Savings Advice

matth255

Hi,

I am looking for some advice with regards to the best ways to maximise my saving ability.
I am currently at University for the next 3 years, 32 years old and work part time earning around £1600 per month. I get the full student maintenance allowing of £10,500.

I currently have:
Premium Bonds - £5600
LISA - £4752
Wealthify Stocks & Shares ISA - £1100

I expect to be able to contribute another £15,700 this year.
I pay maximum contributions to my employer pension that I am able to.

My plan is £1200 in Wealthify. £4000 in LISA which is the maximum contribution and then the rest in premium bonds. 

Just wondered if I am doing the right thing in order to maximise my money or if anyone had any better ideas on how I can maximise the benefits for this year.

refluxer

I'd ditch the Premium Bonds, personally. On £5600, you'll only win £200 PA with 'average luck' which equates to an interest rate of 3.57% (source) and you can get up to 5.22% in the best Easy Access accounts at the moment.

You haven't said if you've got other savings tucked away earning interest that'll eat into your £1,000 PSA but you're likely to earn more in the easy access account than Premium Bonds, even if you have to pay 20% tax on some (or all) of it.

If you are likely to exceed your PSA, then your Premium Bond money would be better off earning up to 5.11% tax-free in the best easy access cash ISA, IMO. Just make sure you choose a flexible cash ISA if you think you'll want the option to replace any withdrawn funds without them counting towards your ISA allowance.

El_Torro

While I agree that Premium Bonds are probably not the best savings tool for you what really matters is what you're saving for. Are you planning to buy your first property in the coming years? If so then your plan to put as much as you can into your LISA (whether it's Cash or Stocks & Shares) is sound. If not then I would question this strategy.

I don't know much about Wealthify. I believe they tend to use their own custom portfolios. Personally I would invest in a Stocks & Shares ISA with more flexibility and lower charges. Won't make a lot of difference with a couple of K in there, will become more significant as your pot grows though.

badmemory

Some people are lucky with premium bonds & some are not.  Have you checked your ratio.

matth255

I would like to be able to buy a property once I finish university in 3 years which is why I am maxing out the LISA to help with the deposit for the house. I will look into different Stocks & Shares ISA's too, is there any recommendations for a good long term option? 

What is a PSA? Is that the amount of interest can be earned tax free? I don't have any other savings other than the ones listed on the first post at the moment

friolento

I wouldn't put money into investments if I plan to spend it in the next 5 years.

matth255 said:
What is a PSA? Is that the amount of interest can be earned tax free? 

Yes. Your PSA is probably £1,000. If you are at risk of exceeding this, look at a cash ISA.

Keep an eye on the Budget on the 6th of March, in case there are changes to savings.

matth255

The plan for investments is to put in a smaller amount each month which will grow for retirement plans which is why I am only putting in a smaller amount each month for that. The plan for the house is Premium Bonds and LISA.

I am thinking.

LISA - Max out each year £4000 plus 25% government bonus - To use towards house deposit

Premium Bonds - 12 Months of Emergency Fund - I'm on zero hours contract with work so things could change and that would me be secure without having to worry about losing a job whilst in University. There is also that chance that I could win a bigger prize.

Investment - £100 per month direct debit - For a future fund (Retirment)

Higher Interest Savings Account - To supplement a house deposit / For Emergencies whilst getting a better APR return than Premium Bonds with Average Luck.

Does that sound ok?

Albermarle

The plan for investments is to put in a smaller amount each month which will grow for retirement plans which is why I am only putting in a smaller amount each month for that. 

Normally it is best to save for retirement via a pension, due to the tax advantages. However as you are already contributing to a public sector pension scheme ( which are much better than private schemes) then this may not be the best way.

Investing via a S& S ISA will not have the same tax advantage as a pension, but will be more flexible on when you can withdraw from it.

 I will look into different Stocks & Shares ISA's too, is there any recommendations for a good long term option? 

The actual S&S ISA provider is of secondary importance to which investment funds you choose to invest in within the ISA. The longer term the outlook the more risk you can take, especially as you will only be drip feeding small amounts.

Stocks & shares ISAs: find the best platform - MSE (moneysavingexpert.com)