Hey big spender...
New research reveals that nearly 50 per cent of adults in the UK have less than £500 in personal savings
Sunday 25 March 2001
It's been a long time since the state pension was considered adequate for a comfortable retirement, which is why the Government has been trying to encourage us to become a nation of savers. But it's still got a long way to go. Research from NOP, on behalf of M&G Investments, reveals that nearly 50 per cent of adults in the UK have less than £500 in personal savings.
Jeffrey Mushens, director of sales and marketing at M&G, says the survey's finding that 21 million or so adults had such small amounts saved was a surprise. "But the biggest surprise was that many of these people regretted they hadn't got more saved and didn't start saving earlier."
Even though 40 per cent of respondents were worried they hadn't saved enough money, and 39 per cent wished they had started saving earlier, these fears were not enough to prompt them to do anything about it, it seems.
A fifth of the population do not save at all on a regular basis, while a third saves less than £50 regularly. The amounts suggest that retirement for some will be difficult.
According to Virgin Direct, anyone looking to amass a £450,000 pension fund would need to pay £121 a month into such a scheme from the age of 18. Leaving it until 25 would cost the saver £188 a month; from 30, that sum would be £261. About £527 a month would need to be salted away for those reaching 40 before starting a pension scheme.
"Unfortunately, putting off a pension can prove to be an expensive delay," says a Virgin Direct spokesman. "A pension should be started as soon as you can afford to, otherwise you can find yourself with a financial mountain to climb."
The M&G research suggests there is little variation in saving patterns country-wide. Habits and attitudes are similar regardless of age, gender or location. Some people might not be able to save, but, according to M&G, this is not the main reason why so many have less than £500 put away.
"The funny thing is it's not always that people haven't got the money to save, but that they just don't get around to organising it," says Mr Mushens.
The majority of people - 88 per cent - would be prepared to make sacrifices to save more. Six in 10 of the respondents admitted they could easily put aside an extra £10 a month - which would be better than nothing.
Mr Mushens comments that opening an account and setting up a direct debit is easy. "It takes five minutes to set up a direct debit - I've tried it out." M&G has lowered its minimum investment requirement to £10 a month.
Traditionally, savers first tend to open an instant access savings account with the bank that runs their current account. But this might not be the best option since high-street banks pay paltry interest rates - ensuring virtually no growth on savers' capital.
Lloyds TSB, for instance, requires a minimum of £250 to be held in a flexible savings account but pays only 1.2 per cent interest. HSBC requires a £1 minimum balance but its rate of interest is still a measly 1.5 per cent.
Opting for an internet-only account is a better option; Nationwide's e-Savings pays 6.7 per cent. But a mini cash individual savings account (ISA) makes most sense as the interest is tax-free and you can invest up to £3,000 a year. (See the table for best rates.)
Many are still unaware that money put into an ISA is not locked away. Introduced two years ago, ISAs were designed to be much more flexible than the personal equity plans (Peps) and tax-exempt special savings accounts (Tessas) they replaced.
Investors used to be penalised by a lower rate of interest if they wanted to touch their Tessa money before the end of the five-year term. Many people falsely assume ISAs carry the same penalties. But mini cash ISAs are little different from savings accounts, apart from being tax free. Some require you to give notice before you withdraw money but most are instant access.
Once you have built up a cash reserve, collective funds - unit trusts, open-ended investment companies and investment trusts - are worth considering. Although the risk is higher than with savings accounts, the potential returns are greater. You do not have to pay in a lump sum and you can make monthly instalments.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 All Blacks Aaron Cruden misses New Zealand flight after drinking session, has brilliant excuse
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': TV reporter Charlo Greene quits live on air in spectacular fashion
- 4 Clothes store Joy angers mental health campaigners with Twitter exchange on bipolar disorders
- 5 Scotland could still declare independence – even without referendum, says Alex Salmond
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...
Day In a Page
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize