.

Thank you and fair enough, I didn't realise it was merely a wrapper, I thought it was a tax free wrapper where the contents also gets invested into pre selected stocks and shares by an "expert" similar to the way private or corporate pension plans work.

You just give them the money, and they'll invest it carefully for you (mostly them).. with some added tax-free incentive.

AnotherJoe

Adams18 wrote: »

Thank you and fair enough, I didn't realise it was merely a wrapper, I thought it was a tax free wrapper where the contents also gets invested into pre selected stocks and shares by an "expert" similar to the way private or corporate pension plans work.

You just give them the money, and they'll invest it carefully for you (mostly them).. with some added tax-free incentive.

Well yes it's a tax free wrapper. There are no doubt hundreds to choose from, some where "experts" will invest in funds such as those run by Mr Woodford. :eek: and others who will use their own investments, and others who will use third parties investments, in many you select a "risk level" and they will choose investments and many where you pick them yourself .
Watch the video I posted which talks about a simple DIY approach to investment selection. Then decide which way to go. Bear in mind you pay for the "experts" and in many cases the cost of that outweighs the benefits.

badger09

Adams18 wrote: »

Hi,

I am 30, and have saved up a fair bit in my savings account past couple of years, I've also spent the same amount on various things outside of normal expenditures.

I have £40K to my name and it's just dawned on me that this is money that depreciates in line with inflation the longer it sits in the bank. What do to do with it for a meaningful return?

5% on fixed savings accounts doesn't seem worth the hassle for me, having my money tied up somewhere for a few years, however investing in something long-term with high return (like property or shares) seems a good way to go.

I'l be able to put away around 2500 a month for savings soon, as I clear some outstanding debts and inherited mortgage to free up income.

You don't mention your pension provision. What is that like?

You should consider either paying more into your company's scheme, or into a private pension. If you are a higher rate taxpayer, this is a no brainer, but the tax relief also makes it sensible for a basic rate taxpayer.

If you pay into a S&S LISA (towards retirement as I'm assuming you're already a homeowner) you will also attract a government bonus of 25%. FREE money:D

[Deleted User]

badger09 wrote: »

You don't mention your pension provision. What is that like?

You should consider either paying more into your company's scheme, or into a private pension. If you are a higher rate taxpayer, this is a no brainer, but the tax relief also makes it sensible for a basic rate taxpayer.

If you pay into a S&S LISA (towards retirement as I'm assuming you're already a homeowner) you will also attract a government bonus of 25%. FREE money:D

Excellent posts.

I am going to be honest with you, I've been thinking like a young man I haven't bothered with pension provisioning. My corporate scheme pays out upto 9 per cent salary before salary sacrifice kicks in. of which I've dialled back to 4 per cent (the minimum) just so I can take 5 per cent as cash.

Is the forum going to lynch me now?

I am a higher rate tax payer and pobably should be paying more... if I pay more by way of salary sacrifice is this then what you mean by being more tax efficient as a higher rate earner???

A private pension should probably be on my list of things to do then with excess disposable income... but I just never assume I will live long enough to retirement hence don't bother prioritising pensions too much.

I am not a homeowner sadly... ive been paying my dads mortgage since he passed and live in the same property as my mom. Interest only mortgage about 80k due in 3 months... whole different story but separate cash pot is ready for that too.

AnotherJoe

Adams18 wrote: »

Excellent posts.

I am going to be honest with you, I've been thinking like a young man I haven't bothered with pension provisioning. My corporate scheme pays out upto 9 per cent salary before salary sacrifice kicks in. of which I've dialled back to 4 per cent (the minimum) just so I can take 5 per cent as cash.

Is the forum going to lynch me now?

I am a higher rate tax payer and pobably should be paying more... if I pay more by way of salary sacrifice is this then what you mean by being more tax efficient as a higher rate earner???

A private pension should probably be on my list of things to do then with excess disposable income... but I just never assume I will live long enough to retirement hence don't bother prioritising pensions too much.

I am not a homeowner sadly... ive been paying my dads mortgage since he passed and live in the same property as my mom. Interest only mortgage about 80k due in 3 months... whole different story but separate cash pot is ready for that too.

No need to lynch you, Throwing away literally thousands of pounds of tax relief is punishment instead. Just stop that and start claiming it. SS is doubly tax efficient, you get £100 for every £60 plus you pay less NI