I think you should make an effort even if it’s hard (it’s not that hard, just choose a low to medium risk fund on a stocks and shares ISA and save a hundred quid a month). It’s good to save for the future if you can. It means you can save towards a dream, have more security, retire, stuff like that x
Low interest rates on savings
- Thread starter AnnO'Neemus
- Start date
seeformiles
Lost in the wood
Minimum is £25 but we’ve got £50 and £100 as well. Not every month but frequently enough - definitely better than current savings account rates.
Orang Utan
Psychick Worrier Ov Geyoor
Anything with graphs or charts or percentages and my eyes and ears glaze over.
(Maybe it’s an ADHD thing)
(Maybe it’s an ADHD thing)
strung out
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Are you opted in to your current work pension? If so and it's with a local authority (I think that's who you work for), you're far less likely to need to worry about some of this stuff to have a moderately comfortable retirement. You will just get a monthly defined amount at retirement, which doesn't rely on stock market performance. Same for you Edie, if you work for the NHS.
If you're not signed up to your workplace pension, do so now!
Yes I am. The problem being I only started working and paying stamp and pension from age 36. Before that all my work was cash in hand or looking after kids and only my husband had a pension.
strung out
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The good news is that unlike a normal defined contribution pension, the NHS pension and ones like it don't matter as much if you start paying into them late.
£1000 into your pension at the age of 18 is worth exactly the same as an inflation adjusted £1000 at 68. Normally £1000 at 18 would have 50 years to compound in a normal pension, but public sector pensions remove that worry.
Doesn't mean you shouldn't save a bit more if you can afford it though, obviously!
Orang Utan
Psychick Worrier Ov Geyoor
Oh yes, I also have two other pensions from two previous jobs but have no idea how to access them come the time. Can’t even remember who they’re with. One of them from when I worked at Channel 4, is very generous indeed.
Still think I’ll be the grumpiest cashier in Waitrose when I’m 80 though
strung out
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If you want a hand figuring some of it out and getting the details in one place so you don't have to worry about it further down the line, let me know
Thora
Differently Ethical
Did you claim child benefit? I think that covers your NI contributions.
Oh does it? Yes I did, well from 25yo onwards.
All investments outside the ISA wrapper should certainly be in your name. As long as you are earning less than circa £12k a year in interest on them, it will all be tax free.
Inside the ISA wrapper, they are tax free anyway, though. That’s up £40k a year of investments between you — more than enough for most people. So before you start worrying about what else to do, use that.
If you do invest outside of the ISA, have a think about making some of the return capital gains rather than income. That’s an advanced lesson for another day though, I am guessing.
I think so.
The passive fund is essentially the average of everybody else’s guesses. If nobody else is making a guess, though, the passive fund has nothing to work with!
bimble
floofy
Everybody’s guesses or everybody’s emotional contagion? (I mean it tracks what’s actually happening to shares doesn’t it ?) maybe those are the same thing actually.
UnderOpenSky
baseline neural therapy
You can check here
Find pension contact details
Find the contact details for a pension provider by using the Pension Tracing Service
I've done bugger all really, other then got what my employers have had to pay since they were mandated to do so, but even a lot of that as I was self employed for a few years. Didn't seem to matter when I was younger, rather worrying now. Opted to pay a few more percent of my salary into my current one last year, not sure it will make much difference in the grand scale of things.
The price of stocks is just the weighted average of what everybody is willing to pay for those stocks, which amounts to the same thing either way. There is nothing magical or natural about the price of a share, after all. It’s just the point at which the buyers balance the sellers.
smmudge
i know the smudge is true
No legit pension company should offer you this!
bellaozzydog
rolling turds in glitter
How does any normal non accountant work any of this shit out
I probably need an “advisor” how do you find an advisor who isn’t just trying to sell you financial products
I probably need an “advisor” how do you find an advisor who isn’t just trying to sell you financial products
I think you can get independent financial advisors.
