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  • FIRST POST
    • NewShadow
    • By NewShadow 12th Mar 18, 1:28 AM
    • 2,839Posts
    • 12,708Thanks
    NewShadow
    Looking for a Savings MOT
    • #1
    • 12th Mar 18, 1:28 AM
    Looking for a Savings MOT 12th Mar 18 at 1:28 AM
    Hi All.

    It's coming up to the end of the FY and this feels like the first year I've ever really considered savings and investments. Being a grownup is hard!

    I've learnt a lot from reading these boards - with thanks to the clever people that respond - but wonder if you wouldn't mind checking what I've done to see if next year needs tweaking?

    Current circumstances

    Female, 1985, single + no dependents (cat...) and no real debt (I have a catalogue account with a 250 limit and the balance tends to float around 100).

    Civil Service on c.28k - Will go up increments over the next 4 years to c.35k

    Current Savings/ Investments

    State pension - 12 years NI conts and NRA of 68 (currently)

    Work pension - Paying into Alpha (5 years conts so far) and paying EPA3 (1 year conts so far)

    Credit union - 400 payroll deduction monthly. 4000 gets taken out to go into my LISA at the end of the year. The extra 800 pays towards a holiday/christmas/birthdays. This is purely so I don't have to think about allocating money from my bank account (reduces the risk of me spending it).

    LISA - 4k in AJ Bell LISA. Currently in cash (only just paid in for end of FY). Intended to buy shares as soon as it cleared but now debating if I should invest it as I'm starting to think about buying a house in the next c.3 years and am worried about the chance of losing money in the short term.

    Bank - Santander regular saver (3%). Between 100/200 a month (wash up from current account). This is my 'the boiler broke' money. Currently empty... the boiler broke in February... Just paid in 100 and should pay in another 100 if no emergencies between now and payday. Was 2k before the boiler broke.

    Goal/ Rationale

    So... what I want (in an ideal world) is to have the choice to retire at 60ish AND to buy a house (have a mortgage of around 120k paid off by 60.)

    I was thinking my LISA would allow me to retire at 60 - but now I'm thinking about buying a house and therefore might need to use the next 2/3 years LISA money for a deposit (c.15k).

    I'm paying around the same in rent as forecast for mortgage payments so once a house is bought (assuming it doesn't need renovation and is around the same running costs) I should be able to start saving for early retirement again.

    Excluding pensions, I'm currently saving around 600 a month in cash (around 1/3 take-home) and I could (relatively easily) save another 100 a month by cutting back on meals out and frippery. This will become easier as I move up the increments.

    I also don't need to spend 800 per annum on christmas/holiday - but I also don't want to be miserable so would appreciate an idea of the difference any extra money could make and where it could go.

    I'm also aware that money might be needed to renovate/maintain a house so I'm reluctant to lock it away in something that needs long term regular investment so ideally it would need to be a product that would at least maintain it's value if I stopped contributions.

    Questions

    Hopefully not asking for the moon on a plate...

    Do my current savings levels look reasonable to achieve my goals - is both a house and early retirement doable? Would you recommend a few years of 'austerity' or can I do this while still having fun sometimes?

    Should I be investing this years LISA money as I had planned or am I better keeping it as cash (and if cash, should I switch providers or leave it with AJ Bell)?

    Are there any changes/other products I should be considering and/or is anything I'm doing a waste of time?

    If I'm looking at buying a house in a couple of years, should I be considering credit building (and if so, how) given I've never had a credit card or similar and so understand my (made up) credit score is low? Or will mortgage companies be okay with the idea of no real credit but also no real debt?

    Thanks for reading and thanks in advance for any suggestions,

    NS
    Last edited by NewShadow; 12-03-2018 at 1:41 AM.
    That sounds like a classic case of premature extrapolation.

    House deposit: 26% = 23,000 + 700pm * 16 months = 33,000

    Goal: Keep the bigger picture in mind...
Page 1
    • planteria
    • By planteria 12th Mar 18, 9:02 AM
    • 4,987 Posts
    • 1,107 Thanks
    planteria
    • #2
    • 12th Mar 18, 9:02 AM
    • #2
    • 12th Mar 18, 9:02 AM
    first and foremost, the fact that you are asking the question, and articulating it so well, explains a lot..

    interesting use of Credit Union > LISA. you could save directly into you LISA i'd have thought, but i understand the 'holiday fund' idea alongside.

    buying your own home and increasing Investment as opposed to Saving are areas to focus on, in my view. having a mortgage would raise the inevitable 'do i allocate funds to clear debt or to invest further?' dilemma.
    • Alexland
    • By Alexland 12th Mar 18, 1:15 PM
    • 2,389 Posts
    • 1,790 Thanks
    Alexland
    • #3
    • 12th Mar 18, 1:15 PM
    • #3
    • 12th Mar 18, 1:15 PM
    LISA - 4k in AJ Bell LISA. Currently in cash (only just paid in for end of FY). Intended to buy shares as soon as it cleared but now debating if I should invest it as I'm starting to think about buying a house in the next c.3 years and am worried about the chance of losing money in the short term.
    Originally posted by NewShadow
    Investing in shares for only 3 years carries a nearly 20% chance of a loss at the end. Even with a mixed portfolio there are times when nearly all assets drop at once as we saw in the recent market correction.

