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  • FIRST POST
    • Massy
    • By Massy 8th Jul 18, 9:28 PM
    • 11Posts
    • 0Thanks
    Massy
    What do to with 30k savings 30 years old?
    • #1
    • 8th Jul 18, 9:28 PM
    What do to with 30k savings 30 years old? 8th Jul 18 at 9:28 PM
    Evening All,

    Just so you have some background on me... i am 30, have my own mortgage and I am pretty awful with my money. Not in the sense that i spend is on pointless stuff, i just get paid and that's it. Whatever i don't use just stays in my current account. I hardly have time for any social activities outside work unfortunately. I work in the IT industry and have the kind of job where my phone starts ringing at 7am and stops around 9pm. Its probably really unhealthy for me to work like this but that's another subject for another day.

    I have been on the housing ladder for 2 years now and happy where i am / with my mortgage, its just a 250k mortgage - repayments are pretty low hence saving the 30k in a couple of years.

    So now i have around 30k sitting in my current account and i just think there must be something i can do with that and make it work for me?

    Can anyone here give me some advice or point me in the right direction of what i should do?

    It looked at a savings account with my current bank (Barlcays) but it just doesn't seem worth the hassle for the rate you get? or is that a bad attitude for me to have?
Page 1
    • Zero Sum
    • By Zero Sum 8th Jul 18, 9:34 PM
    • 407 Posts
    • 309 Thanks
    Zero Sum
    • #2
    • 8th Jul 18, 9:34 PM
    • #2
    • 8th Jul 18, 9:34 PM
    Overpay mortgage & get it cleared earlier
    • Westie983
    • By Westie983 8th Jul 18, 9:55 PM
    • 4,422 Posts
    • 14,963 Thanks
    Westie983
    • #3
    • 8th Jul 18, 9:55 PM
    • #3
    • 8th Jul 18, 9:55 PM
    Hi, and welcome to the forum.

    Can I direct you to have a read of the Top Savings Accounts page which should give you a start on where you can save your money.

    https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

    Westie983
    Save 12k in 2018 #10 Total (25,000)+11,000/12,000 = 91.66%
    Sealed Pot Challenge ~ 11 #97 Total (410) + 40/500 = 8.00% ( x 11)
    Xmas 2018 1 a Day #2 Total 62.59/365 = 17.14%
    Virtual Sealed Pot #1 Total 1000/1000 = 100.00%
    2 Savers Club 2018 #16 Total (1500)+-480/2000 = 51.00%

    Total 13,122.59/15,865 = 82.71%

    I'm a Board Guide on Budgeting & Bank Accounts, Debt-Free Wannabe, Disability Money Matters, and Savings & Investments. I'm a volunteer helping the boards run smoothly, but I'm not a moderator, and do not read all posts. If you see an inappropriate/illegal post then email forumteam@moneysavingexpert.com
    • DrEskimo
    • By DrEskimo 8th Jul 18, 10:14 PM
    • 130 Posts
    • 96 Thanks
    DrEskimo
    • #4
    • 8th Jul 18, 10:14 PM
    • #4
    • 8th Jul 18, 10:14 PM
    Here is my general plan...

    1/ Keep a side 3-6months of expenses in a easy access savings account (I'm not too fussed on interest rate, but I currently keep it in a NationWide Flex Direct account and Flex saver earning 5%, because it seems daft not to!). This is to protect you against any unforeseen change in circumstances, so quick access is key.

    2/ Pay off all high interest debts.

    3/ Work out how healthy my pension contributions are, and whether I am contributing enough to retire on an amount I deem reasonable.

    4/ Put away anything I want for short/medium term savings in high interest savings accounts (car savings, moving house, etc.).

    5/ Put away anything I want for longer term (but before retirement) in a S&S ISA, using cheap multi-asset global funds.

    6/ Overpay mortgage
    • Massy
    • By Massy 8th Jul 18, 10:19 PM
    • 11 Posts
    • 0 Thanks
    Massy
    • #5
    • 8th Jul 18, 10:19 PM
    • #5
    • 8th Jul 18, 10:19 PM
    Thanks for the info all, i am going to have a good read of that link Westie thanks
    • Reed_Richards
    • By Reed_Richards 8th Jul 18, 10:42 PM
    • 97 Posts
    • 31 Thanks
    Reed_Richards
    • #6
    • 8th Jul 18, 10:42 PM
    • #6
    • 8th Jul 18, 10:42 PM
    You will never find a savings account that will give you better interest than the interest you pay on your mortgage. If such a thing were to exist then all the smart investors would borrow to save and it would be fully subscribed within days.
    Reed
    • Audaxer
    • By Audaxer 8th Jul 18, 11:05 PM
    • 1,155 Posts
    • 681 Thanks
    Audaxer
    • #7
    • 8th Jul 18, 11:05 PM
    • #7
    • 8th Jul 18, 11:05 PM
    Can anyone here give me some advice or point me in the right direction of what i should do?
    Originally posted by Massy
    Presumably you have a company pension. You could increase payments to it or start a SIPP and invest the money, but you won't be able to access the pension until you are 57. You could also consider a Stocks and Shares ISA to invest in for some of the money if you do not need access to the money for at least 10 or 15 years.
    • TheShape
    • By TheShape 8th Jul 18, 11:22 PM
    • 1,299 Posts
    • 1,113 Thanks
    TheShape
    • #8
    • 8th Jul 18, 11:22 PM
    • #8
    • 8th Jul 18, 11:22 PM
    You will never find a savings account that will give you better interest than the interest you pay on your mortgage. If such a thing were to exist then all the smart investors would borrow to save and it would be fully subscribed within days.
    Originally posted by Reed_Richards
    Obviously you're not a stoozer!
    • kidmugsy
    • By kidmugsy 9th Jul 18, 12:38 AM
    • 11,051 Posts
    • 7,609 Thanks
    kidmugsy
    • #9
    • 9th Jul 18, 12:38 AM
    • #9
    • 9th Jul 18, 12:38 AM
    You will never find a savings account that will give you better interest than the interest you pay on your mortgage. If such a thing were to exist then all the smart investors would borrow to save and it would be fully subscribed within days.
    Originally posted by Reed_Richards

