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Guest Post: How to Guarantee Financial Security Whenever You Retire

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Today I am pleased to bring you a guest post from my money blogging colleague Jennifer Kempson. Jennifer blogs at https://mamafurfur.com.

In her article Jennifer sets out some strategies to ensure you have enough money to enjoy your retirement, even if it’s not too far away!

Over to Jennifer, then…

They say hindsight is a wonderful thing, and truly as we reach the later years of working life and approach retirement, we may secretly wish we had made our retirement resources a priority and regarded them as a key resource to help fulfil our passions and achieve our long-term ambitions.

Money, much like health and energy, is one resource that we will look back on and wish we had taken better care of during our younger days, so we can look forward with pleasure and excitement to when the time-freedom of retirement allows us to do whatever we dream of.

Reading this right now you may feel that it is too late for you to recover your potential financial security for your retirement, but I’m excited to share with you a few ways that you can invest in your future even when retirement is on the horizon in the next 10-15 years.

Make a plan and start seeing it happen!

Firstly, I will say that I am a firm believer in “putting your own oxygen mask on before anyone else”. And the very best investment financially or otherwise you can make for your future is to sort your own financial security as a top priority.

You absolutely need to write down your financial goals and desired experiences for your retirement, and start getting excited about this and be as specific as possible, so that you know exactly how much money you will require to make it happen.

Like time spent with our children and loved ones, if we master our relationship with money and the way we feel about it today, this will have a huge compounding effect on our short- and long-term happiness in future. I talk more about the habits and thoughts that can reshape your relationship with money in my new book, The Master Money Blueprint, which sets out the 26 timeless money principles and habits that I believe can change your financial future.

Pay off your liabilities as soon as possible

One of the most beneficial things you can do for your financial future is to become as debt-free as possible.

Make better money relationship habits starting today and commit to overpaying on everything you have as a liability against your name.

This could include your mortgage or car payments, and is especially crucial if you have credit card debts or loans. Commit to paying these down as quickly as possible and never returning to debt again.

A home with its mortgage completely paid off will provide you with safety and security in future, and when the time comes can be left to loved ones. But more important than that would be the mindset that your home is secure and safe for your happiness both now and in the future.

I like to use a great principle called The 10% Rule, mentioned in more detail in my book and on my blog at www.mamafurfur.com. This can and should be applied to every debt you have – any outstanding mortgage, car payments, loans, etc.

Commit to paying 10% over the monthly repayment required each month as a default. That small action will do two things. Firstly, you will not really notice too much discomfort. For a mortgage of, say, £400 a month, finding a further £40 could be as simple as giving up that gym membership and going for walk with friends, getting some free weights in the house, learning yoga from YouTube, and so on. It could be giving up all the unused packages from cable TV for a few months to see if you really miss it. It could be starting a small sideline business at home to make some extra money, or saving on your food and shopping purchases by eating one less takeaway a week. The choices are limitless.

That action of paying 10% more each month means you will make the equivalent of 1.2 extra payments towards reducing your debts per year. For a 25-year mortgage, for example, this could result in the debt being fully paid off in just over 22 years instead. That is a nearly three years off your home loan from a small change without causing too much stress to your day-to-day living. The second benefit is to your mindset, which is priceless – you will quickly see that money really is a resource to deploy based on your goals and long-term plans. Overpaying then becomes a joy, as much as it might be difficult to see that at the start, but the smallest actions usually do change us for the better when we let them.

You can find out more about how to pay off your mortgage and large loans quickly using my blog post and videos dedicated to the topic here.

Invest using an investment ISA

An investment ISA (Individual Savings Account) allows you to save up to £20k tax free in stocks and shares every year. This type of savings account could allow you to create a passive income to supplement a pension. You can have a cash ISA and an investment ISA if you wish, as long as you don’t exceed the £20k annual total contributions allowance.

Investments in ISAs are not liable for income tax or dividends tax. Neither do you have to pay capital gains tax when you sell them. They are available from most banks and investment companies.

Like any type of investing, we need to purchase funds based on our goals, requirements for the money long term, and our tolerance for risk.

Investment returns are not guaranteed. However, generally you can expect to see a 4% return on your investments if you pick solid mutual funds (collections of stocks purchased together, spreading your money across a wide range of similar companies) such as Vanguard’s LifeStrategy 100% Equity Fund or reliable low-cost index funds such as the S&P 500. It is also not uncommon to see growth rates of an average of 9.5-10%.

At the later part of your life, if you are hoping to use the power of compound interest and the stock market to gain higher returns than a normal savings account, then I strongly advise doing as much research as you can into the funds you decide to pick.

With investments, we need to assume we are leaving them a minimum of 5-10 years before withdrawing the money, and must not let the ups and downs of the stock market test our emotions.

The value of the stocks once we purchase them is only relevant once we need to sell them, so best mindset practices say to ignore the current day value until you absolutely need them.

Another benefit of using an investment ISA is that you will have access within a few days to your money should your circumstances change and you find you need the money sooner.

I strongly recommend every adult has an investment ISA, as it is currently one of the few ways to get high-interest returns on your long-term savings. It could even allow you to build a substantial ‘pot’ that allows you to achieve complete financial freedom for you and your family in future.

I call an investment ISA a passive income source, as the money generated is created by companies returning some of their profits in dividends, and/or the value of the stocks and shares purchased going up.

We do not have to exchange our time for this income, therefore it is completely passive and grows without any effort from ourselves. The beauty of the stock market is that our money will remain active until we choose to sell our stocks, so it will continue to create more income for us in the background. We can simply withdraw a small portion of it each year to live off, and some of the increase will still remain, adding to our wealth total despite the withdrawn money.

Let’s look at some examples of what we could potentially end up with if we took out an investment ISA even with a short-term goal of accessing the money within 10 years. I will use a withdrawal rate (how much we draw from our account every year as a source of income) of 3.75%. This is regarded as a good average by most financial advisors and institutions.

Starting with no savings at all at age 50, if we contributed the maximum of £20k a year to an Investment ISA with a withdrawal rate of 3.75% a year on average and saw only a 4% return on investment, then using the power of compound interest and reinvesting any dividends or growth, we would have at age 60 a total investment pot of around £246k. If we withdraw 3.75% of this a year, as stated above, after 10 years we could withdraw £9.2k a year of interest (tax free). That would mean an extra £800+ in your pocket every month through your investment ISA savings alone.

Leave the amount until you are officially retiring at age 65, after 15 years of consistent effort and contributions, we could see approximately £411k with an income of £15k a year or £1200 in our pocket every month.

If we were to see a 10% return on investment each year, the total fund within 15 years of maxing out our contributions would be approximately £696k and an income of £65k a year tax free! That is probably more than any retirement could use up, and of course this is purely using our investments as a source of income and not including a state or employer pension. That means you could end up being able to use the interest generated from your investments each year to live off indefinitely!

Another great point to remember is that an ISA is per individual, so if you are a couple you can open one each and double your achievements together.

