Long Term investment account

sweetpeas_2

Hi,
I'm very new to this part of the board, so excuse me if I sound a little bit thick

I am wanting to open some sort of account, to put a certain amount of money in each month in order to save for mine and DH future. We do not have a pension at the moment and cannot afford to put into the one through our employers as the amount they deduct is more then we can afford at the moment.
I would only be able to save around £50/month at present. But I would like obviously a good interest rate (a novice to this sort of thing...)

Would I be best opening a mini cash ISA- or is there something else more suitable for us? I was thinking about opeing it as a suprise for DH (obviously in my name to start with, then get DH added on) as he has always said by the time he's 25 he wants to be investing in a pension, and as hes 25 in 2 weeks Id like to do this as a suprise.

Cananyone shed some light for me on what sort of thing I should go for? Please explain in thicko terms for me cos I'm tripe at understanding interest rates etc etc.
:rotfl:

Many thanks in advance for any help

xx nog xx

dunstonh

We do not have a pension at the moment and cannot afford to put into the one through our employers as the amount they deduct is more then we can afford at the moment.

That is very worrying. If there is a fixed contribution level then this either means you have access to a final salary scheme or there are employer contributions. In other words FREE MONEY.

Typically, the employee cost is around 3-6% Gross. If yours is 5% and your income is £20k then its £1000 a year gross but £800 net. £800 /12 = £66.67pm

So, if you are on £20k a year £66pm is not far off your £50 and you get all that free money that nothing else will come close to matching. Give us your income figures and your pension contribution percentage and we can give you the real cost.

sweetpeas_2

hi thanks for replying.
i dont know the percentage figures but i could try to find them out. i am part time and earn £7754/year and DH earns £22'253 both before tax. someone on the same scale as DH (around same wage) pays £120/month into his work pension. i dont know if that helps. DH brings home £1390 a month.

Is it possible for you to work it out based on these figures? im really not very good with percentages and things like that.

thanks again for replying,

xx Nog xx

Blowsy

If someone earning £22,253 per year is contributing £120/month then that means that due to tax relief on contributions they are actually paying £150/month gross into their pension (£120 divided by 0.8).

£150/month = £1800/year (£150 times 12)
£1800/year is 8.09% of his annual salary (1800 divided by 22243)

The way most pensions work nowadays is that the company agree to match the employee's contributions up to a certain percentage.

So let's say that the employer will match this contribution in full (which would be a decent pension scheme to match as high as 8%)
that means that the employer would contribute another £1800/yr on top of the £1800/yr that you're contributing effectively meaning that you're doubling your money even before the pension fund has (hopefully) grown!

dunstonh

i dont know the percentage figures but i could try to find them out.

It is vital that you do because the employer's pension almost certainly has some element of employer contribution based on what you have said. Nothing else is going to come close to making up for that if you dont use it.

You really cannot consider any alternative until you know what this offers.

johng_uk

noggin - I'm not a financial whizz but others on there forums are. dunstonh is a member that other members seem to seek out and ask opinions of. I would rate his opinions very highly.