advice on what to do with 6,000 pounds and then 1,000 a month, Thanks

JohnJoethompson

hi, i am 24 and have been useless with money but finally have started getting it together and saving but without a savings account. this might seem like a really simple question but i'm struggling on what the best thing to do is. I have 6,000 pounds now and can save on top of that aprox 1,000 a month for the next year. Am i right in thinking that the first thing i should do is open an ISA and then whatever is left put in a savings account and add to it? could anyone offer me any advice on this like which bank i should use etc. Also with an ISA can i add 3,600 each tax year and receive interest on it all? Many THANKS. J

Baldur

JohnJoethompson wrote: »

....with an ISA can i add 3,600 each tax year and receive interest on it all?

Yes, as far as a Cash ISA is concerned.

[Deleted User]

Hi,

I'd suggest the following:

1. Generally ISA's are a good place to start:

http://www.moneysavingexpert.com/sav...gs-without-tax
and http://forums.moneysavingexpert.com/....html?t=401374

2. Regular savings accounts are good too:

http://www.moneysavingexpert.com/sav...vings-accounts
and http://forums.moneysavingexpert.com/....html?t=608697

Regular savings accounts are generally a good place for new money e.g. monthly pay cheques, however if for example you have £3k in a 6% high-interest bank account drip-feeding into a 10% regular savings account then you're essentially getting 8% interest on average for your £3k which beats most fixed rate products - albeit with a bit more work.

3. If you want something with a little less work then fixed rate savings accounts are a good option:

http://www.moneysavingexpert.com/sav...interest#fixed
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

4. One other thing you might like to consider is getting a decent instant access savings account:

http://www.moneysavingexpert.com/sav...st#topaccounts
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

5. Finally if you're a higher rate tax payer then NS&I's 3 and 5 year Index Linked Savings (http://www.nsandi.com/products/ilsc/index.jsp) look good, paying 1% above the RPI inflation rate. Currently this is 5.0% so that’s a rate of 6.0% overall.

The attractiveness of these is that the savings are tax-free meaning it's better for higher-rate taxpayers. Basic rate taxpayers would need to earn 7.5% in a normal savings account to match this, while higher rate taxpayers would need 10.0%.

One thing to note is if inflation drops then so does the rate for these savings. It'll always be higher than inflation and tax free though. It's also best to leave the cash in there for at least three years though and at least £100 must be deposited (maximum is £15,000), so it's not for those who want a short term place to save.

trenchwars

Deleted_User wrote: »

The cash must be left there for at least three years thought and at least £100 must be deposited (maximum is £15,000), so it's not for those who want a short term place to save.

Actually, you can cash in your certificates at any time, but if you cash them in within the first year then you won't get any interest. You can cash them in after just a year and get RPI + a small bonus (about 1%).

[Deleted User]

trenchwars wrote: »

Actually, you can cash in your certificates at any time, but if you cash them in within the first year then you won't get any interest. You can cash them in after just a year and get RPI + a small bonus (about 1%).

Thanks - updated