Just do what everyone else does and get a professional qualification in a financial area. After that, it’s quite straightforward.
stdP
One Swiss dinosaur in Polly Gosling's anorak hood
Just to weigh in on a delayed basis; I've got my rainy day fund in a building society saver account (negligible/negative interest rate), some in premium bonds (slightly less negligible/negative interest rate) but most of my extra money gets put in to overpayments on my mortgage.
My mortgage interest rate is relatively high at 3.2% (I was at the very limit of what they were prepared to lend me and I wanted a fixed term in case interest rates went sky high, even though the monthly repayments would have been less than the rent we were paying), but apart from that paying it off early is a double-whammy - not only do you end up forking over much less money to the bank in pure interest, but you'll also stop paying those mortgage payments much earlier and will thus start pocketing the money much sooner. You might be able to get technically better returns with stocks etc, but you're paying off debt on something that's literally safe as houses. Because of the magic of compound interest, the more money you can pay off sooner in the mortgage, the bigger the benefits, so most of my money designated for savings is now piled in to the mortgage instead. My mortgage with nationwide allows me to overpay by up to 10% per annum of the total amount borrowed before incurring penalty charges (and I've got the option to not pay my mortgage if I need to spend the money so it also acts as a safety buffer); this sort of arrangement seems fairly standard with most other people I know with mortgages (although of course the banks don't like to draw attention to it).
I didn't see it mentioned skimming the thread, but MSE have an overpayment calculator where you can chuck in your own circumstances and see if it makes financial sense for you:
www.moneysavingexpert.com
You need to factor renewed/re-mortgages as well, but even if you're optimistic and end up on a low interest rate for the entire term, the savings can still be substantial. For example, say you borrowed £200,000, paying back at 1.5% for 25 years; overpaying by an extra £2k a year means you pay £8k less interest and finish your mortgage 5 years early (netting you an extra £48k you would have otherwise been spending on mortgage payments) which is pretty impressive. Manage to overpay by £5k a year and now you're saving £15k in interest, finishing 9 years early and saving yourself £89k in mortgage payments.
I used to have both a stocks and shares ISA and some investment funds which did very well for me when I was saving up for a deposit and I'll likely resume these whenever the mortgage gets paid off, but for now my mortgage is my biggest earner.
My mortgage interest rate is relatively high at 3.2% (I was at the very limit of what they were prepared to lend me and I wanted a fixed term in case interest rates went sky high, even though the monthly repayments would have been less than the rent we were paying), but apart from that paying it off early is a double-whammy - not only do you end up forking over much less money to the bank in pure interest, but you'll also stop paying those mortgage payments much earlier and will thus start pocketing the money much sooner. You might be able to get technically better returns with stocks etc, but you're paying off debt on something that's literally safe as houses. Because of the magic of compound interest, the more money you can pay off sooner in the mortgage, the bigger the benefits, so most of my money designated for savings is now piled in to the mortgage instead. My mortgage with nationwide allows me to overpay by up to 10% per annum of the total amount borrowed before incurring penalty charges (and I've got the option to not pay my mortgage if I need to spend the money so it also acts as a safety buffer); this sort of arrangement seems fairly standard with most other people I know with mortgages (although of course the banks don't like to draw attention to it).
I didn't see it mentioned skimming the thread, but MSE have an overpayment calculator where you can chuck in your own circumstances and see if it makes financial sense for you:
Mortgage Overpayment Calculator: Pay off your debt early?...
Mortgage Overpayment Calculator shows how much you can save by paying off your mortgage early - if your mortgage allows overpayments.
You need to factor renewed/re-mortgages as well, but even if you're optimistic and end up on a low interest rate for the entire term, the savings can still be substantial. For example, say you borrowed £200,000, paying back at 1.5% for 25 years; overpaying by an extra £2k a year means you pay £8k less interest and finish your mortgage 5 years early (netting you an extra £48k you would have otherwise been spending on mortgage payments) which is pretty impressive. Manage to overpay by £5k a year and now you're saving £15k in interest, finishing 9 years early and saving yourself £89k in mortgage payments.