    Bank - Santander regular saver (3%). Between 100/200 a month (wash up from current account).
    Originally posted by NewShadow
    Have you considered upgrading to the 123 Lite account for 1 per month to get cashback from your bills and 5% on your regular saver?

    Currently empty... the boiler broke in February... Just paid in 100 and should pay in another 100 if no emergencies between now and payday. Was 2k before the boiler broke.
    Originally posted by NewShadow
    Why was that your problem if you are renting?

    Do my current savings levels look reasonable to achieve my goals - is both a house and early retirement doable? Would you recommend a few years of 'austerity' or can I do this while still having fun sometimes?
    Originally posted by NewShadow
    No idea depends what value of house you are going to buy. I don't see any harm in a bit of austerity for a few years to earn your way onto the property ladder. The best things in life go to those that go the extra mile.

    If I'm looking at buying a house in a couple of years, should I be considering credit building (and if so, how) given I've never had a credit card or similar and so understand my (made up) credit score is low? Or will mortgage companies be okay with the idea of no real credit but also no real debt?
    Originally posted by NewShadow
    They might be, but there's no harm getting a good reward credit card via TopCashBack and setting it up to pay off in full each month by direct debit. I find the Clubcard and Nectar points very useful at helping cover the cost of Christmas.

    Alex
    • NewShadow
    • By NewShadow 12th Mar 18, 4:40 PM
    • 2,839 Posts
    • 12,708 Thanks
    NewShadow
    • #4
    • 12th Mar 18, 4:40 PM
    • #4
    • 12th Mar 18, 4:40 PM
    interesting use of Credit Union > LISA. you could save directly into you LISA i'd have thought, but i understand the 'holiday fund' idea alongside.
    Originally posted by planteria
    Combination of transaction fees on AJ Bell, it being the first year I've done this and me knowing that if the money isn't taken via payroll deduction there's a fair chance I'll pop into the Apple store on payday and lose my mind...

    buying your own home and increasing Investment as opposed to Saving are areas to focus on, in my view. having a mortgage would raise the inevitable 'do i allocate funds to clear debt or to invest further?' dilemma.
    useful debt (like a mortgage) doesn't scare me. I'm also intending to buy a house then stay there (potentially until they carry me out). I'm not one for chopping and changing every few years and don't consider a home 'an investment'.

    As long as I know I can pay it by my deadline (60ish) then I'm in no real rush to pay it earlier - plus I understand the longer you can leave money invested the better the returns so starting increasing investments early would be more logical to me than rushing building assets in something I never intend to sell.

    But that's me...

    Investing in shares for only 3 years carries a nearly 20% chance of a loss at the end. Even with a mixed portfolio there are times when nearly all assets drop at once as we saw in the recent market correction.
    Originally posted by Alexland
    This is my key dilemma - given leaving cash uninvested in a S&S ISA is (according to the internets) stoopid - transfer it to Skipton? Or invest this 4k and put my next 4k in Skipton and push everything back by a year to give myself time to bed these habits in...?

    Have you considered upgrading to the 123 Lite account for 1 per month to get cashback from your bills and 5% on your regular saver?
    If you open the regular saver at 3% can you upgrade? I read the blurb and it seemed to say you had to have the 123 when you first applied.

    Why was that your problem if you are renting?
    Because I wanted an efficient reliable boiler with a working thermostat going into the coldest week in the past decade and the landlord wanted the boiler from the 70s repairing (yet again) by his gas safe mate who could be around some time after work in the next couple of weeks... it was a thing...

    Possibly made the wrong choice - but at least now I'm warm.

    No idea depends what value of house you are going to buy. I don't see any harm in a bit of austerity for a few years to earn your way onto the property ladder. The best things in life go to those that go the extra mile.
    Likely house cost around 120k for a two/three bed with a decent garden (out of a major city in Wales is fairly cheap).

    First time buyer so I'm not hugely familiar with the costs but allowing around 10k for surveys/fees/etc so I'm guessing 15k from LISA and mortgage of around 115k (which should be doable on around 30k).

