Where to save…. 14 February at 1:08PM in Savings & investments 8 replies 432 views

partialycloudy

So I will start by saying I am well aware this is a first world problem… In the past DH and I have been very bad with money, lots of debt, negative equity, no savings. But we now find ourselves, being older and wiser, in the position of having a large amount to save each month. Something we never thought would happen.

I will caveat by saying its highly likely this won't last and I will likely be made redundant next year if not earlier.

We currently have just over £2000 a month to save.
-Currently we save £175 a month to wards annual payments such as insurance, car tax, MOT, TV license etc
- £100 a month to our child's ISA
-£300 a month to a FD 7% savings account. Fixed till Dec.
 

We have a nutmeg stock and shares ISA we opened a few years ago to put some redundancy money in. It’s never made any money. It lost about £500 straight away and has never been back in the black! 

We opened a H&L S&S ISA last year and invest in stocks a shares. About £300 a month. This is in black but barely.

Also have another FD savings account which is just over 2% which is where we put most of our savings. It has over £15k in it. 

We have debt which inc finance for a kitchen and credit cards. All zero percent. 

The kitchen we are paying off next month by taking some money from the £15k savings which will free up another £250 
We could also pay off credit cards in March with bonuses. 

Giving us another £125 a month 

or we could keep bonuses and up the C/C payment?

We have a very low mortgage rate till 2026. We may need to move then as the secondary schools here are awful. 

So after annual savings, child isa and 7% FD account we have £2000 a month to save… but we don’t really know where?! We can keep adding to S&S ISAs.... or would it best to find a more stable Cash ISA with a fixed interest rate? DH fears a crash in the very near future...

We are higher rate tax payers.... we would like some cash to be accessible for paying for holidays or doing some work on our house....mainly DIY bits so nothing massive, and for any emergencies. Although if we pay off C/C we would have these for any possible emergencies.

We also have the future thinking of possible house move and/or possible income becoming significantly reduced in a year. 

So do we pay off all Debt and start fresh and max out the amount we could save each month?
Do we reduce our risk by savings in Cash ISAs rather than S&S?
What split do we put towards the future, and what split for instant access cash?
Oh I know I need to up my pension contributions but the above doesn't factor in a pay rise so my pay rise will be going to my pension. 

There are so many options and if anyone has any words of wisdom I would be grateful! 

Thx

grumbler

It's toooo long to read. 
Few points:

• With a joint current account with FD (or a second sole on) you can have to regular savers.
• You can have more regular savers with 4.5%+
• There are easy-access savings accounts paying 3%+. For a higher rate taxpayers it makes more sense to have cash ISAs where the same 3%+ rates are available.

Band7

Using credit cards as emergency funds doesn't strike me as a good plan. You should have a proper easy access cash reserve of 6-12 months living costs especially if you are already expecting to be made redundant.

Once you have your emergency cash fund sorted, and know expenses (holidays etc) have been budgeted for, I would suggest your emphasis should be on your pensions.

Also, you mention insurance in passing - does this include life insurance? Also, have you got wills?

partialycloudy

Hi, Thanks for responses! yes sorry I know its long but wanted to inc everything!

We do have life insurance. But no wills...we are married (neither married before) have no other kids other then our own so happy for everything to go spouse..... we have death benefits via work too and we have nominated a small portion of that to go to DD. 

We do have a joint FD account so will look at adding another savings a/c in DH name....hadn't thought of that! thank you

silvercue

There are lots of options.  If you are still working, you may find your company pension scheme allows you to put more of your salary into the pension.  This is pretty tax efficient, but not for everyone and may not suit your needs, but it is what I do with extra money at the moment.  

Choirgrl

Picking up on the Wills point first, that’s the first place I’d ‘invest’ some money. Apart from anything else, yet will ensure you have arrangements in place in the event that something happened to you and your spouse at the same time. Apologies for being morbid.

From what you say, it sounds like you should be keeping a chunk of money easily accessible to cover for a potential redundancy. From there, I would sit and look at what the foreseeable financial needs are over the next few years and saving/investing in ways that had the money accessible in the appropriate time frame E.g I wouldn’t be too worried about paying off 0% finance now, but I might want to have cleared it before a house move/remortgage; I’d be thinking about if there were expenses on the horizon for a growing child (expensive hobbies, university fees, etc). I’d also be looking at what I put in my pension.

Albermarle

We are higher rate tax payers

Oh I know I need to up my pension contributions but the above doesn't factor in a pay rise so my pay rise will be going to my pension. 

Higher rate tax relief on pension contributions is very generous, and as far as possible you should make best use of it.

partialycloudy

sorry had a busy work day yesterday so haven't been able to check back in...

So if I was made redundant we could afford to live on my husbands salary.... we just wouldn't be able to save anything. I would look for a job but chances are that would be on a much lower salary than I am on now. So we are just trying to make the most of what we can save while we can save so much! Hopefully we won't have to live off what we save.

My pension statement I received a few weeks ago  said i had a pot off £45,000...I'm 38 so I know it needs a bump! my company contributes 10% and matches what I put in..according to length off service up to 6 years. currently only been here just under 2 years so they will match 1% till Sept, then they will match 2%
How much should I realistically be putting in? 
My pay rise will take me to £53,500 

Think our biggest potential future target will be to move..... which given we have a mortgage rate of just over 1% at the moment and a low mortgage amount, by todays standards...worries me a great deal! but I don't think we could save enough to make the hit of a higher mortgage at a higher rate any less painful!

Band7

partialycloudy said:

 

So if I was made redundant we could afford to live on my husbands salary

What are your provisions if his salary didn't come in either?