I used to have both a stocks and shares ISA and some investment funds which did very well for me when I was saving up for a deposit and I'll likely resume these whenever the mortgage gets paid off, but for now my mortgage is my biggest earner.
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weltweit
Well-Known Member
A couple of guys I worked with had smallish share portfolios they used to watch while at work. Against the ideals of avoiding transaction costs, they often used to change horses in mid flow as it were. I think they did ok, it was more like they wanted to play at being traders rather than serious long term investment programs.
Artaxerxes
Look out, he's got a gnu!
Its perfectly legal and the pension companies will tell you over and over again its a bad idea and you shouldn't do it, but it can be done.
You will be absolutely fucked by the tax man if you do it though.
bimble
floofy
I’ve got a bank account at barclays (not the one I use, this ones got about £12 in it because I keep not remembering to close it) the name of the account has ‘saver’ in it and the interest has been exactly 0 for years now.
Are we going to have negative interest rates like some Bank of England man recently said we might ? If we do get them would it be being done to encourage everyone to spend their money?
Are we going to have negative interest rates like some Bank of England man recently said we might ? If we do get them would it be being done to encourage everyone to spend their money?
It is quite likely that banks won’t give negative rates, just zero, I would guess. It might encourage them to charge a monthly fee though.
stdP
One Swiss dinosaur in Polly Gosling's anorak hood
My own take is that, from the customer's perspective at least, we've had negative interest rates for years since interest available to savers is vastly smaller than the rate of inflation (and inflation figures ignore vast swathes of expenditure like accommodation). The £10 you had in your account a year ago would be worth less today even if your interest rate was 10%. But that's my own personal perspective and not one you'd find financial people nodding along to.
The negative interest rates mooted for the banks were, I think, only going to be used for inter-bank rates, not customer-facing ones; if people were actually charged money to keep their cash in a bank, you'd have people withdrawing their cash left, right and centre and buying bigger mattresses; essentially they're there to try and stop banks hoarding capital and loan/invest it instead. There's a fairly decent explainerator-cum-opinion-piece here:
theconversation.com
It's an argument for another thread but personally I worry the UK economy is in a precarious enough state thanks to brexit, covid and a lunatic government that a return to high inflation (and interest rates) is a distinct possibility; my fear of this is the main driver in me wanting to pay off as much of my mortgage debt as possible when the going's fair.
The negative interest rates mooted for the banks were, I think, only going to be used for inter-bank rates, not customer-facing ones; if people were actually charged money to keep their cash in a bank, you'd have people withdrawing their cash left, right and centre and buying bigger mattresses; essentially they're there to try and stop banks hoarding capital and loan/invest it instead. There's a fairly decent explainerator-cum-opinion-piece here:
Negative interest rates may not boost UK economy – here’s what the Bank of England should try first
UK banks have been given six months to prepare for rates going below zero.
theconversation.com
It's an argument for another thread but personally I worry the UK economy is in a precarious enough state thanks to brexit, covid and a lunatic government that a return to high inflation (and interest rates) is a distinct possibility; my fear of this is the main driver in me wanting to pay off as much of my mortgage debt as possible when the going's fair.
baldrick
hmmmmm
We were lucky buying our house and ended up with a lifetime tracker mortgage that allows unlimited overpayments. Didn't realise at the time how much money that would ultimately save us. The bank certainly didn't tell us! Obviously there have been foolish financial decisions as well, but at least this went in the plus column.Just to weigh in on a delayed basis; I've got my rainy day fund in a building society saver account (negligible/negative interest rate), some in premium bonds (slightly less negligible/negative interest rate) but most of my extra money gets put in to overpayments on my mortgage.
