Tom Gould, 26, is an IT engineer from Bristol. He plans to take a year out from his construction firm job to travel with his girlfriend, Kerry.
He wants to tie up his savings before he leaves so they can work for him while he's away – but with the banking industry in such a mess he can't work out his best options. He says: "This will be the trip of a lifetime – we're hoping to backpack around south-east Asia before heading to Australia. I'd like to know how to maximise my savings while I'm away without having to constantly monitor rates or financial markets."
Annual income: £37,000.
Monthly savings: £1,200.
Savings: £20,000 in an online HSBC savings account and £6,000 in an HSBC Isa account.
Monthly outgoings: £1,880.
Student loan: £10,000.
After five years in work, Tom has built up substantial savings and hopes to buy a property within five years. Here to help are Joseph Clark from No Monkey Business, Fiducia Wealth Management's Marc Ruse and David Brunning from Brunning Newman Houghton.
Interest rates will probably remain low while Tom is away and he should be wary of picking what looks like a good deal if it's likely to fall. His savings account with HSBC is broadly competitive, but for easy access abroad, Ruse thinks he should investigate the web facilities of banks like Standard Life and ING. He says: "For a relatively modest sum, and if Tom needs to access the funds while travelling, it would make sense to use one of the established internet-based accounts." Any money which does not need to be accessed could be tied up in a combination account like Investec's High 5. Ruse says: "This pays the average of the best five savings rates available on sums over £25,000 that can be tied up for three months."
Tom should prepare for possible accidents while abroad. Brunning says: "Travel insurance is inexpensive as most people don't claim, but given Tom's intended destinations, possible sporting activities and the fact he will be away for a year, he needs a specialist policy."
As the interest rate on a student loan is likely to be extremely low, Clark recommends paying it off as slowly as possible so that Tom's money is free to be used.
Tom has given himself just five years to build up a deposit on a house, and Ruse thinks the only way is through hard cash saving. "Five years is too short a period to consider investments," he says. "And despite low interest rates, he needs the security of knowing the capital is available." Nearer the time, he should also seek advice on legal issues if he plans to buy with his girlfriend. Clark says: "It is difficult to discuss, but if you end up buying a house with your girlfriend, you may want to make legal arrangements to safeguard the proportion of the home, perhaps buying the house as tenants in common, rather than jointly."
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