What better gift than your time and freedom back to use as you wish could you give yourself and your loved ones?!

If you would like to know more about the basics of the stock market, or how to use an investment ISA to retire earlier than planned, please check out my blog posts here:

https://mamafurfur.com/blog/investing-beginnersuk/

https://mamafurfur.com/investing/

Master your money and create your best life – your greatest investment in your future!

Make it a priority to learn how to master your money and use it to direct and create your best life.

Successful people in every walk of life leave clues along the way, so however you feel inspired to live your life, do it with style and use money as the tool to get there, taking your loved ones along with you for the ride.

Think of your upcoming retirement as an opportunity to explore new opportunities and even business ideas. Learn as many new skills as you can in areas that make your future life seem exciting, and watch as the world really opens up to you to design the life you always wanted in your retirement.

Here’s to a great future ahead on your terms, with money as an abundant resource to fuel it!

About the author

Jennifer Kempson, aka Mamafurfur, is a 30-something Scottish working mum with a passion to help others create the work-life balance and lifestyle they desire with time and financial freedom, sharing smarter spending, saving and lifestyle strategies.

Outside of her blog, she recently released her first book titled The Master Money Mindset: How to Master Your Money and Create a Powerful Money Mindset, sharing 26 timeless money principles that will allow you to design and shape your future using money as the resource it should be. The book is available on Amazon Kindle and as a paperback now.

Currently voted UK Money Vlogger (Youtube Creator) 2018, and finalist for the UK Blog Awards Finance Blog of the Year 2019.

Jennifer Kempson

 

Many thanks to Jennifer (right) for a valuable and thought-provoking guest post. Please do check out her blog at www.mamafurfur.com and her YouTube channel at www.youtube.com/c/mamafurfur.

I do agree with Jennifer about the value and importance of paying down your debts. Not only will this reduce the capital outstanding, even more importantly it will reduce the interest you have to pay on that capital in future. Other things being equal it’s best to pay off high-interest loans first (though check whether there are any penalties for doing this). Mortgage rates are historically low at the moment so paying extra every month won’t have as big a benefit, but of course there is still much to be said for going mortgage-free as early as possible.

I also agree with Jennifer about the value of saving as much as possible using ISAs. And for long-term saving especially, you are likely to get much better returns from investment (stocks and shares) ISAs than cash ISAs. Do just bear in mind that pension contributions are another great way of saving for retirement, and you get tax relief from the government up front on them.

Finally, I do of course appreciate that not everyone is going to be able to save £20,000 a year into their ISAs. Whatever you can find, however, putting it into ISAs (and pensions) will ensure you get the maximum benefit in years to come. And the earlier you start, the more time your savings and investments will have to weather any ups and downs in the financial markets and grow. You can read some ideas for boosting your income so you can afford to save more for retirement in the Making Money category on my blog.

As always, if you have any comments or questions about this post, please do leave them below.

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Pay Less on Your TV Watching - Try Cutting the Cord

Guest Post: Pay Less On Your TV Watching – By Cutting The Cord

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Today I’m pleased to bring you a guest post on how to save money on your television watching by using free (and low-cost) services rather than expensive cable and satellite TV packages.

It’s by Or Goren, who runs Cord Busters, a UK blog for people who want to ditch their expensive cable/satellite TV bills and become – as Or calls it – cord cutters.

Over to Or, then…

 

We live at what many call ‘The Golden Age of TV’ – with numerous high-quality programmes (and plenty of reality TV nonsense, if that’s your cup of tea), it seems like there’s always something good to watch. But the abundance of TV comes with a high price tag – the high price tag…

Many homes treat Sky (or competing pay-TV offers like Virgin Media, BT, etc.) as if it’s the default – and only – way to watch TV. We’ve come to take those £40-50-60/month contracts for granted, and we assume it’s too much of a hassle to find other – cheaper – ways to enjoy TV.

Luckily, this golden age of TV has also brought with it new ways to watch TV, that don’t involve long-term, pricey contracts. From Freeview to Netflix, here are some of the methods you can use to still enjoy lots of good programmes – without paying too much.

Cut Your Cable TV Cord

Cord cutting is a term that crossed the pond over from the US. It basically means getting rid of your pricey cable TV (or satellite TV, in Sky’s case) plans, and moving to cheaper pay-as-you-go alternatives that usually involve TV that streams over your broadband connection.

The first step is to actually cancel your Sky (or similar) plan. If you’re still under contract, you’ll have to wait for it to end (or pay a fine) – so pay close attention to the relevant dates. In any case, it’s probably best to try some of the methods mentioned here, before you actually cancel Sky – to see if they fit your home and your lifestyle.

Freeview – 100% Free TV

The easiest and most cost-effective way to watch TV in the UK is via Freeview. It’s a joint venture of the BBC, Sky, ITV, Channel 4 and Arqiva, that provides over-the-air access to more than 100 TV and radio channels (including the BBC, ITV, Channel 4, Channel 5 and plenty of others), without ANY monthly payments.

Despite what some pay-TV companies would have you believe, you don’t need THEIR equipment to watch Freeview. You only need two things:

  1. A TV aerial: If you don’t have one on your roof (many still do), you can use a very simple indoor aerial (a good one will cost around £10-20). How well it’ll work depends on the reception in the area where you live – you can check the estimated coverage with the Digital UK Postcode Checker.
  2. A Freeview Receiver: If you bought your telly after 2010, it should already have a Freeview receiver built-in. So you just connect your TV to the aerial – let it scan for channels – and that’s it, you have all the Freeview channels right there, with a convenient Electronic Programme Guide that lets you see what’s on, 8 days ahead.

If, however, your telly is older, or if you want more advanced features, you can buy a dedicated Freeview box.

Some Freeview boxes are also recorders, and you can use them to record TV programmes via the electronic (on-screen) guide. Then, you can watch those recorded programmes whenever you wish, and even fast-forward the adverts. (You can see some of the Freeview boxes I recommend here.)

If Freeview reception isn’t good enough where you live, there’s also Freesat – it’s a similar service that relies on satellite dishes. If you have a Sky dish, you can – in most cases – use that same dish to watch Freesat. You’ll just need to buy a Freesat receiver – but again, there are no monthly costs for the service itself.

Internet-Based TV

If you want more TV than what Freeview has to offer – there are still cheaper alternatives to Sky. You’ve probably heard of Netflix – which is a service that streams TV programmes and movies to your telly (or your computer, or your mobile phone), using your broadband connection.

Netflix (which currently costs £7.99/m for their most popular tier) has a library of thousands of TV programmes and movies. Another competing service is Amazon Prime Video, which you can get either by being an Amazon Prime subscriber (£79/year) or by paying £5.99/month.

In order to be able to watch these internet-based streaming services on your telly, you need a device that will stream the content to it.

One option is to buy a Smart TV, which is capable of connecting to your broadband service (either via WiFi or with a cable to your router), and comes with some of the popular streaming apps, such as Netflix and Amazon.

