Cover Story
Better than ever
• There is a wealth of tools at the
disposal of the most inexperienced
of savers these days
• Tools as well as guidance are freely
available on The Money Advice
Service’s website, covering almost
every aspect of personal finance
• Advice can also be delivered
through your smartphone. Multiply,
the UK’s first regulated financial
advice app, offers robo-advice,
carries out searches and suggests a
financial plan based upon your data
• Whatever your financial objectives,
the options now available are
greater than ever. With support
available at your fingertips, it is now
easier than it has ever been to start
the journey towards that destination
Free money
A savings account is just one way to
squirrel money away for the future,
says Sarah Coles, personal finance
analyst at Hargreaves Lansdown.
“If you’re saving for a first property,
you’re aged 18 to 39 and you have a
year until you plan to buy, a Lifetime
ISA (LISA) is a no-brainer, because the
government will give you free money
towards your deposit,” says Coles.
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It can be a cash or stocks and shares
LISA and making the maximum
£4,000 a year contribution will bag you
a £1,000 top-up from the government.
Premium Bonds are another option.
One in three people in the UK hold
one of these assets, totalling £79bn.
They don’t offer interest, but there’s a
monthly prize of up to £1m to be won.
“Bear in mind that over the long
term, if you don’t win, the value of
your savings will be eaten away by
inflation, so it’s best if they’re held
alongside other options with a better
chance of keeping up,” Coles adds.
You don’t even have to do the
shopping around if you use a platform
such as Raisin, as it brings together
savings products for you to choose from.
Coles points out that while LISAs can
be used for retirement saving, most
will find that a workplace pension
is a better bet. This is because your
employer pays money in for you and
higher-rate taxpayers receive more tax
relief on their contributions.
The age-old old-age problem
Employers are adopting sophisticated
online modellers that allow
employees to see how changing their
contribution rate may influence the
size of their final pension pot.
Most people will have a dozen jobs
over their lifetime and will acquire
a number of pensions, too. The
government’s pensions dashboard
“Over the long term, if you don’t win, the value of your
savings will be eaten away by inflation, so it’s best if
they’re held alongside other options with a better chance
of keeping up”
project is designed to bring all of
them together into one place so you
can keep track of them – and use
that information when making your
financial plans.
This tool is still in development, with
no launch date determined. But the
dashboard is likely to give as many
savers a nice surprise as a wake-up call.
By knowing what is saved and where
it is, a number of small plans can be
consolidated into one single product.
You can ensure the investment strategy
remains appropriate for your stage of
life and you will probably save a heap
of fees.
Making the next move
Most savers won’t go beyond
cash deposits, ISAs and
pensions, content to make
use of their allowances. Many
will shy away from making
investment decisions for fear of
making the wrong choice.
Mark Anthony Grimaldi, co-founder
of Grimaldi Portfolio Solutions and
author of RetireSMART!, recommends
savers keep things simple by using a
large investment company’s platform.
Focus on the lowest-cost index funds
on offer, says Grimaldi, as these tend to
have a low minimum investment and
even lower monthly contribution levels.
“Making small investments at
regular intervals over time – dollar-
cost averaging – can be an effective
investment strategy,” says Grimaldi.
“It establishes discipline and helps
you to invest
regularly, which
can alleviate any
worries about
trying to time the
market.”
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