Save Money 20

Published on April 20th, 2014 | by Pete


Investing in the Future – Things to Consider in Your Twenties

For many people in their 20s, thinking about their future will be the last thing on their mind. Once you have your first proper job, it’s all too easy to enjoy the freedom that comes with a regular income and instead just focus on the present. However if you’re a regular viewer of the news then perhaps sitting up and taking notice of the financial world may not be the worst idea in the world. If that sounds scary, it needn’t be; here are some simple things to consider that won’t compromise your current lifestyle but will set you up for the future:

A pension


A pension is can be simply defined as a long-term savings plan – you make regular contributions which are invested so that they grow throughout your career and then provide you with an income in retirement. Generally you’ll be unable to access the money in your pension until later on in life, ensuring its security.


You can also gain tax relief on your pension, so some of your money that would have gone to the government as tax now goes into your pension pot instead. There are different types of pensions available, including the state pension, a personal pension, or a workplace pension, each with different ways to start saving for your future. When you retire, you can take up to a quarter of your pension pot as a tax-free lump sum. The rest of your savings must be used to provide an income, which is then taxable.


A cash ISA


Cash ISAs are savings accounts that pay tax-free interest, with a limit to what you can save each year – this currently stands at £5760 a year. Whilst your original savings are protected, and you won’t have to pay any tax on the interest you earn, as different ISAs are offered by different providers, it pays to shop around and find the best option for you and your savings.


Stocks and Shares ISA


Alongside a Cash ISA, you can save up to £11,520 in a Stocks and shares ISA. However it should be noted that its value can go down as well as up, and there is no guarantee you will get back the original investment, so be sure to do your research before investing.


 Savings Account


Many building societies and banks offer savings accounts, each of which will offer varying features and interest rates. Usually there will be no limit on the amount you can save, but there will often be different benefits on offer for those saving more. A savings account can be a useful addition if you reach the limit on a cash ISA, for example.


What next?


Even if you don’t think you’re quite ready for any of these specific savings options yet, you can still be more careful with your money as you go along. Think about prioritising current debts (e.g credit cards, store cards, finance agreements) to get in the habit of careful financial planning.

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