You can also buy a dedicated streamer that connects to your telly. While some are a bit complicated and fiddly to use, the Amazon Fire TV is quite user-friendly, comes with a remote control, and can even be operated with your voice.

NOW TV – Sky, but For Less

Some people still swear by Sky TV’s programming. There’s a good reason for that – Sky has the rights to many of the hottest TV shows from America, and it’s hard to get those elsewhere.

However, there’s still a way to save money – even if you want Sky’s channels and programmes – and that’s their NOW TV service.

NOW TV was supposed to be Sky’s answer to Netflix, and indeed it’s a similar service: for a cheap monthly fee (and no long-term contract), you get access to a library of TV box-sets, movies, and even Sky Sports (depending on which plan you subscribe to).

Just like Netflix, NOW TV streams via your broadband – so you’ll either need a Smart TV that supports NOW TV, or a dedicated streamer. They also sell their own NOW TV streaming sticks.

Unlike Netflix and Amazon Prime Video, NOW TV has different “passes”, depending on the content you’re interested in: £7.99/month for the TV package, £9.99/month for the Cinema package, £2.99/month for the Kids package, and £33.99/month for Sky Sports.

Once you get over the hesitation of installing these devices, you’ll open up a whole new world of TV streaming, with premium content from all around the world. And while most of the content does incur a monthly cost, it’s still a lot cheaper than a cable-TV contract. Plus, it’s flexible – you can cancel Netflix, for example, whenever you want – and re-subscribe with the touch of a button.

Happy Cord Cutting!

 

Many thanks to Or for a great money-saving article. Don’t forget to check out his Cord Busters website.

I agree with everything Or says, and am pleased to reveal that I am a ‘cord cutter’ myself. I recently bought a Toshiba 32″ Smart TV, but also use an Amazon Fire TV stick and a Chromecast device (both of which I also recommend).

I have so far resisted the siren call of Netflix, but I do have Amazon Prime. I originally subscribed to this service for the free next day deliveries, but increasingly take advantage of the free films and TV shows as well. Currently I am reliving, well, not exactly my youth but my early middle age, by watching 1990/2000s cult horror series Buffy, The Vampire Slayer, after I discovered that all seven series were available free for Prime members. Incidentally, if you are interested in giving Amazon Prime a 30-day free trial without obligation, here’s a link you can follow (affiliate).

If you are currently paying up to £50 a month for a cable or pay-TV service, you could save hundreds of pounds a year by switching to free or lower-cost services such as those described in the article. So why not take the plunge and join the growing crowd of people who (like myself) have ‘cut the cord’ and are saving money every month as a result.

As always, if you have any comments or questions about this article, for me or for Or 🙂 please do post them below.

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Five Things You Really Need to Know About Monetizing Your Blog

Guest Post: Five Things You Really Need To Know About Monetizing Your Blog

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Today I am pleased to bring you a guest post from my fellow UK money blogger (and freelance writer) Ruth Hinds, who blogs at Ruth Makes Money.

Ruth’s post is about blogging, a subject I haven’t previously got around to covering on Pounds and Sense. But, of course, it’s a major way I make money myself these days, and it’s also an option that is both accessible and appealing to many older people.

Over to Ruth then…

 

Have you ever thought about starting a blog as a way to create an extra online income stream? Or do you have an existing blog that you write just for pleasure, and sometimes toy with the idea of turning it into a money-making machine?

Though I’ve been a freelance writer for the past seven years, it’s only around 12 months since I took the leap and created my own blog, dedicated to documenting my journey towards creating a full-time income online, and what’s worked for me along the way.

Whilst it’s relatively early in my blogging journey, I’m happy to admit that monetization was on my agenda from day one. As well as help people to create their own freedom away from the constraints of a traditional job, I was eager to learn the ropes quickly and add another income stream to my box of tricks.

It’s safe to say that I’ve reached that goal, and I’ve also learned a ton of valuable lessons along the way when it comes to creating a profitable blog. Here’s what you really need to know if you’re thinking about taking a similar path…

1. It’s a steep learning curve, and it pays to get started ASAP

I often see people saying that they intend to monetize their blog one day in the future, but they don’t yet feel ready to make that leap. They feel that there’s more to learn, or more experience they need to get under their belts, or they just find it all a little overwhelming. Though I completely understand – because there’s certainly a lot to get your head around – I do also disagree with waiting.

You see, making money from your blog takes trial and error. There are strategies to become familiar with, tactics to master, and you’ll undoubtedly get plenty of things wrong along the way. This is why I believe that it pays to start that learning journey sooner rather than later.

There’s also a valid point here that as you build your audience, it makes sense that they’ve seen your monetization efforts from the beginning. This way, you’re being transparent from the start, and there’s not a point where your readers can suddenly bring your integrity into question.

2. You don’t need a gigantic audience to start making money

We’ve all heard about the big name bloggers who are pulling in hundreds of thousands of pounds every year, and of course, these people often have millions of followers. It’s important to recognise though that there are plenty more bloggers with relatively small readerships who are earning a decent chunk of cash along the way.

What it really comes down to is the methods that you use. I personally decided to really drill down on affiliate marketing, and put my efforts into promoting my favourite matched betting software. By creating content that explained the matched betting process, answered common questions, and gave an insight into my own successes with leveraging free bets from online bookies, I started earning commissions within my first few months as a blogger, and they’ve continued to grow throughout the year.

3. Though some monetization tactics are definitely more realistic than others!

Though I’ve had great results from affiliate marketing, there are still some blog monetization techniques that my readership is simply too small to tap into effectively. A great example of this is running adverts in the sidebar. These typically earn me about $15 per month. They’re never going to make me rich, though they do cover my hosting and domain costs.

When you’re blogging, it can seem like your to do list is never ending. There are posts to write, content to promote, social media channels to keep on top of, and the reality is that you need to selective about what you do and don’t dip your toes into. Based on my experiences, I’d definitely suggest that new bloggers get super focused, and really run with just a couple monetization techniques so they can see the best possible returns.

4. Blogging can be a great way to get started with freelance writing

When it comes to the various money-making methods that go hand in hand with blogging, the possibility of starting a freelance writing business is definitely discussed less often. Perhaps it’s because it’s more hands-on, and couldn’t be classed as passive income. Still though, it’s worth discussing because it can be highly profitable, and also hugely rewarding.

When you’re putting your writing out there online on a regular basis, other bloggers and business owners start to pay attention. They get a feel for your style, your expertise, and the value that you could bring to their own content creation processes. And of course, you’re building a portfolio that you can use to pitch for projects that catch your eye.

I built my freelance writing business without the power of my own blog behind me. With hindsight though, I can tell that I definitely missed a trick. Starting a blog is a legitimate way to start a writing career, whether that be copywriting for businesses, or even feature writing for newspapers and magazines.

5. It won’t make you rich overnight, but building a generous income is very achievable

 If you’ve been around the block a few times with side hustles, then you’ll know that things take time. There are no overnight millionaires, and if something sounds too good to be true, then it probably is. And so if you’ve read income reports from big bloggers who claim to be pulling in massive amounts of money, then you may be a little bit skeptical. Is it all smoke and mirrors? Have you missed the chance to do the same? Or did they just get lucky?