My mortgage interest rate is relatively high at 3.2% (I was at the very limit of what they were prepared to lend me and I wanted a fixed term in case interest rates went sky high, even though the monthly repayments would have been less than the rent we were paying), but apart from that paying it off early is a double-whammy - not only do you end up forking over much less money to the bank in pure interest, but you'll also stop paying those mortgage payments much earlier and will thus start pocketing the money much sooner. You might be able to get technically better returns with stocks etc, but you're paying off debt on something that's literally safe as houses. Because of the magic of compound interest, the more money you can pay off sooner in the mortgage, the bigger the benefits, so most of my money designated for savings is now piled in to the mortgage instead. My mortgage with nationwide allows me to overpay by up to 10% per annum of the total amount borrowed before incurring penalty charges (and I've got the option to not pay my mortgage if I need to spend the money so it also acts as a safety buffer); this sort of arrangement seems fairly standard with most other people I know with mortgages (although of course the banks don't like to draw attention to it).
I didn't see it mentioned skimming the thread, but MSE have an overpayment calculator where you can chuck in your own circumstances and see if it makes financial sense for you:
Mortgage Overpayment Calculator: Pay off your debt early?...
Mortgage Overpayment Calculator shows how much you can save by paying off your mortgage early - if your mortgage allows overpayments.
You need to factor renewed/re-mortgages as well, but even if you're optimistic and end up on a low interest rate for the entire term, the savings can still be substantial. For example, say you borrowed £200,000, paying back at 1.5% for 25 years; overpaying by an extra £2k a year means you pay £8k less interest and finish your mortgage 5 years early (netting you an extra £48k you would have otherwise been spending on mortgage payments) which is pretty impressive. Manage to overpay by £5k a year and now you're saving £15k in interest, finishing 9 years early and saving yourself £89k in mortgage payments.
I used to have both a stocks and shares ISA and some investment funds which did very well for me when I was saving up for a deposit and I'll likely resume these whenever the mortgage gets paid off, but for now my mortgage is my biggest earner.
smmudge
i know the smudge is true
It is more likely if someone tells you you can do this with them, that they will just take all your money.
nick
Pleomorphic Adenomas R us
Big fan of lifetime mortgages. Any fixed term thing may benefit you short term, but then you are at the mercy of your credit rating when it comes to remortgage time - you may end up stuck on the bank's SVR
Also a big fan of offsets, even though the rates are a bit higher.
Was fortunate enough to get a lifetime offset tracker at base rate + 2% = 2.1% at the moment. (form what is now a zombie bank called Intelligent finance)
Income is variable as I am a contractor, so just have massive current account balances that offset the mortgage - which we never pay down. If funds are short I can spend the current amounts and I don't have to borrow off anyone. Current account is effectively earning 2.1% after tax = 4% before tax (using Kabbes rough & ready approximation upthread - even more at some point in in the tax curve where effective marginal rates can hit 62%)
(Even baby eating anarchists get old )
Also a big fan of offsets, even though the rates are a bit higher.
Was fortunate enough to get a lifetime offset tracker at base rate + 2% = 2.1% at the moment. (form what is now a zombie bank called Intelligent finance)
Income is variable as I am a contractor, so just have massive current account balances that offset the mortgage - which we never pay down. If funds are short I can spend the current amounts and I don't have to borrow off anyone. Current account is effectively earning 2.1% after tax = 4% before tax (using Kabbes rough & ready approximation upthread - even more at some point in in the tax curve where effective marginal rates can hit 62%)
(Even baby eating anarchists get old )
bimble
floofy
Morning, I'm just having a look at those vanguard life strategy funds that you were talking about. Their website is pretty good at talking to beginners but the only thing I cant see is anything about how long you're committed if you put money into one of them.
What did you mean by "they're set and forget for however long you want" - is it just entirely up to you how long you have these things no commitment and no punishment ?
strung out
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Yes, you're free to put money into them for as long or short a time as you like. You buy units of the index fund at whatever the price is when you decide to buy and can sell again at your leisure, when the price will have either gone up (making you a profit), or gone down (making you a loss).
The longer you leave it for, the more likely you are to turn a profit. Lots of people recommend only investing in the stock market if you're happy to leave it there for at least 3-5 years, as this should ensure that you ride out any dips in the stock market, but you're perfectly within your rights to sell at any time you like.
