26 Years Old, Is my savings plan good?

Aiden8889

Hi, I'm 26 and I'm currently studying with the ACCA to be an accountant. I've managed to save about £26,000 off my own back, my Grandad passed away in France early this year and then my dad a month later... so I guess I am to inherit €32,806.46 through my dad and I've also inherited £25,000 from him.

I'm currently having to go through the long process of the UK courts to actually get those euros so I anticipate to receive them around December time which after French IHT and the EX rate will be about £25,000.

So I guess in total I have about £50,000 now and a further £25,000 in December (I keep a £3,000 float in my current account not sure why but I don't count it as savings)

So I want to be quite risk averse and hands off as I don't really have much time to study in investments such as stocks and shares due to going all in with my ACCA (hence the relevence).

I'm trying to at least get a guarantee (or at least likely result) of £3,000 net a year in interest.

Other than this a further £670 a month goes into savings (basically 35% of my net wage).

This is my plan:

1-Year Forecast (Sep 3, 2025 – Aug 31, 2026)Total Funds:

£83,040 (£50,000 now + £25,000 Dec + £8,040 (£670 monthly).

Tax: Basic rate (20%, £1,000 PSA).

Interest Earned
Trading 212 Cash ISA (Tax-Free): £20,000 at 4.38% (12 months) = £876.

Savings Accounts (Taxable):

Chase Saver:
£30,000 at 4.75% (12 months) = £1,425.

£25,000 at 4.75% (9 months) = £890.63.

£370/month to Chase (£4,440 total, average 6 months) = £105.45.

Zopa Regular Saver:
£300/month (£3,600 total, 12 months) = £141.50 (compounded monthly approximation).

Total Savings Interest:
£1,425 + £890.63 + £105.45 + £141.50 = £2,562.58.

Total Interest: £876 + £2,562.58 = £3,438.58.

Tax and Net EarningsTaxable Interest: £2,562.58.

Excess Interest: £2,562.58 - £1,000 = £1,562.58.

Tax (20%): £1,562.58 × 0.20 = £312.52.

Net Earnings: £3,438.58 - £312.52 = £3,126.06

Do you think this is the best hands off approach I could do besides a LISA and Premium Bonds? (I have premium bonds and I'm not thrilled with my prize return from 40k currently sat there)

Mark_d

I don't understand why your target is £3k per year in interest?  Are you planning to reduce/give up work and rely on the interest to supplement your income?

To determine how good you plan is, we need to understand your goal.  Are you saving to put a deposit on your first home in the next 5 years?

I have a large amount invested in Premium Bonds to balance the risk from my investment portfolio but I can't see why you've put £40k there rather than in ISA/fixed rate savings accounts.

EthicsGradient

I would count the 40k currently in Premium Bonds as more of your savings. And, unless the interest on that would be what would move you into the higher rate band, I'd think about moving them - their return is not great for basic rate payers (unless you are genuinely thrilled by the chance of winning big).

Aiden8889

Mark_d said:

I don't understand why your target is £3k per year in interest?  Are you planning to reduce/give up work and rely on the interest to supplement your income?

To determine how good you plan is, we need to understand your goal.  Are you saving to put a deposit on your first home in the next 5 years?

I have a large amount invested in Premium Bonds to balance the risk from my investment portfolio but I can't see why you've put £40k there rather than in ISA/fixed rate savings accounts.

Sorry I didn't clarify £40,000 is part of the 50k I currently have and it's sat in Premium Bonds... I was waiting on his £11k pension payout from Aviva which I now have.

The returns have been terrible this year in terms of relativity so this is why I am now looking elsewhere.

The plan is to save until I've completed ACCA so 3-4 years basically because I generally have no clue what I will do with it yet...

£3k target is nice because it effectively means I am saving 11k a year. 

Aiden8889

EthicsGradient said:

I would count the 40k currently in Premium Bonds as more of your savings. And, unless the interest on that would be what would move you into the higher rate band, I'd think about moving them - their return is not great for basic rate payers (unless you are genuinely thrilled by the chance of winning big).

Last year was great I had about 25k in (I did take some out to purchase and insure my first car) but had it back in by the end of the year.

I made £1,300 but it was really due to a fluke month... now I am getting about £50 a month from it which is terrible really.

Exodi

Can I ask what your goals are?

It seems you will have ~£125k in savings by the end of the year (premium bonds are savings).