What I know for sure from my year as a blogger is that it’s very possible to start earning money within your first few months, and if you commit to being in it for the longer term, the rewards are there for the taking. It takes time, and a dedication to learning the ropes, but I’m pleased to be in a position now where my blog consistently generates in excess of £800 per month. I don’t know about you, but I think that’s not too shabby for something that I only dedicate part-time hours to!

My only regret with blogging is that I didn’t start sooner. It earns me an income, it’s opened up countless opportunities, and knowing that I’m helping other people with their money-making adventures brings me a huge amount of satisfaction.

If you’re thinking about starting a blog, then why not bite the bullet and get stuck in?

Ruth blogs about genuine ways to make money online at RuthMakesMoney.com. She covers blogging, eBay reselling, and freelance writing, and loves helping people to build profitable income streams on their own terms.

 

Many thanks to Ruth (pictured) for an interesting and inspiring article.Ruth Makes Money

I have been blogging myself for a number of years, both here at Pounds and Sense and at Entrepreneur Writer and the former My Writing Blog (now closed).

Like Ruth, I would never claim that blogging is a get-rich-quick proposition. It takes time and effort to build a successful blog, and only then will the big rewards start to come.

But blogging is also a creative and fulfilling pastime that can help keep your wits sharp and generate at least a useful sideline income. And it’s something you can fit in as and when you have the time (and energy), so again it can work well for many older people. For all these reasons  – and more – I plan to cover blogging again on Pounds and Sense before too long.

As always, if you have any comments or questions, for me or for Ruth, please do post them below.

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Eating Healthily on a Budget

Guest Post: Four Steps to Eating Healthily on a Budget

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Today I am pleased to bring you a guest post by Araminta Robertson, who blogs at Financially Mint.

Araminta is a university student and she writes from a young person’s perspective. Today she shares some of her top tips for eating healthily on a budget.

One thing many older people have in common with students is that they need to watch the pennies. Araminta has some great advice for all of us on how to eat both frugally and healthily.

Over to Araminta then…

 

It’s not easy to combine healthy, cheap, delicious and quick. And yet, it is still possible. As a student, I’ve always had to figure out the best combination, and through a lot of practice I’ve realised that the methods I used could also be very useful for anyone in a similar situation.

So – here are four steps get that sweet combination of exactly what you’re looking for when you eat. Here we go:

1. Plan it

The first step is to figure out your ‘magic number’; how much are you willing to spend? What is your budget for food for one month/week?

Start with that number and work your way back. Then make a list of cheap healthy food that you and your family enjoy. Some examples are:

  • Beans
  • Eggs
  • Tomatoes
  • Frozen veggies
  • Pepper + onions
  • Almonds
  • Lentils
  • Squash/pumpkin
  • Oats
  • Canned goods
  • Yoghurt and cheese
  • Quinoa
  • Carrots
  • Aubergine
  • Kale
  • Sweet potatoes and potatoes

Now you’ve got your magic budget number, some general ingredient ideas. What’s missing? A recipe. And it’s at his point that I whip out Google and simple type in ‘ingredient recipe’, so ‘carrot recipe’ for example. I do a bit of research, look for something simple and cheap to make. Some great websites to find these are BBC Good Food and All Recipes UK.

Do a bit of a rough plan – find some ingredients, do some research and pick some recipes you’d like to try out during the week. Then write down the list of ingredients you’ll need to complete that plan. It’s always fun to try some exciting recipes and do some experimenting. More on this later 😉

2. Shop it

Time to do some exploring! If you want to stick to a small budget, go to discount supermarkets such as Aldi, Asda and Lidl. Bring your ingredients and grocery list and do the shopping!

A little tip: Don’t go shopping when you’re hungry, you’ll probably end up buying unnecessary stuff

What I normally do is one big shopping day a week and then some additional stuff from time to time. Pick a day to do your shopping for the week and buy it all at once. You’ll see batching is a huge productivity booster – no need to do mini shopping trips anymore! It’s also easier to budget week by week, this way it’s easy to know how much you spent on the shopping trip.

3. Cook it

Now to the exciting part.

What prevents most people from cooking is the ‘I’m rubbish at cooking’. We were all rubbish at cooking at one point, and you get better by doing more of it. The first pie you make might be a disaster, but the tenth one will be pretty tasty.

Once again, batching: pick a day to do all the cooking for the week (I like Sundays). Make it a fun activity; include the kids, the family, the dog, even. A proper event, an afternoon where everyone gets together to prepare meals for the week. Of course, if that’s not possible then simply cook it yourself – but an event is always nice.

Have your meal plan ready and then cook and freeze stuff for the week. Soup, rice and beans can last the week – whereas meat and potatoes aren’t very good at that. As you cook more and more you’ll figure out what can be stored and what can’t, and you’ll also end up preparing some more delicious recipes.

I normally produce large quantities of rice/pasta/sauce/ and freeze it or leave it in the fridge. Then when it’s time to eat I just have to make the meat/veggies

4. Try it

The most important when improving your cheap/delicious/healthy meals is to keep experimenting (I even do fancy Money Experiments). Try new ingredients (I’ve got an interesting vegetable called a ‘swede’ in my kitchen), new recipes and new dishes. You’ll slowly get better at it. Now I consider myself an expert at making something out of scraps – stir-fry it all.

Here are some examples of cheap budget meals I like to do:

  • Soup – mushroom soup, pumpkin, lentil, tomato
  • Curry – could be vegetarian
  • Pie/quiche
  • Tacos/wraps/quesadillas
  • Jacket potatoes
  • Chili
  • Fried rice – literally just veggies, eggs and rice
  • Omelettes/scrambled eggs
  • Stir-fry

Also keep on the lookout for discounts, sales and chances to save a little bit of money. Here are some good websites to get started: Money Saving Expert, Super Savvy Me and CheckoutSmart.

There you go! Four steps to eating well on a budget. The hardest part is simply sticking to it and being willing to try new things. But if you make it a fun event every week, you can turn it into a family activity and be held accountable to do every week. Next thing you know you’ll be cooking fancy quiches and amazing risotto. Keep trying!

What’s your favourite recipe? Comment below!

Bio: Araminta is creator of Financially Mint, a personal finance blog for university students written by an actual student. She interviews experts, does weird experiments and a ton of research to help her and others graduate financially intelligent.

 

Many thanks to Araminta (pictured) for an interesting and useful post. Do check out her Financially Mint blog as well!Araminta

I guess some of my older readers may be amused by her reference to the “interesting” vegetable called a swede. Swedes are a vegetable many of us baby boomers remember well from childhood, and not always fondly! I must admit I haven’t cooked with swedes for a while, but promise to put them on my shopping list again during the winter months 😉

Like Araminta I enjoy looking for recipes on the internet, and I often use the websites she mentions, and various others. My personal tip would be to take a few moments to read the reviews and comments that are often left by people who have tried the recipes. This feedback is invaluable, especially the ideas for tweaking/improving the recipe.

