Studying for an MSc but have over £4,000 to save - Advice?

Bazlovejoy

Hi Guys

Early this week I created this thread about opening an ISA
http://forums.moneysavingexpert.com/showthread.html?p=13722641#post13722641

I have now done this and am waiting to place the full allowance in the account. I have now over £4,000 of my savings remaining. Currently the money is in an RBS graduate account earning pittiful interest.

I am looking for advice as to where to place this remaining money in order to maximise its earning potential. I will be starting my MSc in a couple of weeks, which Im assuming will make my situation slightly different to that of the regular saver as i don't think i will be paying tax on the interest as im a student.

I need to have access to the money as I will be using some of it to live on however I will probably end up using 50% of the £4,000 on living costs during the year as i have other income that i will be living off as well.

Which account would be best to open in my situation? Student accounts dont seem to pay any interest on the savings, so a savings account might be the right option but would i be able to avoid being taxed with this type of account? Also am i best opening a savings account (if thats the best choice), dumping all the money in there and then paying a monthly amount into a regular savings account.

As you can probably tell im rather confused

Thanks,

Baz

Lokolo

Ok will you have a job? It doesn't matter if you are a student or not, if you earn more than £6k per year you will have to pay tax. I am assuming you won't be earning more than that this year.

Putting money into a savings account and then putting some money into a regular saving is caled drip-feeding. A lot of MSE users do this.

If you want to get tax free interest (make sure you earn less than £6k in the financial year) then you can fill in an R85 form to get tax free interest.

Look around above this thread for the best savings account, go and open one and stick all the money in there, and if you want, drip-feed into a regular savings.

However, when regular saving, if you miss a month or want to stop before the required time then you may find there will be a penlaty (6 months interest or whatever), so take this into consideration as well.

opinions4u

Don't rule out cash ISA up to your annual limit in the next tax year, as if the money is going to remain in tact once your in employment, you retain your tax free interest once you become a taxpayer.

If you become a 40% tax payer that could be worth in the region of £90 a year until you're not a higher rate taxpayer (retirement?).

High rate 6 month bond now, with ISA deposit in April is an option.

alchemistkevin

FWIW ICICI Bank offer some good products. I don't put my money in there but might be good for you if you earn less than £6k and pay no tax on interest. I don't think you'll get more than 7% tax free anywhere else.

Check their feedback on here though. They seem solid with finances but shaky on CS

Bazlovejoy

Thanks for the replies guys.

After putting £3600 in a Cash ISA, I dont think i can afford to lock anymore money away as I wont be earning until May 09. There may be a possibility that i could drip feed small amounts (£20/£40 p/m) into a regular savings account. Would this be worth it as id have to keep paying money into the account until Sept 09 or am i just better leaving the money in an instant access savings account and then sticking what I can spare in another Cash ISA in Apr 09?

Baz