    Factually incorrect.
    Free the dunston one next time too.
    • Reed_Richards
    • By Reed_Richards 9th Jul 18, 6:40 AM
    • 97 Posts
    • 31 Thanks
    Reed_Richards
    Obviously you're not a stoozer!
    Originally posted by TheShape
    "Stoozing", as I understand, involves borrowing at a "special offer" rate in order to invest at a better savings rate. True, I don't do this; I thought it typically involved borrowing on a credit card (with a 0% introductory offer) rather than a mortgage.

    You might be able to beat the interest rate on your mortgage with a regular saver account but these always allow you to save only a limited amount per month. So if you set-up one a month for a year with 12 different providers each taking, say 250 per month that would occupy 3,000 in rotation. If you could find another 12 providers that might be another 3000; how many regular saver accounts exist?

    We're still very short of 30K. So if what I wrote is

    Factually incorrect.
    Originally posted by kidmugsy
    it would be helpful to the OP to give some counterexamples that would work with 30k, rather than just ticking me off.
    Reed
    • Zero Sum
    • By Zero Sum 9th Jul 18, 8:45 AM
    • 407 Posts
    • 309 Thanks
    Zero Sum
    "Stoozing", as I understand, involves borrowing at a "special offer" rate in order to invest at a better savings rate. True, I don't do this; I thought it typically involved borrowing on a credit card (with a 0% introductory offer) rather than a mortgage.

    You might be able to beat the interest rate on your mortgage with a regular saver account but these always allow you to save only a limited amount per month. So if you set-up one a month for a year with 12 different providers each taking, say 250 per month that would occupy 3,000 in rotation. If you could find another 12 providers that might be another 3000; how many regular saver accounts exist?

    We're still very short of 30K. So if what I wrote is



    it would be helpful to the OP to give some counterexamples that would work with 30k, rather than just ticking me off.
    Originally posted by Reed_Richards

    You can get 5 year fixed savings bonds for over 2.5% plenty of mortgages for less than that. Obviously if you get a lower rate 2 year deal, there is a risk of rates going up.
    • steampowered
    • By steampowered 9th Jul 18, 9:24 AM
    • 2,669 Posts
    • 2,603 Thanks
    steampowered
    Open a stocks & shares ISA. Put all of your money into a low cost, balanced investment fund (such as a Vanguard fund). Set dividends to be reinvested.

    If you do not need the money in the short term, you are going to get much better returns through stocks & shares than through cash savings.

    Unlike cash savings, you don't need to be constantly switching to get the best deal. You can just invest and forget.

    Unlike a mortgage, the money would be easy to access if you ever did need it (and you'd be getting a better return than you are paying in mortgage interest).

    Obviously with stocks & shares the value of your investment would fluctuate up and down from time to time, but over time you'd be ahead - the average long term return on stock markets is around 8%.
    Last edited by steampowered; 09-07-2018 at 9:31 AM.
    • steampowered
    • By steampowered 9th Jul 18, 9:29 AM
    • 2,669 Posts
    • 2,603 Thanks
    steampowered
    You will never find a savings account that will give you better interest than the interest you pay on your mortgage. If such a thing were to exist then all the smart investors would borrow to save and it would be fully subscribed within days.
    Originally posted by Reed_Richards
    A quick google search reveals that the best interest rate currently being offered on a 5-year fixed mortgage is 2.04% by Leeds Building Society or 2.09% by HSBC.

    MSE reveals that the best interest rate being offered on a 5-year fixed bond is 2.67%, for which 30k is eligible.

    So you can get a bit more interest with cash savings than you'd pay on a mortgage, though not a lot more. Higher rates like 3% or 5% are possible but only on smaller amounts and using special offers. This also obviously assumes you are on the cheapest possible mortgage, which won't be the case for many people (e.g. higher LTV will mean a higher mortgage rate).

