This one’s going up ridiculously late. It was mostly finished before August hit, but then some pretty big life events popped up at the very end of July, which took priority until late September. At that point I had 2 months worth of budgeting spreadsheets to fill out, and 3 blog posts to write up, and so I pushed it back. I eventually forced myself to get back on track with this in mid October, and now that I’ve sorted out the number crunching side of things I’m ready to get on with writing up the blog posts again. I’m aiming for around 1 a week, which should let me all of them out before the end of the month. So let’s start with July’s post:
Slightly worse than last month, but not bad all things considered. I only just climbed out of my overdraft though, so that’s one big milestone reached (hooray!). Now begins the slow, hard process of continuing to stay out of it while I save up for a mortgage.
In my last post I mentioned that I’d talk a little about what I was going to do with my savings once I have them again, so let’s get into that. Right now there seems to be 3 main options that are worth doing:
The first is a cash ISA, which offers slightly better interest rates than your standard savings account and doesn’t build up tax. It’s not the best option, but barring the bank shutting down your money’s not at risk, and it’s easy enough to transfer money to and from without paying extra fees.
Secondly there’s the classic stocks and shares. Over time these tend to have one of the highest rates of interest and are relatively stable, so long as we’re not hit by a recession… If you’re handy enough with the numbers to do this yourself you can make a real killing, but for everyone else (like me) you can just put the money into a stocks and shares ISA. The best bet here is to make sure you spread your money into a number of different options just in case, and even if you choose only low risk options you’ll still receive a higher interest rate than any other bank account out though. They do carry some fees for investing and withdrawing your money, so it’s best to do this only for longterm savings. If you take the ISA option it’s also tax free, which is another perk to consider.
The last option is relatively new and is called peer to peer lending. Essentially you put your money into a pot to be loaned out to businesses and individuals, depending on who you choose to back with. It sounds like a risky concept at a glance until you realise that this is exactly what happens with your money held in your bank account, you’re just not involved in the process unless it goes disastrously wrong. Like the stocks and shares option, you can choose what level of risk you’re willing to take, but there’s far less fees involved. Another difference is that your money’s not loaned out straight away, so if you suddenly drop a large amount of cash into this option you won’t start reaping the benefits until they find someone wanting to borrow that matches your preferences. Right now this isn’t tax free, but as of next year you should be able to include any interest gained in your ISA.
Out of these options the stocks and shares seems to be the best long-term saving option, but the added costs doesn’t make it very worthwhile unless you’re investing a lot of money in it at a time. Peer to peer lending sounds like a good alternative, but for now I’d like to take advantage of my ISA allowance. So for the rest of this financial year I’m going to be putting money into my cash ISA, then when April starts closing in I’ll transfer it to either a stocks and shares ISA, or a peer to peer lending service depending on how it’s shaping up.