20 Something Saver - Good at saving, know nothing about how grow those savings...any advice?

_novice_123

New Member
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5
I'm going to be 25 this year and want to take more control over my finances. How to do that is another question o_O I come from a family of hard workers and good savers who have never struggled financially, but wouldn't describe any of us as particularly financially savvy!

Although my salary is pretty small (take home is 21k, I work in the arts!), I have always been a good saver, and COVID has actually worked in my favour in terms of boosting my ability to save. Up to this point, I have always saved with a specific goal in mind e.g. travelling, education, spending a year studying in Canada etc. Realistically my next goals are probably a cheapy car in the next few years, possibly some further investment in my education and eventually a deposit on a house in my 30s. I roughly follow the 50% of salary on needs, 30% wants, 20% saving rule...is that even a rule?...and I find it pretty manageable.

I generally aim to save a minimum of 20% of my income per month, but thanks to miraculously cheap rent (I must have a Dublin based guardian angel), I can usually stretch to more than that, and during COVID, with no social life or travel expenses I have been able to make that 30%+ since Feb. This leaves me with €4200 - €6300 savings annually. I have no debt, no outstanding loans and no credit card, and my rent, utilities, transport, food, and subscriptions make up around 46% of my income (€9550ish).

Currently my savings live in an account that was a student saver account, and since I ceased being a student, has converted into that bank's standard saver account, which I'm pretty sure has an interest rate of 0.01%. By the end of they year, I'm hoping to have saved around €9000 total, and basically want advice what is the smartest way to save going forward?

Question 1: Should I try to shop around for savings accounts with higher interest rates? (I already know the answer is yes, but have no idea where to start. Any tips on what to look for?)


Question 2: Is it ridiculous for someone like me to start thinking about investing €500-€1000 a year/every second year in longer term investments e.g. stocks/bonds?? (it's ok to say yes btw). If is this is ridiculous, what options do I have to grow my money over the next few decades? Everywhere I look, people advise that starting investing young is key to making compound interest work for you in the long term, but again, have LITERALLY zero idea where to start!

Question 3: Starting from a few months ago, I pay 3% of my salary to my work pension, which they match with contributions up to 5.5.% - is this all the investment a gal like me should aim for this side of 30??

I realise that compared to most of the posts on here, this seems like it's been written by an actual child, but I live by the rule that its better to ask a stupid question to get on the right path, and asking nothing and wandering around in the dark.

Any and all advice appreciated!
 

Sarenco

Frequent Poster
Messages
6,252
Question 1: Should I try to shop around for savings accounts with higher interest rates? (I already know the answer is yes, but have no idea where to start. Any tips on what to look for?)
Your best option is to use a regular savings account. Here's a list of best buys -
Question 2: Is it ridiculous for someone like me to start thinking about investing €500-€1000 a year/every second year in longer term investments e.g. stocks/bonds?? (it's ok to say yes btw). If is this is ridiculous, what options do I have to grow my money over the next few decades? Everywhere I look, people advise that starting investing young is key to making compound interest work for you in the long term, but again, have LITERALLY zero idea where to start!
I would just stick with a regular savings account for your house deposit. Keep it simple!
Question 3: Starting from a few months ago, I pay 3% of my salary to my work pension, which they match with contributions up to 5.5.% - is this all the investment a gal like me should aim for this side of 30??
At your age and tax bracket, I think you should limit your pension contributions to the minimum necessary to get your employer match.

If you have any say in the matter, your pension should be invested 100% in a global equity fund.

Your medium-term priority should really be putting together a deposit to buy a place of your own - you have plenty of time to ramp up your pension contributions later in your career.

Incidentally, I think you have an admirable grip on your personal finances. I wish I had been as sensible when I was your age!:D
 

_novice_123

New Member
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5
Do you have a financial goal? Like a car or house?
Hi DeeKie,

No immediate short term goals. Potentially i might look into a getting a car in the next 5 years, but currently due to my proximity to my work and my lifestyle, I really don't need one any time soon. Ideally I'd love to be in a position in my early 30s to put a deposit on a first place.
 