As always, if you have any comments or questions about this post, for Araminta or me, please do post them below.



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How to Win Cash and Prizes with Consumer Competitions

How to Win Cash and Prizes with Consumer Competitions

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Today I am pleased to bring you a guest post from Cora Harrison, a UK blogger and vlogger (video blogger) whose website is called The Mini Millionaire.

Cora is a successful ‘comper’ who (as revealed below) has won over £20,000 worth of prizes from free-to-enter consumer competitions. In her article she explains how anyone can follow in her footsteps and shares her top tips and resources.

Over to Cora, then…

 

Twenty years ago my dad, a former miner, spent most of his night shifts listening to the radio answering tie-breaker questions. He won a number of prizes, his favourite of which was a cash lump sum that allowed him to purchase a greenhouse for our garden.

Twenty years later and in my young adulthood I’ve found myself with the same hobby of entering competitions to win prizes. Albeit, things are slightly different now. That’s of course due to the internet, which has seen radio and postal competitions decline in favour of email and web-based competitions – after all, this is a marketing promotion for businesses, and they are interested in creating product awareness and getting you to buy their product.

While I’ve only been a true ‘comper’ for the past three years, I’ve managed to win upwards of £20,000 worth of prizes, including a television, a number of nights and weekends away, a family trip to Universal Studios in Florida, a games console, and much, much more…

Today I want to present a basic introduction to what I believe to be one of the greatest hobbies ever – comping!

Where To Find Competitions

Finding competitions has been made much easier since the birth of the internet. That’s thanks to database websites listing competitions, the answers to any questions asked, prizes on offer, closing dates, etc.

These websites include:

Hot UK Deals

Money Saving Expert

Competition Database

Super Lucky

Loquax

All the above links should open in a new tab.

As well as checking these websites regularly, I also subscribe to Compers News. For £4.95 a month I get a monthly magazine posted direct to my door with a directory of great competitions, news articles from the world of comping, and an online forum providing me with connections to people who share the same interests as me.

How To Enter Competitions

There are a number of different ways in which competitions can be entered. Prior to the internet the main ways were phone calls and the post. And while these methods of entry still exist, they are much less common now.

Instead, as I mentioned in the introduction, you’ll find many more competitions that are online based. They may require you to sign up for a free account for a website, for example, or even to comment via your social media account.

My favourites are known as ‘creative competitions’. These often require you to make or design something. They can sometimes require a specific skill and take longer to enter than other competitions due to the effort required. But of course this has the effect of reducing the number of competing entries, and gives you the opportunity to use your skills to give your chances of success a big boost.

Here’s my girlfriend’s entry to a recent competition hosted by British Heart Foundation charity shops. This required you to use your sewing skills to upcycle an item of clothing from the store.

https://www.instagram.com/p/BlLuanxAGPx/?taken-by=miss_rose1992

Unfortunately, she didn’t win the top prize of a European break for two. However, she had a fantastic time creating the outfit!

Hints and Tips

Now we know where to find competitions and how to enter them, I want to set out some basic hints and tips that should help you to enjoy your new found hobby of comping.

1. Only Enter Competitions For Prizes You Want To Win

Believe me when I say that there are thousands upon thousands of prizes available to win in the UK alone each and every month from competitions. And while some people choose to enter the competition regardless of the prize, I’d advise you to focus instead on a couple of items you’d like to win and enter those competitions specifically.

Spending more time on one entry rather than rushing through to enter as many competitions as possible is certainly going to increase your chances of winning those prizes you really want.

2. Don’t Get Discouraged

It’s easy to get discouraged in comping when you haven’t won a prize in a while. However, remember that everyone goes through a dry spell and absolutely any competition win is a great blessing.

Keep entering competitions for the prizes you want to win even when you’re feeling discouraged, though. You’re only going to win a prize if you enter the competition.

3. Get Creative With Your Entries

As I mentioned earlier, getting creative with your entries is a great way to extend this hobby into other areas of your life. We’ve created some fantastic photo entries, built forts from cardboard boxes, baked cakes, sewn outfits. You name it!

4. Hold ‘Comping Days’ With Friends And Family Members

Comping doesn’t have to be a lonely hobby. There are a number of comping clubs scattered across the UK and some national events hosted by the community. Even if you can’t attend one of the events in person get active within the online comping community in one of the many forums or Facebook groups.

Even consider having ‘comping days’ with your friends and family members. There are competitions exclusively for children that require them to be creative for a chance to win prizes. So consider getting some competitions for the children (or grandchildren) to do the next time they visit, for all the family to join in with.

 

Cora Harrison The Mini MillionaireMany thanks to Cora Harrison (pictured, right) for some great tips and resources.

When I was younger I entered quite a few competitions and won various prizes, including a crate of beer for devising a slogan for a brewing company. I also won third prize in a local radio competition where the top prize was a luxury Mediterranean cruise. Sadly, the third prize was just a leather passport holder and a book of travel tips. So near yet so far!

I do nevertheless think comping is a great sideline earner/hobby for older people. Age or disability are no barriers, and the costs are minimal. You can do it from the comfort of your home with the aid of the internet. It can help keep your grey cells active, and the lure of cash and prizes is hard to resist. So why not check out the resources in the article, including Cora’s own Mini Millionaire site, of course.

Good luck, and happy comping!

As always, if you have any questions about this article, for Cora or myself, please do post them below. And if you have any comping success stories or helpful hints and tips, do share them also!




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Guest Post: It's Never Too Late to Boost Your Income

Guest Post: It’s Never Too Late to Boost Your Income!

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Today I have a guest post for you from my fellow money blogger Perry Wilson,  who blogs at Stupid is the Norm.

Perry has some important advice for anyone over fifty who thinks they have left it too late to boost their income in later life.

Over to Perry then…

 

Okay. So you’re in your 50s, and while you’re not yet in retirement, if you stand on your tip-toes you can see it from where you are now.

You’ve definitely got more years behind you than you have in front of you. Maybe thinking ‘should have stuck in at school’? Or ‘I really screwed up’? ‘It’s too late now?’

Correct to the first two, wrong to the last one.

Let’s say you’re 55. Average mortality age for males is 79.4, and females 83.1. So, you have another 25 or so years left.

25 years. Hmm. If we go back 25 years, you’d only be 30 years old. Knowing what you know now, what advice would you give your 30-year-old self?

You’d advise yourself to do things differently, wouldn’t you? That’s good, because it means you’re taking responsibility for your current position. It’s an empowering admission because it puts the power of change in YOUR hands. It’s down to you. Master of your own destiny, and all that stuff.

Now, return to the present. You have (on average) 25 years left. There LITERALLY is no time to waste, and tinkering around at the edges is insufficient. You need to take ‘massive action’ (as Tony Robbins would say).

You have to put any pride to one side and do something extraordinary. Work more hours. Try something different. Something unfamiliar. Doing the same thing, something familiar, will get you what to have now – and it’s not enough.

