‘Nest eggs’ have been synonymous with savings since the late 17th century. Poultry farmers developed the tactic of placing real and fake eggs in hen’s nests encouraging them to lay more. The significant boost to the farmers’ incomes spawned the term ‘nest egg’. They’ve come a long way since their hen-house beginnings, as more and more of us attempt to be frugal, whether it’s putting aside £10 each month into an ISA, to serious portfolio investing.
Defined as a significant amount of money that has been saved or kept for a specific purpose, nest eggs are now common parlance when talking about any sort of long-term investment or saving with a special aim in mind. Your ‘egg’ could be a contingency fund you always keep topped up to deal with unexpected repairs or emergencies, a retirement fund, or a savings pot for a home or education.
Feeding your savings
15% of people do not know how much they have in savings, according to research by Lloyds Bank, and one in five UK consumers didn’t know how much to save for unexpected events. There is no easy answer to how much to keep in savings: it’ll depend on what you want to do with it, and how long you want to wait. It’s commonly thought that an ‘egg’ of the equivalent of three months’ salary is a good contingency fund if you’re planning for emergencies and the unexpected.
As with investments, you might want to check that your savings allow you to do what you want: if you’re saving a pot for retirement, consider fixed-term with little access (and therefore a higher interest rate); for a contingency fund, you might want to check you can access your money at short notice. Different savings accounts offer different terms - if you’re thinking long-term, you may want to consider investing.
Investing your clutch
In a recent YouGov study, 19% of investors admitted that they had never checked the financial performance of the companies they invest in. Only 44% of Stocks & Shares ISA investors checked the financial performance of their selected companies regularly. So, first and foremost, whilst a return on your investments can never be guaranteed, it might pay to keep track of their performance to make sure you’re meeting your investment goals and so you’re well placed to make decisions on investing and disinvesting.
If the aim of a nest egg is to preserve capital for a future goal, then you might want to think about investing more conservatively in lower risk areas. The ability to cash-in your investment and access your funds may also be something to think about, depending on what you’d like your nest egg to achieve. For example, if your nest egg is a rainy day fund you may want to keep it in a savings account in case you need to access it quickly in an emergency. You can keep track of your invested or saved nest egg with our Money Hub technology alongside your everyday expenses - it’ll show you at-a-glance whether you’re on track for your goal.
Breathing new life into your pension
What kind of lifestyle are you looking forward to in retirement? How is your retirement nest egg performing? Do your contributions match with the level of income that you want?
Our Money Hub tool could help you estimate how your pension contributions could perform over time and plot whether they’re likely to match up against your target income, and what the effects of lowering, increasing, stopping or restarting those contributions would be on your final pot.
Other things that you may think about with a pensions nest egg include:
- Making sure that you’ve read and understood the terms and conditions of your pension products
- Chase down any lost pension pots you may have had over your working life (the Pension Tracing Service can help). Recent research by Age UK found that almost one in four UK adults had lost track of at least one pension. If you’ve changed jobs or stopped and started your contributions, you may have mislaid a pension pot with your name on it.
- Check that your contact details are correct on the databases of your pension providers so that they can continue to get in touch.
Set a due date
If you’ve got a nest egg squirrelled away it could be worth pencilling a date for when you’d like to make use of your ‘egg’. It could be five years, ten years, or 40 depending on what you’d like to do - the choice is completely yours. Whilst you’ve got your diary out, it might be worth also setting a date once a year to review your pension contributions, investments progress and/or savings growth to check you’re on track for your goal.
Thinking about long-term bonds for your nest egg? Use our comparison table to see the latest rates from across the market.