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  • FIRST POST
    • biguily
    • By biguily 10th Jan 18, 1:35 PM
    • 2Posts
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    biguily
    Advice on savings/investments with long-term and short term split
    • #1
    • 10th Jan 18, 1:35 PM
    Advice on savings/investments with long-term and short term split 10th Jan 18 at 1:35 PM
    I am looking for some advice in terms of strategy for investing and saving and the split between short term and long term. Ive been doing a bit of research and reading some posts on this forum but obviously everyoneís situation is different and any helpful advice or just personal experience/opinions would be much appreciated.

    Iím not completely financially illiterate and aware of the risks and rewards of investing but havenít done much in the past and not fully up to speed with what is best in terms of which funds, platforms, LISA vs normal S&S ISA and just a trading account (outside of GCT and dividend tax savings when above the thresholds, which are fairly high on an annual basis)

    Some info about me to help tailor advice:

    Aged 33, full time employed and higher rate tax payer. I currently contribute to a work placed pension and can increase this but my employer wonít go beyond the 2% they currently match for now (pretty low from them IMO but anyway it is what it is).

    I currently have a bit of savings in a relatively high interest rate regular saver (5% AER), some P2P lending and a few grand emergency savings, which if they all return as expected will put me round about the £500 interest tax free allowance threshold.

    I currently own a flat with my other half so I donít need to save for a deposit but as our current place was a first step on the ladder, a move in the next 2/3 years could happen. Weíve done a fair bit of work on the flat so no big expenditure on current place is expected.

    After paying my mortgage, bills, all other food and leisure activities plus holidays, I should have about £1,000 per month to put into further savings and/or investments. So the question is what is a good strategy for the £1kpm?

    Iím happy to lock some away for a longer period of time (higher contribution to pension, LISA, S&S ISA?).

    I also want to keep a proportion available in the short term in case needed (stamp duty/deposit in a couple of years, emergency, wedding maybe!) but Iíd like to gain the best return, whilst still being to access if and when needed. Donít know if that is just pumping more into as much higher rate savings and taking a tax hit above the £500 threshold.

    Does anyone have some helpful advice on how to balance some long term savings with trying to get the best returns on fairly accessible savings/investments? (Iím aware that investments in S&S ISA would be liquid but potentially cashing out if needed during a downtown could lead to taking a hit.

    Thanks and sorry for the long post..
Page 1
    • Linton
    • By Linton 10th Jan 18, 2:01 PM
    • 9,394 Posts
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    Linton
    • #2
    • 10th Jan 18, 2:01 PM
    • #2
    • 10th Jan 18, 2:01 PM
    Keep the two requirements separate. If you kept likely/possible cash needs for the next 5 years in high interest current accounts you could invest the long term money in higher risk/higher return investments knowing that, barring the direst emergency, you should never need to to sell at a bad time. Every year you could reassess the balance moving new money into whichever pot most needed it.
    • enthusiasticsaver
    • By enthusiasticsaver 10th Jan 18, 2:11 PM
    • 6,608 Posts
    • 13,855 Thanks
    enthusiasticsaver
    • #3
    • 10th Jan 18, 2:11 PM
    • #3
    • 10th Jan 18, 2:11 PM
    It is a balancing act as to how to separate savings/investments into short term or long term. In your situation I think I would go for a percentage of money you would be happy to put away for the long term and put the balance in regular savers until you have taken the next step up on the property ladder and/or paid for a wedding as both those things are expensive.
    Debt free and mortgage free and early retiree. Living the dream

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    • Eco Miser
    • By Eco Miser 10th Jan 18, 3:09 PM
    • 3,444 Posts
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    Eco Miser
    • #4
    • 10th Jan 18, 3:09 PM
    • #4
    • 10th Jan 18, 3:09 PM
    Can you put enough into your pension to get back to being a base rate taxpayer, and therefore have £1000 Savings Allowance, as well as building up more pension.

    In any case, keep known/expected expenditure for the next five years in cash, invest the rest.
    Eco Miser
    Saving money for well over half a century
    • biguily
    • By biguily 10th Jan 18, 4:46 PM
    • 2 Posts
    • 0 Thanks
    biguily
    • #5
    • 10th Jan 18, 4:46 PM
    • #5
    • 10th Jan 18, 4:46 PM
    Thanks for all the replies so far

    Can you put enough into your pension to get back to being a base rate taxpayer, and therefore have £1000 Savings Allowance, as well as building up more pension.

    In any case, keep known/expected expenditure for the next five years in cash, invest the rest.
    Originally posted by Eco Miser
    No I wouldn't be able to get down to being a basic rate tax payer but good idea
    So it sounds like I should keep some savings in cash for the next 5 years, do I just find as many high interest accounts I can find that will allow fairly quick access to cash? Do I just take the tax hit above £500, I think its still preferable to terrible cash ISA rates at the moment unless there's any better ideas for that?

    I'm thinking as I have some cash saved I would drip feed both cash saving and investments (maybe £700/300 split) and can adjust cash up If I see a big expense coming up soon or vice versa.

    Does that sound reasonable? If so, good ideas for the monthly £300 investment payments?
    • Eco Miser
    • By Eco Miser 10th Jan 18, 5:27 PM
    • 3,444 Posts
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    Eco Miser
    • #6
    • 10th Jan 18, 5:27 PM
    • #6
    • 10th Jan 18, 5:27 PM
    Yes, high interest accounts. Any account whose after tax rate beats the ISA, otherwise take the ISA (some fixed term ISAs may manage it).

    Homes for cash savings: http://forums.moneysavingexpert.com/showthread.php?t=608697
    It may be worthwhile to take all the 5% RSs and stuff them by depleting lower rate accounts.
    I'm thinking as I have some cash saved I would drip feed both cash saving and investments (maybe £700/300 split) and can adjust cash up If I see a big expense coming up soon or vice versa.
    Yes that could work. Remember to look far enough ahead for upcoming expenses.
    Eco Miser
    Saving money for well over half a century
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