    However I think it should be recognised that achieving the best interest rate with cash savings requires keeping an eye on the best rate and moving your money around for special offers. Most people can't be bothered to do that, which I think is a real advantage to investing in stocks & shares rather than in cash savings.
    Last edited by steampowered; 09-07-2018 at 9:32 AM.
    • Wobblydeb
    • By Wobblydeb 9th Jul 18, 10:15 AM
    • 973 Posts
    • 1,447 Thanks
    Wobblydeb
    I think Dr Eskimo has given a good, ordered summary for you to think about.

    You've got the easy access savings bit sorted out. Now - do you have any high interest debts? What is your pension provision like?
    I've got a plan so cunning you could put a tail on it and call it a weasel.
    • xylophone
    • By xylophone 9th Jul 18, 10:23 AM
    • 25,762 Posts
    • 15,221 Thanks
    xylophone
    Whatever i don't use just stays in my current account
    You might consider a switch to Santander 123.

    https://www.santander.co.uk/uk/current-accounts/123-current-account

    You might consider a couple of Tesco current accounts if you have the 6DDs.

    You might also open a TSB Plus current account.

    If you have never had a Nationwide Flexdirect account you might open one and get 5% for a year on 2,500.

    Standing orders between the accounts deal with the monthly pay ins.

    Or you might wish to consider a stocks and shares ISA.

    https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

    http://monevator.com/using-vanguard-lifestrategy-funds-life/
    • Terry Towelling
    • By Terry Towelling 9th Jul 18, 1:36 PM
    • 199 Posts
    • 101 Thanks
    Terry Towelling
    I think DrEskimo is just about right but the OP's written style is indicative of a lack of motivation to adopt such an approach. For 30K to build up over 2 years with no return/benefit whatsoever does suggest a degree of indifference to a multi-disciplined approach. Sorry, OP, I'm not criticising, it is just a feeling that comes across.

    On the mortgage-overpayment front, 2 years have now been lost. It is important to understand that mortgage overpayment has a far reaching effect. It isn't just the % interest rate of the overpayment that you save. This saving continues to compound for however many years the mortgage has to run - and is a guaranteed saving.

    At 2% for, say, 5 years followed by 5% for 20 years, a single 1000 overpayment two years in could have the effect of knocking 2800 (approx.) off the mortgage. In reality it doesn't work quite like this because the true effect is that the mortgage reaches a zero balance before the end of year 25 so you don't actually get the full 23 years of compounding. Someone shout if the maths is wrong.

    It may also be important to service more debt when the rate is lower so that there is less to service when the rate is higher later in the term.

    Without preaching, and assuming no high-interest debts because none are mentioned, the very least OP should be aiming for is 6 - 12 months emergency fund, proper pension provision and possibly some degree of mortgage overpayment (if permitted). Once established with the regime perhaps then consider some form of investment strategy.

    Beyond that it is just a case of praying that the capacity to work, earn and save 15K per year continues.
    • swindiff
    • By swindiff 10th Jul 18, 8:40 AM
    • 322 Posts
    • 132 Thanks
    swindiff
    "Stoozing", as I understand, involves borrowing at a "special offer" rate in order to invest at a better savings rate. True, I don't do this; I thought it typically involved borrowing on a credit card (with a 0% introductory offer) rather than a mortgage.

    You might be able to beat the interest rate on your mortgage with a regular saver account but these always allow you to save only a limited amount per month. So if you set-up one a month for a year with 12 different providers each taking, say 250 per month that would occupy 3,000 in rotation. If you could find another 12 providers that might be another 3000; how many regular saver accounts exist?

    We're still very short of 30K. So if what I wrote is



    it would be helpful to the OP to give some counterexamples that would work with 30k, rather than just ticking me off.
    Originally posted by Reed_Richards
    I have 43,000, mostly stoozed borrowing at 0%, spread over many accounts ranging from 1.5% to 5%. They return on average 3.33% giving me an annual return of 1,453.

    My mortgage is 1.99%
    Last edited by swindiff; 10-07-2018 at 8:45 AM.
    • atush
    • By atush 10th Jul 18, 9:04 AM
    • 16,873 Posts
    • 10,527 Thanks
    atush
    10k savings in cash, 10k into pension, 10k into s+s isa
    • Reed_Richards
    • By Reed_Richards 10th Jul 18, 12:28 PM
    • 97 Posts
    • 31 Thanks
    Reed_Richards
    I have 43,000, mostly stoozed borrowing at 0%, spread over many accounts ranging from 1.5% to 5%. They return on average 3.33% giving me an annual return of 1,453.

    My mortgage is 1.99%
    Originally posted by swindiff

    I'm very impressed, not least by your high average percentage. But surely this must take some doing? For example if keeping track of all these accounts takes you, say, two hours a week, so about 100 hours a year that would represent a "wage" of 14.53 per hour. But perhaps you only spend an hour a month which would equate to 121 per hour?
    Reed
    • swindiff
    • By swindiff 10th Jul 18, 1:34 PM
    • 322 Posts
    • 132 Thanks
    swindiff
    Once all the direct debits and standing orders are initially set up it takes no time to maintain at all, its all done automatically each month.
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