Savings Accounts

[Relentless81]

Hello and lets get this this out of the way, I'm rubbish at this kind of thing, anything to do with numbers and I lose patience and interest (See what I did there) always have been this way and I want to fix it.

With that out of the way a bit of background, I have some savings which I've always just put a bit away every month and forget about it, its not a lot but I'm starting to wonder how I can put effort in and get more out of it. Its for later life, security if I lost my job, retirement, maybe even buy a property one day and do it up but that's possibly unlikely in this lifetime with house prices

With all this stuff going on around cost of living etc I thought to check how much interest I earn on my Savings account to see its 0.25% paid annually, I then started looking into seemingly a large can of worms relating to Savings Accounts, moving money around to get the best deals, drip feeding from Easy Access into Regular Payment accounts and all sorts (Yes I'm an overthinker)

I got a bit confused and need to read more into it but was also curious about what the people of OCUK do to get their money to work for them, please be gentle if you're going to reply, I am a noob at this and don't understanding investing etc and only keen to understand how to use the savings accounts available to my advantage with no risk. So if you're knowledgeable at this kind of thing I would appreciate any advice.

Otherwise, my local bank does have a letter box and I'm not interested in using it, I'm not saving for a Gucci belt or corner sofa and I own an "average" car which I would love to change but decided to keep for now.

Thanks

 

[Mason-]

A lot to digest here really. You say you're saving for later life, job security, retirement and maybe a house. Really the way you save for those things is different.

Saving for retirement and later life, pensions are your best bet (and I'd argue property but only if you can afford multiple), a long term saving system.

A house is probably medium term (depending on how close you are to being able to afford one), investments, are your best bet like Vanguard, but there is a risk you could lose money.

And for security if you lose a job you need money to be readily available, so some sort of instant access savings account, but you will get crap interest on this.

Really you need to work out what you're saving for as a priority and split these into separate things like how I listed above. I'll let people with better knowledge comment though.

 

[Raymond Lin]

Things I would consider in order

1 - contact work HR and increase your pension contribution
2 - Open ISA and set up direct debit to put in it every month, the day you get paid so you don't notice it
3 - open private SIPP on places like Vanguard if you want to look more into it. You do set up DD or put it in manually

 

[VaderDSL]

Have a look at lifetime ISAs if you're eligible https://www.gov.uk/lifetime-isa. I put 4k (max) a year into my LISA and it yields £1000 bonus each year from the government, can only pay in until you're 50 and you have to pay in before 40. Comes out of your yearly ISA allowance. Can only access it without losing the 25% bonus once you are over 60 or using to buy a house as first time buyer, or terminally ill. I pop the rest of my ISA allowance into whatever fixed ISA with the best rate I can get at the moment.

Plus shares scheme at work and pension contribution, around 17.5% of my wage into that.

 

[Craig R]

I added a personal contribution lump sum to my work pension recently.

I'm not too clued up about how pensions work, and I wasn't expecting this, but I paid in £9600 which instantly added £12k to my pension fund.

 

[Relentless81]

I've rushed my post and not provided enough info, sorry about that.

I need to be able to access the money without notice because I'm paranoid that if I lost my job I would need the money, maybe that's something I need to get over or only lock away some of it I don't know.

I have a pension, really don't understand it and need to invest some time to understand it better but I'm between jobs at the moment so that will also change and no idea how that works.

I'm 41 if age is a factor, I don't want to work until 65 and trying to imagine ways of retiring early so in terms of what it's for its not a retirement plan but could possibly help with paying off the mortgage when the time comes or buying a second property to rent out or just covering a few years until pensions can be claimed I'm not sure yet

Terms like LISA, ISA and SIPP only make me go cross eyed I don't know anything about them but if they are worth reading into I'll do that so thanks

I was in a lot of debt in my 20's and managed to turn that around which I'm pretty proud of that but the lasting effect is savings and understanding financial planning has never really been considered previously so I'm trying to figure it all out now

I was initially just thinking of getting a better easy access savings account seeing as though my current one pays so little at .25 and there are others paying 1.5

 

[mid_gen]

I added a personal contribution lump sum to my work pension recently.

I'm not too clued up about how pensions work, and I wasn't expecting this, but I paid in £9600 which instantly added £12k to my pension fund.

You get 20% tax relief added when you contribute from your own funds.

If you're a higher rate tax payer, you can also claim another 20% back in your tax return.

 

[Semple]

I've rushed my post and not provided enough info, sorry about that.

I need to be able to access the money without notice because I'm paranoid that if I lost my job I would need the money, maybe that's something I need to get over or only lock away some of it I don't know.

Unfortunately this will put a massive dent in what's available to you. Immediate access and good returns don't co-exist.

If you want better returns then the money has to effectively be locked away for X number of years. The question is if you lost your job would you honestly need access to your full life savings? In reality the answer is no. You'd need enough to pay for bills/committed expenses and everything else gets cancelled or cut back on.

You can get some accounts that require notice - say 90 days to withdraw. So if you've got a smaller savings pot for immediate access to tie you over with, then this could be an option.

 

[200sols]

If you want to access at any time and you don't want to risk its value going down the choice is a savings account. Look at chase, 1.5% easy access saver. 6 month fixes will get you to 2% and 1 Yr upto 2.7%. But rates are rising so don't fix for too long right now.

Terms like LISA, ISA and SIPP only make me go cross eyed I don't know anything about them but if they are worth reading into I'll do that so thanks

LISA is a lifetime ISA, SIPP is a pension, you get tax relief on what you put in there but the money cant be accessed until you are 55 (rising to 58 soon iirc) and you can only take the first 25% tax free as a lump sum, can have inheritance benefits later in life as well.. ISAs can be accessed anytime, you can add £20k per year across all ISAs. Basically these things are 'tax wrappers' and any interest or dividends you earn from them are shielded from tax and if you build up a large ISA pot over your working life that is a decent retirement income plan as well.