I have a friend who decided to work eight hours overtime per week. That’s equivalent to a 20% pay rise. Extra money which he now invests.

I have another friend who delivers takeaways two evenings per week and makes a whopping £160 per week cash (and a free supper each night). An extra income of £8300 pa!

I do matched betting which regularly makes me £200 per week for half an hour’s work per day.

Be an Uber driver. Sell stuff on eBay. Start a blog and monetize it. Massive action.

Alternatively, do nothing. To do or not to do? That is the question. (Thanks, William).

Thinking and planning are important. But it’s action that changes things. Nothing changes until you take action.

Doing nothing is what normal people do. But that’s not you. If you’re still reading this it means you’re extraordinary. Different. Deserving of better.

Act now.

Don’t be Stupid and don’t be Normal.

 

Many thanks to Perry for some cogent advice. Do check out his Stupid is the Norm blog for more ideas and inspiration.

I agree absolutely with Perry that it’s never too late to boost your income, whether you are in your fifties, sixties, seventies, or older.

Indeed, there is a lot to be said for creating additional income streams whatever your age. For one thing, the extra cash can help boost quality of life for you and your loved ones. But beyond that, having an extra income source makes you less reliant on your salary or pension, and gives you additional options. It can also help keep your brain sharp and flexible, and provide the opportunity to be creative, meet new people, and learn new skills (or apply old ones).

On Pounds and Sense I regularly feature sideline-earning opportunities such as those mentioned by Perry, and many others too. No matter what your age or background, there are ‘side hustles’ (to use the modern vernacular) you really can make a start on today.

As always, if you have any comments or questions – for me or for Perry – please do post them below.



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Twelve Top Tips for Selling on eBay

Twelve Top Tips for Selling on eBay

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Today I have a guest post for you from Luci Olivia, who runs The Frugal Fox website and blog.

Luci is a highly experienced eBay trader, and in her article she sets out some hints and tips for making the most of this popular sideline-earning opportunity.

Over to Luci then…

 

Making money selling tat from around the house is great, as you’re earning extra cash and de-cluttering at the same time! For someone like me who is looking to buy a house soon, downsizing and making money ticks both boxes.

There are plenty of websites these days to flog your unwanted items. However, eBay is arguably the UK’s most popular customer-to-customer sales site. They have earned this reputation from being incredibly easy to use. They offer an honest way to earn some money, whether you’re organising your house, selling off some vintage heirlooms, or even ‘flipping’ items from a charity shop.

At any given time there are 100+ million listings on eBay worldwide, with 6.4 million listings added every day. In the UK alone there are 17 million people visiting eBay every month and 180,000 registered UK based eBay businesses so it’s certainly a way you can make some money!

There are a lot of beginner’s mistakes to be made and trials and errors to experiment with, but if you’re looking to make a little extra money this year then read these tried and tested tips from myself – an eBay veteran – to make the first time you sell go as smoothly as possible.

1. Pick an Account Name

Your eBay account name is part of what you’re selling. If you want to sell vintage dresses and your name is Laura’s Vintage Dress Store, it’s going to look more professional and instill more faith in your eBay shop than if you called it LauraSmith1975.

2. Fill Out Your Profile

Also fill in your ‘About’ page, add a nice background and show that you are a reputable business that people should have no worries spending their money with. I’m surprised by how few people fill out their profile – it might just make the difference between someone bidding or not bidding.

3. Take Clear Pictures

Make sure the pictures of the items are taken with a plain background, no shadows on the item, by natural daylight, and include any signs of wear or marks. Trust me – it’s much easier to sell to someone who accepts the flaws than sell and refund someone who didn’t know it had marks.

4. Put it in the Correct Category

I know it’s common sense to ensure it’s in the correct category, but eBay suggests a category once you’ve chosen your title and sometimes it gets it wrong! Check the category before you agree and your antique coin ends up in a category with key rings.

5. Use Keywords

Your item is more likely to sell with extra information in the title. For example, if you find an old games console under the bed and decide to make a few quid off it, as a buyer which are you more likely to click on – the listing called ‘PS2’ or the listing called ‘Barely Used PS2 Slim +2 Controllers, Tested and Working’?

6. Double Check the Spelling

If I search ‘Barbie Doll’ but you’ve inadvertently called your listing ‘Brabie Doll’ then it isn’t going to show up for me or anyone else looking for a Barbie. So double check your listing for spelling mistakes to ensure it’s seen by everyone who’s searching for it.

7. Describe it Well

You don’t need to be a salesperson to fill in the description. All I put is a brief description of the item with a few key words and some essentials about the item. For example: ‘Stunning fluffy and comfortable jumper with no snags or signs of wear. This item is from a smoke- and pet-free home and I’m happy to take more photos if requested. Please ask if you have any questions and make sure you see my other items for sale.’ That’s all you need.

8. Time the Ending

When your eBay listing ends is really important, because the more people who are on eBay at that time, the more likely it is that you’ll get a bidding war. You want your listings to end on either Friday, Saturday or Sunday any time from 5pm – 9pm. You can schedule your listing’s start time for free, so set it to go live at 7pm so it will end at 7pm in the future.

9. To Bid or Buy

eBay offers two main options when you’re selling an item: ‘Buy It Now’ or ‘Auction’. Auction items have the bonus of no top price; however, you usually have to start them at 99p to gain attention and appear in the search. Buy-It-Now items can be sold at any point and for the exact price you’re willing to pay. Weigh up your options and pick the right one for your product.

10. Know Your Fees

eBay offers 20 free listings a month but they do take 10% of the selling price so keep that in mind when you see the final figure. They will bill you monthly, so keep 10% aside for that bill. Also keep 3.4% aside as that’s what PayPal will charge. I usually keep 15% aside to be safe and keep my PayPal pot above zero.

11. Deal Professionally with Issues

There will be issues. You can do everything perfectly and there will still be issues. Unfortunately that is part of doing business – so if a customer isn’t happy, it’s best just to keep that smile on, remain professional and help them out (no matter how much they make your blood boil!).

12. Give and Get Feedback

To be a successful seller on eBay it’s important to build your reputation. So always take the time to rate buyers, and ask politely if they will do the same for you. Obviously nobody wants bad ratings, so if there have been any issues (see above) check and double-check that they have been resolved to the buyer’s satisfaction before asking them to rate you.

So those are my top tips for selling on eBay. It’s super easy, especially via the free app, so get listing and see first-hand how stress-free it is and how much money it could make you this year.

Luci Olivia

Thanks again to Luci (pictured, right) for her valuable tips. Please do check out her Frugal Fox website for more advice on saving and making money.

If you have never tried online auction selling before, I hope this post will inspire you to give it a try. It really is as easy as Luci says, and someone, somewhere will almost certainly want anything you have to sell.

In my own case, I recently sold a selection of old beer mats that I had originally scrounged from a local pub for our house-warming party twenty years ago. Although admittedly I did have to re-list them (for no extra charge) as they didn’t sell the first time around!

