Last week was not just the start of a new year, but a new decade. So rather than set some New Year resolutions, why not think further ahead?
Here, we show you ten financially savvy moves that could pay handsomely in ten years’ time.
Last week was not just the start of a new year, but a new decade. Here we show you ten financially savvy moves that could pay handsomely in ten years’ time
1. DON’T STARVE YOUR SAVINGS
Interest rates on savings accounts have been low for years. But if you need to have your cash to hand, moving to a better paying easy-access account would be prudent.
HSBC’s Flexible Saver pays just 0.1 per cent, and would add just £100.50 to a £10,000 deposit over ten years, or £502.49 to a £50,000 deposit, according to data analysts Moneyfacts.
Yet if you switched to a top-paying account, like Shawbrook Bank’s Easy Access Issue 17 which pays 1.41 per cent, then you would gain £1,513.29 on £10,000 and £7,566.47 on £50,000.
Boost by 2030: £7,064.21
> Check the best savings rates in our independent best buy tables
2. SEAL YOURSELF A MORTGAGE DEAL
A homeowner with a £150,000 mortgage taken out over 25 years would pay £833.75 per month on the current average standard variable rate (SVR) of 4.5 per cent.
If you know you will be staying put, it might be worth locking into a fixed mortgage deal while rates are at record lows.
A homeowner with a £150,000 mortgage taken out over 25 years would pay £833.75 per month on the current average standard variable rate (SVR) of 4.5 per cent.
But mortgage broker L&C says that if they locked into a ten-year fix at 2.20 per cent, then they would pay £650.49 a month, saving £183.26.
So, if the SVR did not vary for a decade, the deal would save a homeowner £21,991 by 2030.
If the homeowner opted for a five- year fix at 1.39 per cent, and was able to renew the deal halfway through the decade, they would save £241.57 a month — or £28,988 over ten years.
Boost: £28,988
> Calculate how much a mortgage would cost you, with our mortgage-finder tool
3. TIME TO GIVE UP THOSE BAD HABITS
Sums from investment platform Hargreaves Lansdown show a ten-a-day cigarette habit costs us £1,971 a year.
Two bottles of £7 wine a week also sets us back £728 a year, while five takeaways a month costs £456.
Giving up all three could save £3,155 a year or £31,550 over a decade. Hargreaves says that could be turned into £40,750 if invested in stocks and shares with an average 5 per cent growth.
Boost: £40,750
> Work out how your savings and investments could grow
Putting cash away into a pension means every penny you pay in is topped up by your employer and tax relief from the Government
4. PAY ATTENTION TO YOUR PENSION
Putting cash away into a pension means every penny you pay in is topped up by your employer and tax relief from the Government.
A commitment to saving more over ten years will see your money snowball.
Insurer Royal London calculates that a 28-year-old earning £26,000 would have a pension pot of £33,915 after ten years if their salary grew by 3 per cent a year, they saved 8 per cent of their pay, and received investment returns of 5 per cent every year.
But by saving a further £10 a week, their pot would grow to £44,513 in a decade — an extra £10,598 for adding just £5,200.
Boost: £10,598
> The best self-invested personal pensions (Sipps) for investors
5. DON’T SETTLE FOR PRICEY BILLS
Significant savings are still available to those who shop around when it comes to household bills.
Bills comparison site uSwitch says those who switched gas and electricity suppliers saved up to £477 last year.
The site also says the average saving for those who switched mobile phone contracts was up to £148, while those who went for the cheapest broadband deal saved up to £192.51.
If the market did not change, switching could save you a total of £817.51 a year or £8,175.10 by 2030.
Boost: £8,175.10
> Work out if you could save on your energy bills
6. INVESTING COULD BE THE BEST THING
If you don’t touch your savings for the next decade, returns on stocks and shares Isas could be much more profitable than the paltry rates currently on offer with cash Isas.
Investment platform AJ Bell says £10,000, with returns of 5 per cent after fees, would be worth £16,289 after ten years. If this sum was left in a cash Isa paying 1 per cent a year, it would be worth just £11,046 in a decade.
Boost: £5,243
> The best and cheapest DIY investing platforms
7. GET PAID TO SPEND ON A CREDIT CARD
Some credit and debit cards offer cashback rewards. One top-paying deal is the American Express Platinum Cashback Everyday Credit Card which pays 0.5 per cent on purchases up to £5,000 and 1 per cent on those above.
So if you spent £1,000 a month, you’d earn an extra £95 a year.
Boost: £950
> The best credit cards for spending and rewards
8. TAKE STOCK OF YOUR DIRECT DEBITS
Clearing out unused subscriptions and unnecessary direct debits — such as Amazon Prime — could save the average Briton £640 a year, says charity Citizen’s Advice.
AJ Bell says swapping an £80 monthly deal with Sky for an £8 Now TV package would save you £864 a year.
Boost: £15,040
> Check if you could save money on TV and broadband
Clearing out unused subscriptions and unnecessary direct debits — such as Amazon Prime — could save the average Briton £640 a year
9. WITH INSURANCE, DISLOYALTY PAYS
Insurers often save their best deals to attract new customers, so shop around when renewing policies.
Price comparison site Moneysupermarket.com says Consumer Intelligence research shows that around half of all consumers could save up to £270.32 on car insurance and up to £90.17 on home insurance.
Boost: £3,604.90
> Ten tips to cut the cost of your car insurance
10. SAY NO TO THOSE COSTLY CHARGES
Fees eat away at money invested. Investment platform Vanguard says a £10,000 fund would be worth £16,289 after ten years — assuming a market return of 5 per cent.
However, if the platform were charging a higher management charge of around 2.5 per cent, the fund would be worth just £12,801.
If the investment was subject to a cheaper charge of 0.4 per cent, the fund would be worth £15,679 by 2030.
boost: £2,878
Total savings boost by 2030: £123,291.21
> How to be a successful investor: Download our free guide
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