You say you are 41, so I would be chucking my spare cash (after I have 6 months cash buffer) into an index tracker, Vanguard all world, HSBC all world or something and just watch it grow over the years.

 

[Relentless81]

Thanks for the info, I think I need to do a lot more reading into ISAs to make sure I make the right decisions

I was reading about the drip method where you open an easy access account like the 1.5% Chase account and siphon it off into a Regular Savings account which will have around 3% but not sure if that's worth the effort now compared to ISAs

 

[MatsyLR]

I'm rather lazy when it comes to savings.
I have all of mine stashed into a Chase 1.5% account, currently I get around £100 every month just by having it in there (I do have £80k just sitting there....although most of it is all going to spent in a few months time so not point doing anything with it) once its been diminished I'm probably just going to leave it there (around £10-15k)

 

[Scam]

Money Saving Expert really is good for this stuff https://www.moneysavingexpert.com/savings/

ISAs used to be the way forward historically but everyone can earn £1,000 interest per year before you incur any tax so they're relatively pointless for most. For example, I think I'm doing these sums right, but if your savings interest rate is 1% you'd have to have nigh-on £100k in there to hit that limit. (Someone correct me ). Even if my maths are wrong it's highly likely you don't need an ISA right now.

Honestly if you're just starting out I would keep things simple and look at 'easy access' savings accounts. This means you're not locked in, you wont get penalised for withdrawing at any time etc. https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/ If you're really not good at saving, then as above setup a standing order to pay in XXX every month. You can always add more once you've paid your bills etc.

From there you can branch out into a variety of options. If you know you can continue to put away XXX amount every month without getting uncomfortable, maybe open a 'regular savings' account to put some in every month - gives you a better rate. Or if you want to start looking more long term, put a proportion into a fixed rate ISA where you get a better rate but can't touch it for e.g. 2 years.

Only once you've used a variety of options like the above, and have been saving for 3-4 years, would I start looking at stock and shares options that the great and good here on OcUK will undoubtably push you towards (Vanguard etc.).

At the end of the day it's not rocket science, just make sure you stick with 'known' banks preferably for now or if you go somewhat off-piste check they are covered by the FSCS; https://www.moneysavingexpert.com/savings/safe-savings/
Also, rates are so low right now it's really more about what money you put it. You're not going to be become a millionaire overnight by putting in £250/month on 1.5% interest

 

[Relentless81]

I'm rather lazy when it comes to savings.
I have all of mine stashed into a Chase 1.5% account, currently I get around £100 every month just by having it in there (I do have £80k just sitting there....although most of it is all going to spent in a few months time so not point doing anything with it) once its been diminished I'm probably just going to leave it there (around £10-15k)

I don't have anywhere near that but it is mounting up, I'm managing to put away £675 a month currently, £500 in savings and £175 for next car but I'm thinking of running my current car into the ground and combining the accounts because as the cost of living increases I'm having less and less disposable income every month

I definitely need to do something, I'm missing out on free money and my current savings accounts are pitiful in terms of interest

 

[dlockers]

Lots of great but super complicated advice here. Do you have a 'proper job' with a decent employer? Start by understanding your pension there. Look at your payslip and how much you pay in. Look at your employee books and see how they're paying in. They should give you a pension projection but this will only be accessible at 57.

For savings and easy access, get a Chase and keep topping it up. If you need to access it, you can easily.

An ISA is only useful as a tax wrapper which it sounds like you're a million miles off.

 

[dlockers]

675 is good savings. And definitely drive your car till it does; balanced with resale value etc.

Do you own/want to own a house?

 

[Haze]

I earn more money from premium bonds, than I will ever earn in interest on a savings account

 

[dlockers]

I earn more money from premium bonds, than I will ever earn in interest on a savings account

Prove it

 

[Relentless81]

Yes I have a mortgage, I won't be able to keep up with the £675 for much longer with the cost of living increases it will probably drop to around £500

Pension I do need to understand better but like I say I'm changing jobs soon so my pension will change with it

I think I'm going to combine my car and general savings and open a Chase account and put everything in there to start, close my current saving accounts, read a bit more into locking half of it away into a better account. The way I see it then that's 50% of my savings in a regular savings account earning around 3% and move it when better offers come up and pay into that account monthly and then the other 50% sits in the chase account and I can access it if I need to, does that sound sensible?

I had a look at Vanguard and my head fell off, ISAs I'm not sure on just yet need to read more bu don't think it's any better than a savings account from what I've read so far

 

[Finners]

I'm rather lazy when it comes to savings.
I have all of mine stashed into a Chase 1.5% account, currently I get around £100 every month just by having it in there (I do have £80k just sitting there....although most of it is all going to spent in a few months time so not point doing anything with it) once its been diminished I'm probably just going to leave it there (around £10-15k)

Is tax deducted automatically from that? As from what I read £100 a month would be over your savings allowance.

Seems it would get complicated if it did but then you didn't have it all in there.for a year and you'd actually be owed tax.

Edit* what is the chase app like? Play store seems full of reviews saying it's slow and often has service outages?

 

[radderfire]

The fact of the matter is if you put money into a savings account, the interest being offered is now less than inflation, so you aren't saving money in real terms, you are losing it.

Making your money make money is very difficult, and takes years of learning and experience. The best way is probably to invest in shares of reliable companies that pay high dividends, but this takes a lot of time and effort finding them and maintaining the portfolio. The suggestions of tracker funds are reasonable if you don't have time to do it yourself, but you then pay more charges.

This is not financial advice, more a comment on the high level of difficulty.