This week we continue our series by looking at the importance of regular Savings and Investments and the positive impact they could have on your future lifestyle.
The economic impact of Covid 19 means that interest rates on savings will likely remain lower for longer now, whilst at the same time we find ourselves spending less than normal each month.
Here are a few simple ideas on how you can put your newly-found regular, surplus income to good use.
Did you know ….that?
A third of Brits admit to not saving anything on a regular basis*?
We would advise keeping a “contingency fund” equivalent to at least 3 month’s income – just in case. *(Source, Lloyds Bank Survey October 2019).
You could be Mortgage-free sooner than you thought?
There are usually limits to how much you can overpay your mortgage each year. However, by paying an extra £200 per month towards a £200,000 mortgage*, you could potentially save £17,367 in interest payments and shorten the mortgage term by 5 years and 10 months? *(capital and interest basis, 25 year term, assumed interest rate 2.5% pa).
Your child is really gonna cost you?
According to LV, it costs £75,436 to raise a child to the age of 18.
You can save up to £20,000 per person, per tax year into a tax-efficient Individual Savings Account (ISA). This can be cash or investment based. Don’t forget to review previous ISAs periodically, they can be transferred to a better rate of interest or alternative investment funds.
Weddings just got even more expensive!
The average cost of a wedding is now £25,000!
Perhaps savings regularly into a Junior ISA might help you enjoy the big day more, when it comes. You can save up to £9,000 per tax year, tax-free until your child reaches 18. It then becomes your child’s cash held in an ISA. Cash or investment junior ISAs are available.
The TV remote can be all yours again!
Helping your children onto the property ladder is expensive. The average first-time buyer deposit in the UK is now £44,000 (source, ONS March 2019).
Applicants for a Lifetime ISA (LISA) aged between 18 and 40, can save up to £4,000 per tax year. The government will then add a 25% bonus on top-of the contributions made. The LISA can be accessed tax-free when used for a first-time house purchase, or if it is accessed after age 60.
“Help-to-buy” is gone…. but not forgotten.
Although no longer available, don’t forget that you can still pay into a help-to-buy ISA if you already have one. You can save up to £200 per month until November 2029 at the very latest. The government will then add a 25% bonus on top of the HTB ISA balance (subject to a £3,000 maximum) when used for a first-time house purchase.
As ever, please contact us if you would like to discuss your Savings or Investments or if you require any help or advice.