Aiden8889 said:

So I want to be quite risk averse and hands off as I don't really have much time to study in investments such as stocks and shares due to going all in with my ACCA (hence the relevence).

I would really encourage you to reconsider your stance on investing. Some would argue that it is more risky holding all of your money in cash, and facing the very real risk of capital erosion through inflation.

As long as you intend to invest for a the long term (e.g. 10 years or longer), then your risks are reduced. Again, sitting in cash for extended periods carries risk too. My investments are currently averaging over 10% XIRR (that is, to achieve the same level of return as I have with my contributions from a savings account, it would need to have an interest rate of over 10%).

Of course if you had intended to buy a house in the near future, the investing wouldn't be appropriate, but if you planned on sitting on cash for the long term, then it's certainly worth considering.

Likewise, what is your pension situation? I understand you're only 26 and retirement is a long time off, but given you already have ample savings, it would pay dividends to maximise your pension contributions instead of adding it to savings. Depending on your employment terms, you may also benefit from an increased employer contribution, NI savings, etc.

Really, I don't think you can afford not to spend a little time studying investing.

Don't be mistaken - for the vast majority of people it's not looking at complicated stock charts, sitting on quarterly earnings calls listening to financial jargon and predicting which company will be the next Amazon - many people are just investing in a single global index funds that take the guess work out of it.

Aiden8889

Exodi said:

Can I ask what your goals are?

It seems you will have ~£125k in savings by the end of the year (premium bonds are savings).

Aiden8889 said:

So I want to be quite risk averse and hands off as I don't really have much time to study in investments such as stocks and shares due to going all in with my ACCA (hence the relevence).

I would really encourage you to reconsider your stance on investing. Some would argue that it is more risky holding all of your money in cash, and facing the very real risk of capital erosion through inflation.

As long as you intend to invest for a the long term (e.g. 10 years or longer), then your risks are reduced. Again, sitting in cash for extended periods carries risk too. My investments are currently averaging over 10% XIRR (that is, to achieve the same level of return as I have with my contributions from a savings account, it would need to have an interest rate of over 10%).

Of course if you had intended to buy a house in the near future, the investing wouldn't be appropriate, but if you planned on sitting on cash for the long term, then it's certainly worth considering.

Likewise, what is your pension situation? I understand you're only 26 and retirement is a long time off, but given you already have ample savings, it would pay dividends to maximise your pension contributions instead of adding it to savings. Depending on your employment terms, you may also benefit from an increased employer contribution, NI savings, etc.

Really, I don't think you can afford not to spend a little time studying investing.

Don't be mistaken - for the vast majority of people it's not looking at complicated stock charts, sitting on quarterly earnings calls listening to financial jargon and predicting which company will be the next Amazon - many people are just investing in a single global index funds that take the guess work out of it.

No sorry, I have £51,000 now (£40,000 in Premium Bonds and £11,000 from my late father's pension) then I will have £25,000 from the Inheritence in France in December.

Albermarle

Regarding the post of @exodi above, I was pretty much going to say the same thing.

Part of the issue is this '  basically because I generally have no clue what I will do with it yet...'

Although there is some risk with investing, this is minimised by using mainstream index trackers, and multi asset funds over a long period. 

You could well look back in 10 years time and regret not investing at least some of it, as normally investments will significantly outpace savings accounts.

Aiden8889

Albermarle said:

Regarding the post of @exodi above, I was pretty much going to say the same thing.

Part of the issue is this '  basically because I generally have no clue what I will do with it yet...'

Although there is some risk with investing, this is minimised by using mainstream index trackers, and multi asset funds over a long period. 

You could well look back in 10 years time and regret not investing at least some of it, as normally investments will significantly outpace savings accounts.

I know but I'm kind of wanting a hands off approach for now because my life is basically work, revise, gym, revise, sleep, repeat lol.

So to start taking on another subject to learn... I just don't think I really have the room for it at the moment.

I'm happy to take a look at it in 3-4 years plus I'll probably be able to put away even more money then as I'll be chartered.

Yorkie1

You might also want to consider whether you are contributing to your pension, and whether you might want to take advantage of a LISA.

Emmia

At 26 I'd be putting some of those monthly savings into a SIPP - investment in your pension now while you're young will have a big pay off due to compounding. 

I'd also (depending on your plans for housing) be looking at S&S ISAs or a LISA.

It doesn't need to be complicated - pick an ISA and shove the money in it - spending time dithering or "researching" means you're not investing and losing money in interest.