How do you become/maintain an interest in savings/investments?
Top sources of info?
After many years of not having very much money at all, we appear to have a good stable income and we now manage to save more money than I need to spend.
We have joint finances but neither DH nor myself are terribly good at managing it - in the sense we have savings in low interest accounts (are there any others these days?) and very few in investments/property etc.
I periodically feel I should get better at managing money but rarely manage to keep on top of it - to be clear it's not the budgeting aspect I find difficult it's the what to do with it when I've saved it.
So how did you get interested in investments, how do you maintain this and what are your top sources of information for new products/best investment advice etc etc.
We have no major debts beyond a mortgage on a very low interest rate, both have good pensions. I realise this is not the usual money problem most people have...
Sorry of no help with investments but would also love to see what others are up to. We're saving for a house so have a bit in current accounts, but need to start putting cash somewhere else.
We have a nationwide current account, and two bank of Scotland accounts which keeps £12500 getting interest. Those accounts don't need dd coming out.
I'm applying for a first direct account which will give me access to a savings account too, it only allows £300 a month, but the interest is better than ISAs ATM. This years ISA is a virgin 2 year one as I heard it was best.
Don't have enough money to do more than basic savings/ISA, so I use savingschampion.co.uk to see the best rates.
the 'best' rates are in current accounts at the moment, and this involves a varying amount of faffing about to just about keep pace with inflation.
this list will help:
best rates are summarised as follows. These accounts need varying payments in, but you can move money between them with standing orders so you don't need a big income. Or indeed any income!
5% in the TSB Classic plus, you can have 2 each, max 2k, no DDs needed
5% in the Nationwide, 1 year only, 1 each
4% Club Lloyds: max 5k, 2 DDs
3%: Bank of Scotland vantage (3 per person), TSB Enhance (3 per person)
Santander 123: 1 each but max £20k. £2 a month fee, needs DDs.
Tesco current: max 3k.
anything lower, don't bother.
Thanks for the suggestions!
I'm definitely mostly interested in non-bank savings investing right now.
Consider what risk you are happy to accept. Company bonds can give a 6% return but there is risk, you can lose the amount invested. Companies like JohnLewis have bond issues from time to time.
You need to think timescale - generally you should have 3 months income in short term savings accounts. After that, i would move into shares, probably through a low cost tracker fund.
Make sure you use the full ISA allowance each year first.
Unless you learn about it in depth and it interests you, I would do something simple and then review every year.
The other thing is to consider your saving goals -ie what will you spend the money on?
Thanks for your help ladies. We're there already with savings/ISAs etc. It's where do we go from here that I really need help with.
Where would you look first to learn about these kind of things?
It depends on what you mean about where you start. Do you understand how companies/stock markets work, bonds, investment trusts etc?
If not I would recommend the weekend money pages on the proper papers and saturday's FT.
I also like Warran Buffett's (world's most successful investor) letters he write to his shareholders here
Thanks for the link caroldecker. I do more or less understand how this stuff works. I think the problem is choice over load - there are just way too many products on the market and I don't even know where to begin in making a choice about what to go for!
It's a good idea to be goal focused though.
I think I should do this more...
Agree there is lots of choice, but I would look at it one of 3 ways (and can mix and match), depending on your interest/time and goals.
1. Goal - better result than cash - little day to day management - UK/US/Europe main market (FTSE/SP) tracker (although fx risk with overseas). Buy through fund supermarket, invest monthly and ignore (except for tax return and when you want to spend it). Make sure it is a proper traker and doesn't use derivatives.
2. Goal - holiday of a lifetime or bust - little day to day mangement - emerging market or commodity (eg gold) tracker - set a large goal (based on cost of holiday), check prices monthly and sell when you have made it - can be risky
3. Goal - get involved in managing money - review daily/weekly - set up an account with a broker (money supermarket has some options), read about companies (eg investor chronicle) - buy those that you think have potential, often those with products you see trending at school/work
Of the 3, option 1 is most likely to make money in the long term, but least interesting.
Option 2 does not involve much time and can be fun planning the spending (although you may never get the money).
Option 3 is great if you enjoy it, but rubbish if not
Thanks for that caroldecker that really helpfully summarises it for me!
Can I ask which companies (online in particular) you would use/suggest for these. I imagine moneysupermarket would be good for option 1? (Given cost of university these days, this is an appealing option.
I'm not quite sure I'm up to option 3 yet but I do like the idea of option 2 as well...
I may be flamed for this but have found the money section of the Daily Mail online app really useful in expanding my knowledge of finance and investment. Had originally started to read up as I had taken on Power of Attorney duties but being up to speed financially has caused us to pay more attention to our own finance (SIPPs, ISAs, trackers, remortgage).
Read the Motley Fool before getting into investments. Basically they suggest finding a FTSE All Share (ie 250 index not the 100) investment or unit trust with the lowest possible fees (Se M&G or L&G) and then investing monthly via direct debit. This uses share price averaging so that you don't have to worry so much about when to buy as you are drip feeding into the market. This will probably get you about 14% annualised growth if you hold for the long term and keep it in an ISA wrapper. Buying shares like this means that you just pay in and a computer does the rest so you don't have to be that interested or knowledgeable. Most computers beat the funds with higher charges that have active fund managers - or at least the lower cost of the tracking computer outpaces the fund manager in the long term as fees eat massively into your returns if you let them.
However alongside or instead of this I would highly recommend that you make overpayments on your mortgage. Many products allow this (check whether they are instantly credited or whether they have a particular day each year and/or any limits on amounts) and get paying to reduce the term. If you use a calculator like this you can see how many years are shaved off the term and more importantly how much you will save in interest payments. If you can pay up to £500 per month the savings get eyewatering large! Being mortgage free is f***ing brilliant. Best thing we ever did.
I am now looking into property to get better returns over the long term and to invest for the kids. I just need to find someone who can advise me on setting it all up properly so the tax man doesn't wreck it all later!
Before anyone comes along thinking I am some over priviledged type, I started work earning less than I could have behind the counter of a book shop. That made me concentrate and save £50 per month as soon as I could afford it into a unit trust (as above). Every time I had a pay rise, I would give myself half to "spend" and half to "save". Over the years this has served me very well so I have choices now because of the wonders of compound interest. I am doing the same for my kids now using the child benefit which we top up and save into low cost trackers/JISAs for them. The amounts are not large but over the long term small amounts really add up using the drip feed method.
Oh I forgot to say that all of the above is irrelevant if you have loans. Credit is expensive and must be avoided!! Before you start saving you must get rid of any outstanding loans - just compare the interest you pay out compared with the interest that you are getting in from a savings account and you will weep.
Thanks for all your input ladies.
This is really helpful background.
I have also had a couple of books recommended to me which I have started ploughing through. I thought I would post the titles here as they also seem to be quite good so far and may be useful to others. Namely:
The FT guide to wealth management by Jason Butler
FT guide to wealth management
And not looked at yet but same series:
The FT guide to Investing by Glenn Arnold
Don't bother with anything else until your mortgage is zero. Use any spare money to pay that off.
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