As always, if you have any comments or questions, for Luci or myself, please do post them below.



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SMI Change: What You Need to Know

Guest Post: SMI Change: What You Need to Know

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This is a guest post by Sara Williams, who blogs about debt and credit ratings at Debt Camel. She is also an adviser at Citizens Advice.

If you get government help with some of your mortgage costs, you should have heard that this help, known as Support for Mortgage Interest (SMI), is changing from April 2018. About half the people getting SMI are pensioners who get Pension Credit. Many of the rest are disabled.

At the moment the SMI help is given as a “benefit”. But from April 2018, it will only be given as a loan that is secured on your house, so it has to be repaid when the house is sold.

This may sound very worrying. And some people are saying that it isn’t being explained very well by Serco, the firm the DWP is using to try to persuade people to sign the new loan documentation.

With only 6 weeks to go until the change, less than 5% of the people getting SMI have agreed to the new loan. And for people who don’t agree, their SMI will stop in April. This could mean people getting into mortgage arrears and ultimately having their house repossessed.

Questions people ask about the SMI change

Hundreds of comments have been left on an article I wrote about this SMI change. Here are some of the questions people are asking:

How much help will I get?

The same as now. Whatever SMI is currently paid to your mortgage lender, the same amount will be paid after April if you agree to the new loan.

But I’ll need more money each month as interest is now being added to this new loan?

You don’t have to start repaying this new loan, or the interest on it until your house is sold. So on an everyday basis, you will be in the same position as you are now.

Will the interest rate on the new loan increase?

The interest on the will be fixed to the UK Gilt rate – at the start it will be 1.7%. This is the rate at which the UK government can borrow – it will always be cheaper than most mortgage rates.

The loan is from the government, you don’t need to worry that Serco will change these rules and charge you more.

Will there be a delay before it’s paid?

If you are already getting SMI, the switch to the loan will be seamless; there won’t be any months when you aren’t helped.

If you aren’t currently getting SMI, the same waiting period of 39 weeks will apply as now.

Can I repay it if I get a new job?

Yes, you can repay the loan, or part of it, at any time. But it may be better to overpay your mortgage if you have spare money, as your mortgage rate will probably be higher than the interest rate on the SMI loan.

What other options are there?

Some options include:

  • ask friends or family to help you with your mortgage costs – this isn’t possible for many people;
  • get a lodger – but this could reduce your other benefits so get advice from Citizens Advice before deciding to do this;
  • use up your savings – but most people won’t have much and using what you have could leave you unable to afford an emergency;
  • sell the house and downsize or rent. This is a big change. It may be a good idea if your house is too large or difficult for you to manage or you have an interest-only mortgage ending soon, but you need advice on how it will affect your benefits first.

Should you agree to this?

I don’t like the change. I think it’s unfair and if people lose their homes, it could cost the government more money than it is supposed to save,

But you should make a pragmatic decision based on whether you have any better alternatives. Don’t be swayed by feelings about unfairness or politics.

Complain to your MP if you feel it’s unfair – these changes were discussed in Parliament, but they didn’t get much attention at the time – but don’t reject this loan without a better option.

The loan is cheap. Unless there are relatives who could help you, most people won’t have a good alternative. If you aren’t sure, or you have detailed questions, e.g. about what you are being asked to sign and its implications, go to your local Citizens Advice and ask for advice about the proposed loan and your finances, benefits and any other debts.

 

Thank you very much to Sara for a concise and informative article about the SMI change, which is clearly likely to affect some readers of this blog. If that includes you, with the new system coming in after 5 April 2018, it’s important to get to grips with the change and decide what is the best course of action for you.

If you have any comments, as always, feel free to post them below.



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Guest Post: Top Tips for Picking Up a Bargain!

Guest Post: Top Tips for Picking Up a Bargain!

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Today I have a guest post for you from my fellow money blogger Vicky Eves.

Vicky loves nothing more than picking up a bargain, and in her article she shares some of her best tips and resources. Over to Vicky then…

 

I love a bargain. I mean, who doesn’t? Whether you are financially well off or not, why would you pay over the odds if you don’t need to? It’s not good financial sense. Buying second hand is also better for the environment so it’s a win-win. Here are my favourite places and ways of finding bargains.

Freecycle

I recently moved from a one bedroom flat to a three bedroom house. Much as I don’t want to fill my new place up completely, I knew it was going to be rather bare with only the belongings I already had.

Once the ball was rolling on my move I started planning and thinking. I would be using the third bedroom as a study or computer room. I had made do with my laptop on my knee for the last 12 years and I was so excited that I was going to have a study. I’d looked online and found a desk I really wanted. It was from Ikea and it wasn’t cheap, but as I’d never had a study before I built that expense into my budget.

A few weeks down the line, I was browsing Freecycle when I saw the EXACT desk I wanted. I thought it was too good to be true and that I would never get it (on Freecycle you have to be pretty quick off the mark as it is usually first come first served) but the owner still had it and was happy for me to take it. I went over there after work, and after putting all the seats down in the car and with the owner helping me take it apart I managed to squeeze it in. My move got held up so it was stored in pieces in the corner of my lounge for many months, but I am sat here now in my new house sat at my awesome FREE desk as I write this.

It is definitely worth bookmarking Freecycle and joining a few groups (it is done by area so you just find things that are close to you) and keeping an eye on it. I’ve got and given away other things via the site before but the desk is my favourite Freecycle item. Just remember that if you are meeting a stranger to purchase an item that you either go with someone else or that someone knows where you are – bad experiences are few and far between but it’s better to be safe than sorry.

Charity Shops

Such an obvious place to find a bargain – but how many of us actually go there when we are looking for specific items?

I regularly visited charity shops before I moved. I soon worked out which were cheaper and when each one would reduce or rotate their stock. I got some amazing bargains – including a little record player for my retro diner themed kitchen. Sometimes if you go in regularly you might get to know the staff and if they know you are looking for something specific or along a theme they will keep their eye out for you.

Car Boot Sales

Another obvious one, but do you ever go? I got so much awesome stuff at car boot sales over the summer before I moved. I found a big one near me that was every Sunday and I was there for a few weeks in a row. I’m still not convinced whether it’s better to get there early (to get the best things as soon as it is open) or later (when the sellers are getting bored and ready to go home and reduce things), but either way you can get some great things.

Don’t be afraid to haggle either. The first couple I went to, I was rubbish at it. They would say a price and I’d go “Wow, bargain” and just hand over the money. I know you won’t want to offend the seller, but they want rid of the stuff, so even if you just try £1 or 50p less than they’ve suggested and they meet you half way, the savings adds up!

Facebook Selling Groups and Shpock

Facebook selling groups are almost like online car boot sales, and Shpock even calls itself the “Car boot app”. With Facebook you join groups local to yourself and browse or search the items that people are selling. With Shpock you can search for the item and set a search radius.

You can still haggle online – negotiate with Facebook sellers via the messaging facility and Shpock is set up to haggle – you make an offer and they counter it until you find a price that works for you both. You would then arrange a mutually convenient place to pick up the item and make payment. Again, remember your safety when meeting people in person.