    They might be, but there's no harm getting a good reward credit card via TopCashBack and setting it up to pay off in full each month by direct debit. I find the Clubcard and Nectar points very useful at helping cover the cost of Christmas.
    I shall investigate now...

    Thank you both
    That sounds like a classic case of premature extrapolation.

    House deposit: 26% = 23,000 + 700pm * 16 months = 33,000

    Goal: Keep the bigger picture in mind...
    • Alexland
    • By Alexland 12th Mar 18, 4:55 PM
    • 2,389 Posts
    • 1,790 Thanks
    Alexland
    • #5
    • 12th Mar 18, 4:55 PM
    • #5
    • 12th Mar 18, 4:55 PM
    If you open the regular saver at 3% can you upgrade? I read the blurb and it seemed to say you had to have the 123 when you first applied.
    Originally posted by NewShadow
    No idea but you could ask (in writing via secure message), or just close and reopen the regular saver and it would start the 12 month clock again. The cashback on the bills alone are likely to cover 123 Lite monthly fee regardless of the regular saver balance. We also get cashback on our Santander mortgage.

    Because I wanted an efficient reliable boiler with a working thermostat going into the coldest week in the past decade and the landlord wanted the boiler from the 70s repairing (yet again) by his gas safe mate who could be around some time after work in the next couple of weeks... it was a thing...
    Originally posted by NewShadow
    Wow never heard of a tenant replacing the boiler - your landlord must be very pleased with their improved asset.

    Likely house cost around 120k for a two/three bed with a decent garden (out of a major city in Wales is fairly cheap).

    First time buyer so I'm not hugely familiar with the costs but allowing around 10k for surveys/fees/etc so I'm guessing 15k from LISA and mortgage of around 115k (which should be doable on around 30k).
    Originally posted by NewShadow
    10k on fees sounds 10x too high. Assuming its a freehold the solicitors and searches are about 1k and you won't pay any stamp duty. The seller pays the estate agent. You might need some help with the move but otherwise your plan all looks very possible.

    Alex
    Last edited by Alexland; 12-03-2018 at 5:00 PM.
    • EJS_Superted
    • By EJS_Superted 12th Mar 18, 6:04 PM
    • 64 Posts
    • 39 Thanks
    EJS_Superted
    • #6
    • 12th Mar 18, 6:04 PM
    • #6
    • 12th Mar 18, 6:04 PM


    This is my key dilemma - given leaving cash uninvested in a S&S ISA is (according to the internets) stoopid - transfer it to Skipton? Or invest this 4k and put my next 4k in Skipton and push everything back by a year to give myself time to bed these habits in...?
    Originally posted by NewShadow
    Personally I would focus on the house purchase for now and not invest the money. Saving for retirement is always good but you will be better informed to make retirement plans once you are in your own home and therefore know key information like the size of your mortgage debt, value of your house, cost of maintenance etc. Also I don't see the point of delaying the purchase and paying rent for longer than needed given that you have firmly decided you are buying a house. That rent could be paying down your mortgage.

    Also, don't underestimate the costs of things you will need after the house purchase. Things like decorating, carpets, furniture, renovations etc. You might struggle to save much after these expenses for the first year or so. Having a good "broken boiler" fund before you move in is a good idea if you can afford it.
    • Alexland
    • By Alexland 12th Mar 18, 6:56 PM
    • 2,389 Posts
    • 1,790 Thanks
    Alexland
    • #7
    • 12th Mar 18, 6:56 PM
    • #7
    • 12th Mar 18, 6:56 PM
    Having a good "broken boiler" fund before you move in is a good idea if you can afford it.
    Originally posted by EJS_Superted
    When we bought our current house the survey said the boiler would need replacing but then on move day my wife discovered it had since been condemned as unsafe.
    • fiisch
    • By fiisch 13th Mar 18, 10:57 PM
    • 270 Posts
    • 144 Thanks
    fiisch
    • #8
    • 13th Mar 18, 10:57 PM
    • #8
    • 13th Mar 18, 10:57 PM
    Saving 1/3 income is good. Buying your own place might alter your outgoings, but if you can maintain anything like that momentum retiring at 60-ish should be doable.

    Couple of things to add:

    - Assuming you are already, but are you getting maximum matched contributions from pensions?
    - Consider taking out Amex credit card - can get a small amount of cash back (we get around 100/year from 5-600 monthly spend) - and will help you build your credit history. Having a credit card - always paid off in full - and having "unused" credit is good from a future potential mortgage lender's perspective. As Martin says.... ALWAYS pay off in full!!
    Save 6k in 2018: 1651.19 / 6000
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