the friendly guide to saving and investing

www.scottishfriendly.co.uk

THE FRIENDLY GUIDE TOSAVING AND INVESTING

http://scottishfriendly.co.uk/

© Scottish Friendly 2013

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Our Friendly Guides are here to help you get the most from your money.

Introduction



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Introduction

We know money matters can sometimes seem a little baffling. So each Friendly Guide is designed with the aim to make the world of finance a bit clearer - and help make you a bit of an expert.

As one of the largest mutual life offices in the UK - and one that’s been around for over 150 years - we know that there’s never been a more important time to think about saving and investing.

The Friendly Guide to Saving and Investing explains what saving and investing is, what you should do before you start, and how putting money aside can help you prepare for the future.

We hope you find it helpful.

Introduction



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Why should I save or invest?

Putting money aside regularly will help you get the things you want in life, whether it’s a new car or a deposit for your first home. Choosing a goal is up to you - but getting into a regular saving and investment habit will help you achieve it quicker. Here’s a few more of the most common reasons for putting some money aside:

Once you’ve decided which goal you’re saving or investing for, you can start examining your options.

Everything you need to know

HolidayWeddingHome improvementsUniversity fees Retirement fund



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What should I do first?

Before you do anything, it’s vital to work out how much you can afford to save or invest. Make a list of your monthly expenditure, including every outgoing like:

Add it up and take away the amount from your total monthly income. Hopefully you should have some cash left over - can you spare some to put aside for a rainy day? If the answer is ‘no’ then you could…


Rent or mortgageCar paymentsPetrol

Food

Broadband

Utility bills

Gym membership

Credit cards



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Cut your outgoings

There are plenty of ways to economise - and put what you save to better use. Here’s a few ideas of how you could save a few pounds here and there, if it’s something you would like to do:

Economising like this all adds up - even if it gives you an extra £10 or £20 every month, that’s enough to start saving or investing. You can always increase it later, if your circumstances change.


Switch energy, insurance or phone supplier to a cheaper tariffInstead of a pricey sandwich and coffee for lunch, make your ownBuy own-brand labels instead of big names at the supermarketCurb your online spending habits - especially late-night clicking!



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What about my credit cards?

Paying expensive interest rates on your credit card defeats the object of saving or investing. Shop around for deals which offer 0% balance transfers, then aim to pay off the balance as soon as possible.

You’ll soon be glad you’re free from costly repayments.




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I’m ready to put some money aside. So what are my options?

Okay, so you know how much you can afford to put away each month, and what you want to use it for. The next step is to choose your method of saving or investing. There are four main options:

Regular savings account - Usually with a bank or building society, the money you put in earns interest, giving a guaranteed lump sum. You pay tax on any interest earned.

Cash ISA - Like a savings account, the money you put in earns interest - but this time the taxman can’t touch it. You can currently save up to £5,760 per tax year in a Cash ISA. See our Friendly Guide to ISAs for more details.

Investment ISA - Also known as a Stocks & Shares ISA, this invests your money in the stock market, in things like funds, bonds or shares. If the market does well, the value of your investments rises - although, like all investments, the value can go down too and you could get back less than you have invested. You can currently invest up to £11,520 per tax year in an Investment ISA less any amounts subscribed to a Cash ISA. Our Friendly Guide to ISAs gives you a full explanation of how they work.

Other long-term investments - If you’re not in a hurry for your money, there are a variety of ways to invest over a longer period. Some invest in the stock market through small payments that rise regularly over time. Others offer a guaranteed minimum cash sum after a period of time. Tax treatment depends on your individual circumstances and tax law may change in the future.




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Saving for the short-term

Savings accounts and Cash ISAs are traditionally seen as short-term savings options. They’re basically bank accounts where you earn interest on what you put aside, with a guaranteed lump sum at the end. If you’re just saving for a year or two, they usually fit the bill. So let’s say for example you want to put money aside for next year’s holiday. A short-term savings account like a Cash ISA or regular savings account might be right for you.




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Investing for the long-term

Because Investment ISAs rely on the stock market for growth, it can take longer to start seeing results, but the returns may be higher than a cash investment. Therefore, they are seen as a long-term option. But don’t forget, the value can go down too and your original investment is not guaranteed. You could get back less than you have invested. So for example if you’re a new parent, and you want to invest for your child’s education in 18 years’ time, then a long-term investment might appeal to you.



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We know there’s a lot to think about when it comes to saving and investing, but we hope we’ve made things a little simpler for you. Remember - the key is to decide these four things:

Summary

1. What am I saving or investing for?

2. When do I want my money?

3. How much can I afford to put away each month?

4. Which option is best suited to my goals?

So which one’s for me?

Ultimately, the final decision is yours.



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No advice has been provided by Scottish Friendly in relation to this plan. If you are in any doubt as to whether this plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.

Scottish Friendly is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of AFM, Member of ABI. Scottish Friendly Asset Managers Limited is authorised and regulated by the Financial Conduct Authority. Details can be found on the FCA register - Registration No. 188832. Member of IMA.

Registered address:Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Summary

Thanks for reading. We hope you’ve found this guide helpful.

If you’d like to know more about Saving & Investing or have a question, you can find out more on our website www.scottishfriendly.co.uk.

Want to know more?


http://www.unbiased.co.uk/


the friendly guide to saving and investing

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