Savings and Investment Review

Woggle

Hi All,

My wife and I have recently both moved jobs and are in the fortunate position of having a slight increase in salary. We're both in our mid-20's with myself working in Local Government (with a Local Government pension) and my wife working for a small social enterprise firm (no pension).

We've been doing a review of our budget and savings in light of the change and want to review our savings and investments.

We are both using our Cash ISA limits (£3,600 each in an account paying 5.55% and another paying 6.00%). Beyond that we have an E-Savings account which we don't really use at the moment but will do so when we've reached the maximum on our ISA's (although the one we've got only pays 4.04% Net).

However, given that she doesn't have a pension, we want to look at long term saving options - perhaps either saving for when we have kids or perhaps even longer (i.e. pension). Can someone advise on the best approach as we've considered the following:

- Regular savings account such as E-Savings: Unfortunately too much of a temptation to 'dip' into this;
- Shares: Obviously a risk (I'm keen to give it a go but not really sure where to start);

Would love to have your thoughts (either on the above or any other recommendations). We're only thinking of saving between £50-100 per month in this account (as most of the savings will go into the ISA's).

Thanks

Jonbvn

Given your young age, a personal pension for your wife would seem to be a good idea.

Woggle

Any recommendations or places to start looking? I must admit that having a LG pension has left me in a bit in the dark about personal pensions. Should we also be looking at a percentage of her salary?

nrsql

5.55% isn't very high for an ISA. You might consider transferring.

Have a look at
http://www.mindsdoor.net/Finance/Savings.html

Mr_Mumble

Basic or higher rate taxpayers?

Higher rate: a personal pension is the better option if you're sure you want to use the money for retirement purposes.

Basic rate: the inflexibility of a pension needs to be weighed against its very marginal, current, tax advantage compared to a shares ISA. You can always put shares ISA money into a pension at a later date but not pension money into an ISA. Since an ISA is a yearly 'use it or lose it' tax benefit there is an immediate benefit of using it instead of funding a personal pension. An ISA is the safer option too (note: talking about the actual tax wrapper not the investments within it). With a pension you're locked into the tax regime of the government in 30+ years time!