So, I want to begin saving money..

I've been saving for about 12 years now and have mostly saved with a low risk, low return attitude (i.e. various cash based accounts). Clear any debts first and then start with a Cash ISA (£5100 maximum for this tax year) this should be your first port of call.

There are other ways of saving cash (after maxing the ISA) again all low risk, low return:

regular savers (Lloyds TSB @ 5% - these work differently so read carefully)
index linked savings (usually linked with inflation - although withdrawn by NS&I recently)
fixed rate bonds (but interest rates will surely rise next year) (around 3% for a year)
instant access e-savers (internet only accounts offering 2.6-2.99%)

Recently I have been considering the next step as cash isn't a good performer at all (over the long term) due to inflation...for that you need to look at risk based products for the longer term (say 5+ years)

A Stocks & Shares ISA (can be made up of funds, corporate bonds, guilts, shares) maybe next and you can save another £5,100 in this per tax year if you already hold and max out a Cash ISA

I'm no expert but have been very disciplined with my saving and hopefully soon (after some reserch) will be looking at a suitable Stocks and Shares ISA based around a 10 year investment. Its about time I took a little risk. Like the OP I'm saving a large sum each month as I'm a little dull :D
 
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Electronic Dave said:
I've been saving for about 12 years now and have mostly saved with a low risk, low return attitude (i.e. various cash based accounts). Clear any debts first and then start with a Cash ISA (£5100 maximum for this tax year) this should be your first port of call.

There are other ways of saving cash (after maxing the ISA) again all low risk, low return:

regular savers (Lloyds TSB @ 5% - these work differently so read carefully)
index linked savings (usually linked with inflation - although withdrawn by NS&I recently)
fixed rate bonds (but interest rates will surely rise next year) (around 3% for a year)
instant access e-savers (internet only accounts offering 2.6-2.99%)

Recently I have been considering the next step as cash isn't a good performer at all (over the long term) due to inflation...for that you need to look at risk based products for the longer term (say 5+ years)

A Stocks & Shares ISA (can be made up of funds, corporate bonds, guilts, shares) maybe next and you can save another £5,100 in this per tax year if you already hold and max out a Cash ISA

I'm no expert but have been very disciplined with my saving and hopefully soon (after some reserch) will be looking at a suitable Stocks and Shares ISA based around a 10 year investment. Its about time I took a little risk. Like the OP I'm saving a large sum each month as I'm a little dull :D
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Not dull.. sensible :)
 
Nitrojan said:
I agree but I will still have enough money left over to do the things I want to do so it's win-win :) I just wanted some advice on what to do with the money I want to save.
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Good for you, I didn't start saving properly until I hit 27 - I'd have been ridiculously minted if I'd started 10 years earlier. I just ended up spunking most of my money on stuff I shouldn't have anyway (but it was fun).
 
Invest in a cash isa for the first year. Spend that year reading up and educating your self on investments. Youn should NOT be thinking about hedge funds or spread betting until you understand much more about the market. There are various wrappers that can be used for your investments t achieve tax efficiency and some of which give you access to investment types not normally made available to retail client investors such as yourself.

Spend a year educating yourself and then seek advice from an independent financial adviser, as well as those at your bank(s). By waiting you're more knowledgable yourself and less likely to be sold some carp you doon't really need or want.

Good luck
 
Electronic Dave said:
Recently I have been considering the next step as cash isn't a good performer at all (over the long term) due to inflation...for that you need to look at risk based products for the longer term (say 5+ years)

A Stocks & Shares ISA (can be made up of funds, corporate bonds, guilts, shares) maybe next and you can save another £5,100 in this per tax year if you already hold and max out a Cash ISA

I'm no expert but have been very disciplined with my saving and hopefully soon (after some reserch) will be looking at a suitable Stocks and Shares ISA based around a 10 year investment. Its about time I took a little risk. Like the OP I'm saving a large sum each month as I'm a little dull :D
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I was thinking of something like this recently (S&S ISA) and was just wondering what peoples thoughts were on it. I've been like Electronic Dave and have been risk adverse when it comes to savings. I know there's more oppurtunity to make greater returns but I'm not sure I like the thought of getting an update to find my savings have dropped considerably.

