Best way to save long term?

scott_damien

Im looking for advice on what would be the best way to save some money for the future. Ive been listening to podcasts and reading information on the issue and came to 3 options.

A fixed ISA where i can put a large sum in up front and safely be locked away from it for 5 years (or so) and then reassess. (i cant over pay my mortgage for 5 years anyway).

A fund, i dont know whos reliable and UK (Hargreaves Lansdown?, Vanguard) or what the general costs are, but ive been hearing more and more about them (usually from Americans) start with a small sum (in comparison to the isa) with monthly top ups and let it compound for 20/25 years.

Utilising my works pension scheme, via salary sacrifice, putting in a larger percentage of my salary in, lowering my monthly tax deductions and being to access it when i reach a specified age. (Thus keeping my current savings untouched)

the goal is to be able to retire comfortably as soon as i can or want to.

jimjames

Where is the money now? Initially I thought you were planning on starting saving but you then mention putting a large lump sum into an ISA which suggests you already have a substantial amount already saved up. Long term and if you are  on the money being used for retirement then there are few ways that would beat a salary sacrifice pension especially if you are a higher rate taxpayer. Once that's maximised then stock market based investments (as you would have in a pension) inside an ISA would probably be a good idea as the should beat cash savings over the longer term.

This assumes that you already have a suitable emergency fund with enough cash in it, if that isn't the case then it should be a priority before the other options.

scott_damien

I have about £20k in an old ISA (just purchased a property), id keep £5-£10k available as my emergency fund (and the remains of my monthly salary would keep this topped up)

jimjames

scott_damien said:

I have about £20k in an old ISA (just purchased a property), id keep £5-£10k available as my emergency fund (and the remains of my monthly salary would keep this topped up)

An old ISA is unlikely to be a very good interest rate so definitely check that out. You can get rates up to 5% that would almost certainly be better.

Albermarle

scott_damien said:

Im looking for advice on what would be the best way to save some money for the future. Ive been listening to podcasts and reading information on the issue and came to 3 options.

A fixed ISA where i can put a large sum in up front and safely be locked away from it for 5 years (or so) and then reassess. (i cant over pay my mortgage for 5 years anyway).

A fund, i dont know whos reliable and UK (Hargreaves Lansdown?, Vanguard) or what the general costs are, but ive been hearing more and more about them (usually from Americans) start with a small sum (in comparison to the isa) with monthly top ups and let it compound for 20/25 years.

Utilising my works pension scheme, via salary sacrifice, putting in a larger percentage of my salary in, lowering my monthly tax deductions and being to access it when i reach a specified age. (Thus keeping my current savings untouched)

the goal is to be able to retire comfortably as soon as i can or want to.

As a very general rule of thumb ( without knowing all your circumstances and personality)

Money likely to be needed in the next 5 years - Keep as cash savings.
Money to provide a retirement income - Pension.
Money for inbewteen period, maybe say to pay off mortgage or gift to family at some point - Stocks and Shares ISA ( investments) . 
It is always better to hold investments long term if possible, ideally 7 to 10 years, or more.

root

If the only goal is retire as early as possible then you need to focus on your pension and a means to 'bridge' the gap between your retirement and being able to draw the pension.

Albermarle

root said:

If the only goal is retire as early as possible then you need to focus on your pension and a means to 'bridge' the gap between your retirement and being able to draw the pension.

OP- The above comment is correct, but you should be aware that to retire very early ( say before 55) and comfortably, you need to build up a big fund of money. Often people underestimate how much they need, and underestimate their potential longevity.
If you spend sometime reading through the pensions forum, there are lots of useful threads on how people save for retirement, and just as importantly the predicted spending patterns ( which vary a lot ). 
Pensions, annuities & retirement planning — MoneySavingExpert Forum