18th Coming Soon, What Do I Do With My Savings?

ncfcstar

Hi everyone,

At the moment I have over £4000 in savings in a Nationwide 'Smart' Account, but my 18th birthday is coming up and I was just wondering what I should do with it!

I am going to Uni in September (if I get the grades), and obviously want to make sure I have an account, and hopefully earn some interest on some of my money (maybe put some in an ISA?).

It would be great if you could help me out, I don't want to be stuck with £4000 and nowhere to go!

Thanks

James

newfoundglory

If i remember correctly you can keep the smart acct until you are 18 yrs 6 months old. I'd leave it where it is until then, or you could open a nationwide flexaccount along with a nationwide e-savings account and put it all in esavings (pays about the same as the smart i think!).

I wouldn't worry too much about putting it in ISAs UNLESS you are going to get a job and work so so much that your income goes over your personal tax allowance (you would have to earn about £4,750 in a year - thats about £400 a month). But if you find a cash isa paying a load of interest then take advantage of it anyway!

You should definitely think about ISAs before you leave uni though. But with 3 or 4 years before graduation you are way ahead of yourself if you are looking for tax benefits at this stage.

Milarky

You can open open a cash ISA (you are over 16). You could pay the money into a fixed term 'bond' if you can leave it there for the duration. You can get a rate of 4.55% with instant access from Nationwide provided you can get a current account with them.

But there's nothing wrong with the ING direct account in my view pays 4.5% (at the equivalent rate) monthly and that gives you both access to your savings at all times and a tangible incentive to save if possible (i.e they take by pre-requested direct debit from your current account, so you end up not missing them!)

For an ISA - why not go for a regular saver too? The best rate (6%) is payable on the Scarborough Building Society:

http://www.scarboroughbs.co.uk/savingsandinvestments/regular_savings.html

This might suit someone in your situation - putting the same amount away every month by standing order and slowly building up tax free savings almost impercitible.

codetown

Are you getting any interest tax-free at present?
Banks and building societies tend to take 20% off your interest automatically even if you don't work or pay taxes.

If so, then an ISA would be convenient.
Of course you can choose whatever seems easier to access while still giving decent interests. A good one for easy access and interest seems to be the A&L one, but you might find many good ones around if you don't need online access.

angelica

I desagree with Milarky and codetown.

6% for the regular savings is not the best. Halifax pays 7% and A&L pays 10%. Also Halifax allows you to vary the amounts you pay in every month (£25 min-£250max), e.g. one month you can deposit £100 and another month £250 etc

Secondly, if you send form R85 to your bank they will not deduct any tax from your savings.

jimclark1967

angelica wrote:

I desagree with Milarky and codetown.

6% for the regular savings is not the best. Halifax pays 7% and A&L pays 10%. Also Halifax allows you to vary the amounts you pay in every month (£25 min-£250max), e.g. one month you can deposit £100 and another month £250 etc

Secondly, if you send form R85 to your bank they will not deduct any tax from your savings.

I think Milarky was referring to ISAs rather than normal regular savers. The A&L is best for 1 year but you have to deposit £500 a month in the current account too so maybe too much hassle when a student.

Good luck to the OP in getting the grades :beer:

JC

angelica

jimclark1967 wrote:

I think Milarky was referring to ISAs rather than normal regular savers. The A&L is best for 1 year but you have to deposit £500 a month in the current account too so maybe too much hassle when a student.

Good luck to the OP in getting the grades :beer:

JC

I think Milarky was referring to saving account, but you are right an ISA option is also available for the same rate.

But I would say that with an ISA option the interest will be much lower than at 'normal' easy access ISA account (let say the best one I know, Halifax with 5% interest) as the mentioned by Milarky account allows only regular payments into account of max £250/month. The interest will be less than £100 instead of £150 if the whole ISA allowance of £3,000 will be deposited in the beginning of the tax year.

Re A&L you don't need to deposit £500 but pay into account, you can withdraw the money the same day. I have a standing order to pay money from my main account into A&L, and few days later SO to pay my rent from A&L account. Money in, money out...

jimclark1967

angelica wrote:

Re A&L you don't need to deposit £500 but pay into account, you can withdraw the money the same day. I have a standing order to pay money from my main account into A&L, and few days later SO to pay my rent from A&L account. Money in, money out...

That's exactly what I do. Isn't that called "depositing" just followed by withdrawing at any rate we don't seem to be disagreeing on anything

Thanks
JC

codetown

Given James will have a lump sum of 4000 to invest immediately, it will certainly be worth to invest 3000 of it into a good ISA as soon as he get out of his young account.
Then any additional eventual income might be invested into good saving accounts. I too recommend for this the A&L Premier Saver (10% interest) and a bit of juggling with money in the associated compulsory Premier Direct Account

fairenoughclough

Spend most of it all on wine, women and fast cars; anything left over just blow on luxuries.


:beer: