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What should I do with my savings? (Clueless)

9 replies

opalescent · 10/01/2018 08:07

Dp and I are not high earners, we have a joint income that allows us to live comfortably, as long as we budget super tightly, and there is nothing left over.

We did however, make a small amount of savings on our last house purchase (15k).

What's the best thing to do with this money? At the moment it's just sitting in a current account.

Thanks in advance!

OP posts:
BarbaraofSevillle · 10/01/2018 09:18

Partly depends on what exactly you mean by the words 'we have a joint income that allows us to live comfortably, as long as we budget super tightly, and there is nothing left over' and your definitions of 'comfortably' and 'super tight budget', but you seem to be suggesting that you have a lump some somehow leftover from a house purchase? Did you buy a cheaper house than the one you sold?

You could always pay back some of it onto your mortgage if you have one and are allowed to make overpayments (most allow 10% of capital each year as an overpayment, but check the terms).

An emergency fund is always useful, especially if you would struggle to pay for significant house or car repairs, major works such as a new roof, windows or bathroom, or car replacement, so you could always save it and use it for those sorts of things.

If you are saving it, you need to get the best interest rate possible, this will be in current accounts, which can be a bit fiddly to meet the pay ins and sometime direct debit requirements (they don't really want you to use them as savings accounts).

An easy way, as long as you are disciplined enough not to spend all the money because it is in your current account would be to make Santander 123 your main current account, and you will get 1.5% interest on up to £20k and cashback on your bills which should exceed the £5 monthly fee (we get about £4.50 pm and our bills are lower than average (band A council tax, total of £20 pm on phone contracts, no pay TV).

If you haven't already reviewed your budget, you could go back to basics and go through the Moneysavingexpert budget planner to get the best price on all your bills, think about reducing unnecessary expenses such as insurance policies you don't really need and get the best interest on your savings as well as thinking about whether you should overpay your mortgage with some of the £15k.

specialsubject · 10/01/2018 09:46

The current account interest thing is no longer worth it, as no savings rates even touch inflation. Santander's cash back may just negate the fee and then you get a little interest.

You need to look at your long term plan, one job loss and you are screwed.

mumblechum0 · 10/01/2018 09:50

I’ve put around £120k into an investment fund with Baillie Gifford which is growing by over 40% pa.
Obv it can and does go down from time to time but I looked at it today and it’s gone up by £8k since 21 Dec.
So if you are happy to invest for a few years and take the rough with the smooth, i’d Think about going down that route.

timeforabrewnow · 10/01/2018 09:57

Eh? Not really 'screwed' if they own their house and have an extra 15 grand in the bank.

If that counts as nearly screwed I must be totally and utterly screwed!!

Emily7708 · 10/01/2018 09:58

I would buy premium bonds. The savings rates are rubbish at the moment and at least with premium bonds you have easyish access to the money and the chance of winning a decent amount. I get quite a good return on mine with small wins most months.

BarbaraofSevillle · 10/01/2018 10:00

Well no, interest on cash is less than inflation at the moment, but what else do you suggest for a liquid, risk free savings method that will do better than cash savings as an emergency fund to help in the time of job loss or for car replacement etc?

specialsubject · 10/01/2018 20:18

With £15k, and only just making ends meet they would be bonkers to invest.
Stock market has rocketed over the last year. For those who have been in for a while. It ended the year at a record level. Short term of course it looks good - use a tracker at 0.1% charge, not an active fund manager.

There is nowhere you can put cash for it to grow. Carney hates savers. You're stuffed if you rely on cash savings.

TalkinPeace · 10/01/2018 21:34

I've got £20k in a Santander 123 account that earns me around £40 a month
I've got a chunk in premium bonds
I'm setting up S&S Isas with money I've taken out of cash ISAs
and I pump loads into my pension that I can access in a few years

alekskedra · 11/01/2018 10:17

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