Very very long terms savings... 25 years?

zain · 13 June 2004 at 12:21PM

Can anyone suggest a very long terms savings plan?

I am quite keen to put away something very small say £20 per month for the next 25 years and effectively forget about it. Is there such a scheme available? I don't mind taking some risk, but essentially over 25 years i would like a return - at least what i put in + some account for inflation.

Can banks/bs interested in these types of accounts. I know i could just put it into a regular savings account but i thought there might be something better, particularly since i am not interested in touching the money for a very long time.

Thanks in advance

dunstonh · 13 June 2004 at 2:37PM

You wont find any banks or building societies offering contracts which have a premium that small unless its into one of their deposit accounts. Indeed, most companies wont be interested in premiums less than £50.

The exception is endowment plans (such as the one Carol Smilie advertises for Axa). Avoid them like the plague.

You can pick up some CAT standard equity ISAs which offer smaller premiums but your choice is extremely limited.

Another option is to contribute to a cash ISA until such time that you can increase the savings amount or have enough in the cash ISA to move it into an Equity ISA (20pm would take about 5 years).

Unfortunatly, the Govt has done its best at reducing the benefits and ability to save and its the smaller savers who have lost of because of it.

Atari · 13 June 2004 at 6:04PM

Depends on your age, but how about a stakeholder pension? You get your income tax back on whatever you pay in and with virgin pensions you can put as little as you like in each month.

Milarky · 13 June 2004 at 7:47PM

I have been saving £25 a month into Foreign & Colonial - the world's first investment trust - and one of the largest - for the last five years. [Unfortunately you have to save at least £50 per month to start a plan with them - but there is a way around this - see below]

I would therefore suggest considering an investment trust as a long term means of saving with the prospect of quite good returns and the ability to 'smooth' out stock market flucuations - by "drip-feeding" your savings in.

Although the minimum regular payment into an IT was £40 last time I checked - and is £50 with F&C you could still open an account with a lump sum of £250 (after saving up for about a year?) and then add a further £60 'lump sum' [minimum for subsequent 'top ups' is only £50] every three months or so. Unfortunately it's less convenient this way than by £50 a month direct debit - but possibly more fun :D. [It costs about £10 to sell a holding, but you can do so at any time and then go 'back in' later at a lower price if the market is falling.]

It is these features - allowing you to stop and start payments - to cash-in or top-up which really attract me about an investment trust for regular savings purposes. UNLIKE a "with profits" policy - which requires you to pay in for at least ten years - offers no flexibility in general - and is completely 'opaque'. An IT, by contrast is a quoted stock market company.

zain · 13 June 2004 at 8:03PM

Wow, i didn't think there were so many different options. I have already used up my cash isa. The last one sounds complicated, but i will have a think about it
Thanks

BULLNOTBEAR · 14 June 2004 at 6:18PM

I think M&G has a minimum regular contribution of £10 a month for it's Mini/Maxi Shares Isa. Should be a few funds on offer including low charging trackers which may be the best option. The increases need to be £5 a month if you increase it at any time so starting at £20 a month shouldn't be a problem and there's an option of increasing this to £25 if you feel need to.

https://www.mandg.co.uk

Good luck and I hope this helps.

Also look at Stakeholder Pension if no Pension provision to date- the tax rebate does really add up but obviously only 25% of fund can be taken as cash from age 50. Not so flexible as Mini/ Maxi shares Isa.

Martyn

DiggingOut · 14 June 2004 at 8:40PM

Also look at Stakeholder Pension if no Pension provision to date- the tax rebate does really add up but obviously only 25% of fund can be taken as cash from age 50. Not so flexible as Mini/ Maxi shares Isa.

Martyn

Government has talked about increasing the threshold to age 55 but nothing has been done about that yet. Something to be aware of, depending on your age.

Stakeholder pension would be much more attractive to higher rate taxpayers than basic rate, because of the tax rebate.

zain · 6 July 2004 at 12:13AM

I just got a flyer from Scottish Friendly assurance which suggests if i invest £25 a month for about 10 years , i should get a decent return. They suggest this is tax free and i can get one in addition to my mini cash isa. Is that right? And in term of a long term savings this sounds good. Are there any catches?
Thanks

dunstonh · 6 July 2004 at 4:53PM

I just got a flyer from Scottish Friendly assurance which suggests if i invest £25 a month for about 10 years , i should get a decent return. They suggest this is tax free and i can get one in addition to my mini cash isa. Is that right? And in term of a long term savings this sounds good. Are there any catches?
Thanks

Either its an endowment, Friendly society plan or an insurance ISA. Insurance ISAs are being discontinued next year so its unlikley to be that. Possibly an endowment but more likely a friendly society savings plan.

If you can only afford £25pm then i guess its ok although you should probably consider more liquid savings,such as a cash ISA. If you can afford £50pm then there are a lot better options.

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Very very long terms savings... 25 years?

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