Important information - The value of investments can go down as well as up, so you may not get back the amount you originally invest.
So, what are you planning on doing with your ‘surprise’ lockdown savings?
You might want to start thinking about it now, because new research from Fidelity International reveals that we are each, on average, set to come out of lockdown a surprising £1,744 better off.
It seems that while we have been forced to ‘stay home’ and had little choice but to put much of life on hold for the best part of the past year, something interesting has occurred.
All those haircuts, holidays, that ‘must have’ grande macchiato on the way to work, that ‘swift half’ on the way home, while sorely missed, have done our bank balances a bit of a favour.
Two thirds (65%) of UK adults have spent less overall since March 2020. On average, we have each saved £439 on eating out at restaurants, another £401 on days out with family and friends, and £364 on going to the pub, over the past 12 months.
Even working from home has been cost-effective, with average savings of £190 on the daily commute over the past year and another £86 on lunch-break sarnies. Throw in suspended gym membership and short-breaks and trips abroad and your won personal savings could be considerably more than the average £1,744.
Of course, it is not like we haven’t been spending at all. The fortunes of online retailers and the constant stream of delivery drivers, not to mention the mountain of cardboard in the nation’s over-flowing recycling bins, are the tell-tale signs that we are now fully au fait with the fact that you don’t have to move a muscle to spend, spend, spend.
Some 25% of us admit we have actually spent more since March 2020. Most of this spending has been on essential items - although a third (31%) of people have said they are spending £39 more each month on takeaways, while one in four (25%) are spending a further £41 per month on alcohol.
Just under half (44%) of households also reported spending more on their weekly or regular food shop - around £178 throughout the year or just under £15 more every month. While this may not seem like much, this adds up to 23 million people spending an additional £9.4 billion on their regular food shop, highlighting the discrepancy between those who have been able to save and those who have had to spend more during lockdown.
Other areas in which spending has increased over the past year include streaming services (£68 in total), exercising at home (£78 in total) and purchasing apps or in-app purchases (£37 in total).
While we all desperately hope the pandemic is something we never again see in our lifetime, the past year - if you are fortunate enough to have accrued these lockdown savings - is also something of a unique, one-off chance to super-charge your savings and investments.
Never before have we been forced to stop our day-to-day lives in their tracks and with it had the chance to take a good hard look at where our hard-earned money goes.
So, this is your opportunity to turn the trials and tribulations of 2020-21 into something positive for yourself and your family’s future. Sure, let loose and spend on days out, time with family and friends, travel and whatever you have missed.
But equally, don’t let the sacrifices of the past year just get frittered away. We have all given up too much for that. Instead turn at least some of these surprise lockdown savings into something even bigger, by investing them.
April is the perfect month to re-start, set-up or simply boost your savings and investments, with the old tax year ending on 5 April and the new one starting a day later. It is the ideal time to get started and use those tax-efficient savings available to you.
Whether that’s setting up an ISA, topping up your child’s or grandchild’s Junior ISA or stashing away some extra cash into your SIPP, this is one way to turn the negatives of the past year into something positive.
If you need some inspiration, take a quick look at just what these lockdown savings could potentially turn into, given five, 10, 15, or 20 years to grow and assuming a hypothetical growth rate of 5% which is not guaranteed.
Invest that money now and when you look back on the past year you will know that something came out of the darkest of times and that whatever life throws at us next, at least we will be more financially prepared.
|Expense||Total amount saved since March 2020||Potential returns if invested in an ISA after:|
|5 years||10 years||15 years||20 years|
|Eating out at restaurants||£439||£2,421||£5,352||£8,898||£13,188|
|Days out with family and friends||£401||£2,212||£4,889||£8,128||£12,047|
|Going to the pub||£364||£2,008||£4,438||£7,378||£10,935|
Source: Fidelity International, March 2021 - based on a hypothetical illustration assuming a growth rate of 5% a year, a platform service fee of 0.35% and an annual management charge at 0.75%.
Important Information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on personal circumstances and all tax rules may change. You can't normally access money in a SIPP until 55. Withdrawals from a Junior ISA will not be possible until the child reaches age 18. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
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