A financial advisor (not independent, he was with Britannia building society where I had some savings) had advised me on balanced managed S&S ISA however I was reluctant as it cost 4.5% to set up then I think it was a 1.5% annual management fee as well. I felt the fees almost negated the higher returns as well as the risk of shares dropping although his answer was they try to make the fees back in the first few months so that would give me an idea of what I could expect for an annual return.

Any folks any experiences with a managed fund, if it's worth it or what alternatives they're are?
 
I would go for a variety of high risk shares if I were you, in an ISA to keep the taxman off. Sure, you might lose it all but put it in 4-5 different companies (500 a month = 6000 for a year. Still feasible to divide into 4-5 companies then, accounting for trade fees) to minimise risk as far as possible, and if you lose it all you're only 18, plenty off time to remake the money.

I'm young too, and I think we pretty much NEED to go for the high risk high yield option - unless you never plan on buying a house ;)
 
Tachyon said:
I was thinking of something like this recently (S&S ISA) and was just wondering what peoples thoughts were on it. I've been like Electronic Dave and have been risk adverse when it comes to savings. I know there's more oppurtunity to make greater returns but I'm not sure I like the thought of getting an update to find my savings have dropped considerably.

A financial advisor (not independent, he was with Britannia building society where I had some savings) had advised me on balanced managed S&S ISA however I was reluctant as it cost 4.5% to set up then I think it was a 1.5% annual management fee as well. I felt the fees almost negated the higher returns as well as the risk of shares dropping although his answer was they try to make the fees back in the first few months so that would give me an idea of what I could expect for an annual return.

Any folks any experiences with a managed fund, if it's worth it or what alternatives they're are?
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Go and see a real FA adviser not a tied one you would get more experience listening to people here then listening to a tied adviser. If you are looking for a stocks and shares ISA then they will probably suggest you put your money with one of the larger platforms, Skandia, Funds Networks, Transco, CoFunds etc. In general you do not pay any money directly to the FA. The AMC you pay depends on on the spread of the funds you invest in. They can range from 0 to very high (if the fund has a performance related fee) however most normal funds are within the range of 0.25 to 1.75 per annum. The AMC is not paid to either the platform or the FA but goes to the Fund Manager. The platform then claws back a % of the AMC as a rebate; a % of which the platform keeps and a % of which the platform pay the FA commission. For instance on an AMC of 1.5; the platform would claw back 75bps (0.75%) they would keep 25bps and pay 50bps to the FA.

All charges incurred from a product are called a TER(Total expense ratio) this is the charge you should be looking at rather tan AMC alone; it is basically AMC+Admin fees)

TER on a decent equity portfolio could be about 2.25% per annum.

So on an investment of £1000.00 per annum you would be charged £22.50; not too bad in reality. Note however that some platforms will have hidden charges; switch charges, investment charges etc and most will have a fixed product charge: usually about £100 per year.

Obviously the more money you invest then the less relevant any fixed charges are but you need to take these into account if you are not maxing out your yearly allocation.

In short if you are investing in S&S then you need to be investing in a portfolio which will offer growth over and above the charges you will pay. If not you may as well invest in cash ISA's.

Managed funds are passe by the way way forward is to offer risk based portfolio which are the equivalent of the old managed funds. Look up Skandia Spectrum for an example; however I would be looking at my adviser to offer me a range of alternatives you can get more growth by actively manging your portfolio using a high proportion of riskier funds than just sticking it all in a managed funds or risk based portfolio.
 
Putting money away in order to earn interest is stupid in this climate, much better to invest it.
 
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