Before I start on this journey, I need to put a mark in the ground.
Where am I now?
Below is a snapshot value of the savings I have at the start:
Savings – Yes, approx £48,000.
These savings are in poor interest rate bank/building society accounts. In the current UK climate it seems impossible to find anywhere good to put your money and get anything above 1% interest. So I know at the moment that I am loosing to inflation.
Cash ISAs – Yes, approx £48,000.
I started these some time ago (advised by work colleagues at the time – when they were called TESSAs) and managed to save money away each year. In the early years I wasnt able to save the full allowances but tried to save the max every year I could. I have been consolidating them into 1 account but in recent years the best paying cash ISAs have not allowed ‘transfer in’ which has really hammered my ability to maximise the interest rates and gain.
Stocks ISAs – Yes, approx £80,000.
I started when they were PEPs and put what I could aside each year as a monthly DD. They then changed to be known as ISAs and I have tried to have a cash and shares ISA – mainly as I wanted the Cash ISA to be an emergency fund, although now I have managed to increase my general savings – my cash ISA isn’t seen as much of an emergency account any more. Again, I have tried to put away the max permitted each year that I could.
Shares – Yes, approx £170,000.
Wow, I didn’t realised how much I had in shares here. This is a valuation point and can go down as well as up! The majority of the shares are in one company…see below…
At my last employer (the one that made me redundant) I had management share options as well as share schemes every year (up to the max permitted). They have paid off handsomely over my time working there and I now have quite a bit here – although to minimise tax charges on sales, I can only sell small chunks at a time if I want to diversify and not have all my eggs in one basket! These shares have been a bonus over time as they pay a nice dividend and have helped me pay off my mortgage.
Pension (excluding company schemes) – Yes, approx £66,000.
At the beginning of my work life I worked for a company with no pension scheme, so started off with a personal pension. That had to be closed(paid up) when I joined a proper company scheme 2 years later.
I didn’t want to just have a company scheme (this was the era of Maxwell pension crisis), so continued to pay an AVC on this old personal pension and then paid into the company ones as well – the only thing you were allowed to do at the time due to government/tax rules.
These rules have changed now given the recent ‘pension crisis’ so now you can contribute to both a company AND a private scheme, so I now have both on the go.
I am currently a high-rate tax payer so I get additional contributions from HMRC, every bit helps towards that financial cushion which hopefully I will be able to use when I reach ‘state retirement’ age of 67 (at the moment! this is likely to rise over the coming years). So I have an AVC and a Stakeholder pension now, the Stakeholder is doing really well compared to the old ‘commission’ hungry one. Again the extra contributions from HMRC are helping to increase the value of this one nicely. Now that the pension rules have changed again, I can now access this stakeholder one from the age of 55. So well worth me using as a savings pot.
That gives me a Savings Pot of : £412,000.
Wow – really didn’t thing I was in this position! A great starting point.