£60 a month spare what shall I do with it?

As I am self employed some times this is less some months it is a lot more, this month for example I have made quite a nice amount of money and have a few £100 in the bank for the first time in my life although my busy social life going to gigs in London is taking up a faire chunk of it I still have enough to save a little.

I am 24 in August and want my own flat/house eventualy, I want to move out by the time I am 30 even if its rented and not owned.

Sorry I am woffeling again

Point of the thread?

What is best way to invest £60 a month? I was thinking £20 a month into a pension and £40 into a tax free ISA does this sound like a good plan?

I just don't want to be like my parents when I am older, I want a little bit of money.

 

Some kind of financial stability is always nice, despite being boring! I'd say try and sort out a decent pension if possible. I'm dead lucky as my works pension is rather spectacular and I retire at 51, it really is a nice feeling, security.

 

Put all of that money into an ISA for now.... you will need it when you move out (I mean you WILL need it), and if you put it in a pension it's inaccessible. As you've no employer to make matched contributions to a pension, there's little attraction to it right now. Put it aside, grow it as best you can and use it for deposit on flat/house or to buy some of those boring essentials, like furniture, appliances, bedding, etc.

 

£60 per month? ZeroGain hosting! The good karma you earn will support you in your twilight years better than any pension could - and the government can't get their hands on it yet, though they're bound to find a way...

 

pension.

I think the formulae goes, every five years you wait to begin your pension, you need to double the monthly amount you pay for the rest of the pension period to take the same amount out at the end.

So... lets say for arguements sake £50 per month at your age, £100 if you start in 5 years, £200 if you leave it ten years before starting etc.

 

An ISA for a deposit

 

Think you got it right don`t put all your eggs in one basket both options have their merits as stated above.

Pension - cos you need to make a start on that somewhere, and the longer its in the more it will grow, however it will be inaccessible.

A cash Isa if you want a tax free saving vehicle that is accessible, or a Stocks and shares Isa if you want real growth potential, however this can bite you if the stock market is not performing.However it does offer real growth potential if you are prepared to save regularly over ten years.

Talk to a Finanancial advisor.

 

AT - dont forget to squirrel the tax away as if her majesty's finest come knocking you'll be glad you did. Almost everyone I know who runs their own business spent the tax the owed during the first year (including me )

 

It's true that the earlier you start a pension the less you have to pay in to get a similar sum to starting one later.... but you'll still have to put in a tidy sum to get a reasonable amount on retirement.

I've got two personal pensions and expect to get only about half my earnings on the estimated value when they mature. There's also no guarantee that the Government won't decide to raid the pensions when they're short of cash.

If you're wanting to save the money it's best to get an account that's not to easy to access. I saved up a nice sum then one day just spent it cos it was easy to get at. I think I have 41p in my savings account now.

 

That is what I want to avoid, I am a techno addict, I think I have been done very well not to blow the little savings I have in my current account on HIFI or computer gear though .

I think I still need to find a part time job for one day a week so it won't affect my business (any more than will have an effect on my business).

Idealy I need to get to the point where I have £100 a month spare for pensions and savings but it is a long way of yet.

I am not too worried about tax, I didn't earn enough april 2005-06 so I don't have to pay any tax I have been making voluntery contributions to the NI, and the tax next year can be paid of in two lump sums which means I should easily be able to find the money.

 

As a rule of thumb for a decent pension you need to half your age to work out how much you should be saving from the start. So if you are 26 you need to save 13% gross annually. If you wait until you are 30 to start saving for a pension this rises to 15%, etc. Pension provision is going to be the biggest problem your generation is going to face. The sooner you start to address it the better provision you will make. You will not be able to live on the state pension alone, if it even exists when you retire. I would put pension provision as my first priority if I were you. Others may disagree. Instead of asking a hifi forum why not pay an IFA for an overview. Also you may think you are making 'voluntary' NI contributions , but without them you will not even qualify for a state pension.

 

Yeah that is exactly why I am paying my NI I am also considering becoming a LTD company if in a few months income is still on the up, this means I have normal employee NI rules instead of self employed.

I am on two minds with the pension, my uncle died last year of a heart attack living his window a very very tidy sum, his widow has really bad MS and is wheel chair bound, she needs constant care and because of the money he left she is no longer entitled to any NHS funding, in other words all my uncles hard earned money is now being swollowed up.

It all sounds quite bleak when you think about it properly.

 

May I suggest that is not a sound base to build your financial planning upon. If you save cash, assets or whatever then if your planning has been good you will have control of your assets up until you die. So for the period up until you die you can do quite a few things with your pot and the first idea may be to see a financial planner, pay for their advice and think about what they tell you.

PS people go to an expert to get their pc fixed and then they pay the expert (you) so at least go to an expert to give you sound financial advice.

 

i say blow it on beer and hookers.
if you want to be sensible about things bung it in an isa and save up for a while then go on a world wide beer and hooker binge.

basicly, beer and hookers.

seriously though an isa is probably best this early in your business, if you do suddenly need the cash it'll be there whereas if it's in a pension it is inaccessible. also if you only pay a small amount into your pension you'll only be paying the admin fees and not saving much at all. admin fees are a killer.

no admin fees with beer and hookers though and you'll have some wild stories to tell your cats when your old.

 

Thing is, with the way pensions are going they may be pretty worthless anyway these days. Property is where it's at.

I currently put a bit over £100 per month into my pension (and my employer does the same), but if I put that money into my mortgage instead then the mortgage would be paid off about 8 years sooner, but obviously I would not get the matched contributions from my employer (and the pension is all tax-free also).

If you're not earning enough to pay tax on, can you not get a small earnings exemption for NI?

 

i suggest asking on moneysavingexpert.com forums.
my suggestion - open a current account with alliance and leicester, and take their matched 10% regular saving account. set up a standing order to shift £50 or whatever into that regular saver. you'll get the highest rate of interest that i know of, despite the interest being taxed. then at the beginning of april 2007, just before the next tax year starts, shift all of the money into a cash isa. investing in a cash isa monthly now wont accrue a higher return that the above method.

 

I'm with Julian. Sex and drugs and rock and roll is the way forward.

 

is this basd on thr assumption that you'll always have the cash spare at the end of the month..? - what happens if the reverse is true and you wanna invest an extra wad some month(s)..?

 

Exactly my feelings. As far as I can see and from what I have read, pensions underperform and the pensions companies like to take unnaturally high fees from your pot, and then when you retire you find that you get virtually bugger all, and then you die 6months later and all the money you put in mysteriously disappears. That's if the pensions company hasn't already folded by the time you retire of course.

Seriously, the small print I've read on 3 or 4 works or private pensions that I've been 'invited' to join make me inclined to give the saleman my best head-butt. Ridiculous growth forecasts that bear no relation to recent growth, sky-high admin fees, paltry returns.

When you move out you don't want top rent for long, it's completely wasted money. Stick all your money in an ISA to get a deposit on a house. The higher the deposit the less interest you have to pay on a mortgage (they really really sting you on interest rates if you have a low/no deposit). Five years after you've bought your first house, rent it out to cover the mortgage and buy another one, etc, etc. 35 years down the line you have three houses two of which were paid for by other people, result! Sell two and have a big fat holiday, with beer and hookers aplenty (assuming you can still get it up in 35 years).

 

You can have a Pension that will pay for your last miserable years in a nursing home before you die.

or

You can have a House that will pay for your last miserable years in a nursing home before you die.

IMHO do not look at a house as an investment but as somewhere to live.