What If You Don’t Want Second Hand?

Whether you don’t want second hand items, or you just can’t find what you want via any of those methods, some of my favourite places to find bargains are outlet villages and clearance shops. Be sure to do your research online to make sure that the special offer or price is as special as they say, but if you know what you want and have a price in mind, you can really find some great deals.

Whilst technically second-hand, if you are on a budget or like a bargain, have you considered getting reconditioned items? They will have been pre-owned but they will have then been serviced or checked over and you will get some form of guarantee from the retailer. I know people with Dyson, Sony and Apple reconditioned items which they say are as good as new but they got for a fraction of the price! I’m definitely considering going down that route next time I need something electrical.

I’d love to hear about the bargains you’ve found. Please comment below, and pop on over to ibeatdebt.com for more money making and saving tips and articles.

 

Many thanks to Vicky for an eye-opening article. I would just like to add my recommendation to hers for reconditioned items. In the last few months I have bought a reconditioned digital radio and portable DVD player, both at around half the standard price for new products. Both were (to my eye anyway) indistinguishable from new and worked perfectly out of the box. In my experience that isn’t always the case when buying new from retailers or wholesalers.

As always, if you have any comments or questions about this post – for me or for Vicky – please do post them below.

Happy bargain hunting!



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How to Invest for Income from High-Yield Share Dividends

How to Invest for Income from High-Yield Share Dividends

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Today I have a guest post for you from my fellow money blogger Lewys Lew, who blogs at The Frugal Student.

Lewys has a particular interest in dividend investment. As I know this is a subject of interest to many readers of this blog, I asked him to write about it here.

Over to Lewys, then…

 

I watched the Conservative party conference in despair!

Not because I’m a Conservative but because once again the vultures circle Theresa May and Brexit seems to be going backwards.

Not that I voted to leave, but this constant uncertainty unsettles me and the market.

To add a cherry on top of bad news, productivity in the UK has begun shrinking and we’re no better off than we were in 2007.

What this means for you and me is that the economy continues to struggle and along with that interest rates remain dire.

Sure, for those of us who save a few pounds a month there are some decent bank accounts out there that offer 2%+ interest but these usually come straddled with a set of conditions and maximum deposits.

For those with large sums lying dormant in bank accounts the deals on offer are pitiful. With the current rate of inflation, your cash-pile may even be worth less.

In this post, I’m going to share with you how you could earn 5% in interest yearly.

Before we begin, there are a few things to note:

  1. If you use this method your money is at risk.
  2. To reduce risk, you should be prepared to lock your money up for 5+ years.
  3. This method may not be suitable if you’ll need to use this money in an emergency
    (remember to always keep six months’ worth of expenditure in an easy-access account)
  4. Here’s some key terminology before we start:

Dividend = Money a company pays to you as a reward for being a share-holder.

Dividend Yield/Yield = A dividend as a percentage of a current share price, as so:

Dividend per share/Price per share.

Right, let’s get stuck in!

Dividend investing is a vast field. Myself, I’m a dividend growth investor. At 24 years old, I seek to buy stakes in companies who are growing their dividend at a rapid pace. Over time these types of stocks often increase their dividends at higher rates than companies who already pay a dividend at a higher yield.

But for those who maybe don’t have the benefit of a 30-year investment horizon, dividend yield investing may be a better choice for you. Frankly, getting just 1% of invested monies back as a dividend each year isn’t going to satisfy you if you’re close to retirement or retired.

The good news is that there’s an alternative dividend investing method that could see you getting 5% of your invested monies back each year, along with some capital gains along the way.

I’ll illustrate dividend yield investing with this example…

National Grid is a very boring, steadily performing utility company. It owns and manages the UK’s grid structure along with some bits in the United States and in return is allowed to make a modest profit from its operations. It’s a monopoly, meaning that we don’t need to worry about competition or anything of that sort.

As we can see from the graphic below (from the Hargeaves Lansdown website), National Grid pays a 5.15% dividend. This effectively means that for every £100 you invest, you’ll get £5.15 back every year.

National Grid share performance

The good news is that National Grid buys back its own shares, pushing up the capital value of your holding and reducing the possibility of capital loss over the long term (5+ years).

Dividend investing can be especially powerful if you use your dividends to buy more shares.

£1,000 worth of National Grid shares would let you buy around 5 additional shares with the dividend after one year. Compound this over the years and you could really start building a decent stream of dividend income.

Pros and Cons of High Yield Investing

Cons

  • When dividend yields go over 6%, this can be an indication that the stock is risky, as investors are fleeing the stock, thus reducing the share price and increasing the dividend yield (as this is relative to the price).
  • Stock prices could fall below your original purchase price and dividend income combined, leading to a net loss.
  • A large capital deposit is needed to make this method really effective; small amounts won’t really go a long way.
  • You have to pay to buy/sell stocks.
  • Identifying safe higher yield stocks can be difficult and time-consuming.

Pros

  • A 5+% dividend yield smashes any bank account out there.
  • The combination of steady stock price rises and dividend income can really boost your savings.
  • Large and ‘boring’ companies such as National Grid are very resilient and it’s relatively unlikely that you’d find yourself at a capital loss if you held such stocks over five years.
  • Remember that other investments can carry large risks and costs too. One such example is buying a rental property, where bad tenants, maintenance costs and the hassle can eat away at returns. By investing in a large company you won’t need to do anything else. Just sit back and soak up the dividends!

How Do I Buy Shares?

If you’re interested in building yourself a dividend income later on in life (40+) then I would certainly recommend chasing higher yields from boring large companies such as National Grid.

In order to buy shares you’ll have to sign up with a broker.

The most popular in the UK is Hargreaves Lansdown, but this platform charges a management fee of 0.45% annually, in the case of National Grid lowering your net income from 5.15% to 4.7%. They also charge £11.95 for share repurchases and 1% for dividend reinvestment.

To really reap the benefits of this strategy, I’d recommend signing up with online brokers De Giro, who only charge £1.75 a trade with no management fee.

If you like the idea of dividend yield investing but the risk is a little too high for you, I recommend you take a look at my Nutmeg Investment Review for a platform that manages your portfolio for you.

 

LewysMany thanks to Lewys (pictured, right) for an eye-opening article.

Personally I have tended to stick with self-selected funds and ready-made portfolios (including Nutmeg) for my core investments, but I can certainly see the attraction of high-yield share dividend investing for part of my portfolio – especially as (being semi-retired) I am now looking to generate an income from my savings.

Another thing in favour of dividend yield investing is that there is a generous annual tax-free dividend allowance (which most people don’t make use of). Currently you can earn up to £5000 a year in dividends before any tax is due. The government has threatened to reduce this to £2000, but even if that happens the allowance is still well worth taking advantage of, as it comes in addition to other tax-free saving and investment opportunities such as ISAs.

If you have any comments or questions about this post, as always, please do leave them below.




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