_novice_123

New Member
Messages
5
Your best option is to use a regular savings account. Here's a list of best buys -

I would just stick with a regular savings account for your house deposit. Keep it simple!

At your age and tax bracket, I think you should limit your pension contributions to the minimum necessary to get your employer match.

If you have any say in the matter, your pension should be invested 100% in a global equity fund.

Your medium-term priority should really be putting together a deposit to buy a place of your own - you have plenty of time to ramp up your pension contributions later in your career.

Incidentally, I think you have an admirable grip on your personal finances. I wish I had been as sensible when I was your age!:D
Hi Sarenco,

Extremely helpful thanks a mill! Really helpful resources! 3% is the minimum contribution in my workplace, and our pensions scheme is provided by Irish Life.
 

mtk

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Messages
532
If employer matches Pension contribution up to 5.5% I would put in 5.5% Of my own money to get free money !
 

moneymakeover

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Messages
595
Hi Sarenco,

Extremely helpful thanks a mill! Really helpful resources! 3% is the minimum contribution in my workplace, and our pensions scheme is provided by Irish Life.
You should probably increase to 5.5%
It's not going to break the bank
And will result in you adding to your pension by
your 2.5% + matching employer 2.5%
 

_novice_123

New Member
Messages
5
You should probably increase to 5.5%
It's not going to break the bank
And will result in you adding to your pension by
your 2.5% + matching employer 2.5%
Hi moneymakeover and mtk,

Interesting idea, and probably something I might look at for 2021, as my salary goes up incrementally each year.
 

llgon

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Messages
574
Realistically my next goals are probably a cheapy car in the next few years, possibly some further investment in my education and eventually a deposit on a house in my 30s.
Firstly well done on the excellent management of your finances. I think the key decision at your stage is career choices and investment in education as you have mentioned. As you have said you do have a relatively small salary. Despite your excellent record of saving you will find it very difficult to afford a house in Dublin on your 30's unless there is a significant change in your circumstances.

Do you expect that in your current job your income will increase significantly in future years? Have you a career path in mind within the Arts where you can increase your income? I think investment in further education would be very wise if it will help to progress your career. Maybe you could consider a different career path? But if you're happy doing what you're doing, stick with it.

Don't get a car if you can manage well without. Even if it's cheap the running costs won't be. And to repeat the advice of the previous posters increase your pension contribution to 5.5% if your employer is matching it. And put your savings in a regular saver account rather than stocks.
 

_novice_123

New Member
Messages
5
Firstly well done on the excellent management of your finances. I think the key decision at your stage is career choices and investment in education as you have mentioned. As you have said you do have a relatively small salary. Despite your excellent record of saving you will find it very difficult to afford a house in Dublin on your 30's unless there is a significant change in your circumstances.

Do you expect that in your current job your income will increase significantly in future years? Have you a career path in mind within the Arts where you can increase your income? I think investment in further education would be very wise if it will help to progress your career. Maybe you could consider a different career path? But if you're happy doing what you're doing, stick with it.

Don't get a car if you can manage well without. Even if it's cheap the running costs won't be. And to repeat the advice of the previous posters increase your pension contribution to 5.5% if your employer is matching it. And put your savings in a regular saver account rather than stocks.
Hi Ilgon,

Thanks for the advice. There was a lot of opportunity for career development and salary progression with my employer pre-COVID, but its likely that will change somewhat in the year ahead, as my company and the sector in general takes a hit. For now I'm going to sit tight, until the smoke clears a bit. I looove my job, but definitely didn't plan on it being a long term commitment when I started there 2 years ago on a a part-time basis, so further education or upskilling is something I'll definitely be looking into going forward.

Really genuinely appreciate everyone's input and helpful advice!
 

Itchy

Frequent Poster
Messages
348
I would capitalise on your interest in your finances and read a few books that will teach you how to think about money for the long term. It might frame how you organise your finances as your lifestyle evolves. I’m sure if you search this site you will find a recommended list.
 
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