Growing your nest egg, little by little

bird and Easter egg to indicate ISA nest egg.

Savings

Julie Hutchison

28th March 2013 at 6:45pm

Other News and MoneyPlus Blogs have mentioned how Junior ISAs, as well as pensions, are options when it comes to building a nest egg for children.

But what about your own savings?

Regular ISAs for us adults are different. Over the last 15 years they have become a prevalent savings option, which can offer a great deal of flexibility. While pension contribution limits have fallen in recent years, ISA contribution limits have increased.

ISA limit

In fact, the ISA limit for tax year 2013/14 is £11,520. Up to £5,760 of that can be saved in a cash ISA, while the remainder – or the entire amount – can be invested in a stocks and shares ISA.

So let’s assume someone has been saving the maximum amount into a stocks and shares ISA over the last 15 years. They could have built up a pot of around £121,000 without taking into account any growth or income.

This may seem like an overwhelmingly large amount. But break it down into monthly contributions, spread over 15 years, and you can see how it instantly becomes more feasible.

The maximum monthly savings limit for a stocks and shares ISA will be £960 (tax year 2013/14).

Long-term view

Thinking about how much you can save each month could make your goals seem more manageable.

And contributing smaller chunks regularly will help build up your nest egg in the long term.

This is a key point to consider if you’re looking at the new tax year and reviewing your finances this Easter. Don’t be put off by the big number – it’s all about what’s affordable for you.  And listening to the views of people who were asked about this topic – you could avoid their number one financial regret : not starting to save early enough for retirement*.

Get more information on Stocks and Shares ISAs and how they work.

*YouGov plc research, January 2013

As with any investment the value of a fund can go up or down and may be worth less than what was paid in.  Returns are dependent on investment performance and are therefore not guaranteed.

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