Savings & Investments: Top Tips - Part 1
1. Keep A Float
There is nothing worse than that feeling of having no money of your own that you can put your hands on quickly and easily, whether it’s to pay for a holiday or to repair the boiler or to cover an unexpected bill. Work out how much you might need to spend on one-off or unexpected items over the next three years and try to make sure that you keep at least that much in an account where you can get at it easily.
2. Avoid Expensive Debt
Credit cards have their place. They are an easy way of paying for goods. They offer protection when things go wrong. They are better than carrying around large amounts of cash. BUT, once the special deals and the incentives have run out, they are horribly expensive. The best savings rates are currently between 1-2% per annum. These toxic pieces of plastic could be costing you upwards of 30% per annum. Clear your credit cards monthly without fail. If you can’t afford what you want – wait until you can!
3. Shop around
Savings rates are at all-time lows but it still pays to shop around regularly. For small balances you can get up to 5% from current accounts. Some also offer cashback on your household bills. Don’t settle for 0.25% from your bank’s savings account when you get more than four times that much from numerous online and postal accounts. If you can tie the money up for a while consider notice accounts or even 1-2 year fixed term bonds. All are offering returns ahead of inflation.
4. Review your Mortgage
How long have you had your mortgage? Is the rate still competitive or can you switch to a better deal? Are there any repayment penalties if you overpay? Better to reduce the mortgage if it is costing more than you can earn on your savings. If you still have a long time to go consider switching to a fixed rate. Current deals are the best they have ever been.
5. What If?
It makes sense to think the worst – just occasionally. What would happen if you lost your job or were long-term sick? How would the family cope if you died? Saving and investing is all well and good – but what if the monthly pay cheque stops coming in?
6. Make a Plan
It doesn’t have to be set in stone and it will probably change every year – but make a plan and review it regularly. What are you saving for? How much do you need to save? When do you hope to retire? Will there be school fees and/or university fees? How will you minimise tax and maximise returns?
7. Get Advice
Go as far as you can on your own. Use the internet, there is a wealth of helpful information. But when you’re not sure or you don’t understand or you don’t know how – find an adviser you can trust and get them to share their knowledge and experience with you.
To discuss further or to arrange a face to face meeting please contact us.