Savings Advice for a novice

tokyophil

Hi all,

Any help is appreciated, so I'll start by saying thanks. My pc doesn't have a pound sign (bought in Japan), so I'll just use the numbers.

I've always been careful with my money, but now I'm looking at the best places to put it to gain the most reward.

I currently have most of my money in Barclays online savings accounts - 2 or 3 to control what the money is used for.
I've applied for their regular saver, which will allow me to out 250 in a month and give 6% AER interest for a year. (Don't plan to withdraw from it in that time)
I've also applied for an ISA with them, which I'll put the maximum 3600 into as a bulk sum (And find a new one to invest in come April).
I'm now applying for an HSBC current account, which I'll link to their 8% AERmonthly saver (Again, 250 / month).
Finally, I'm applying for an A&L current account, simply because it will give me 100 if I meet their terms, and a further 50 for using quidco if i understand right.

This means I'm saving 500 / month, plus the ISA lump sum, but still have another 400 / month to save. I now need help deciding where to go next?.

I will think about buying a house in 2-4 years, so I don't want to put all of it into long term investments, but I would consider some if it will be worth it.

If I understand correctly, the Barclays Capital Protection plan offers a 40% return (before tax) over 5 years, providing the FTSE 100 level isn't lower after that time. Does this sound a likely proposition, seeingas the level is so low now? Also, does it sound a good deal? I was thinking of putting 100/month into it if I do?

Any other tips or recommendations? Should i be looking at risking it with investments or does anyone have any other ideas? I understand that i have a further 3600 tax free i can save in investments - how would i go about using this and is it a good idea?

Again, thanks to all. Sorry I've waffled on a bit....

Phil

Lokolo

Investments ideally are longterm things, so we are talking around 5-10 years at least. There a blips and bumps and all sorts so in 2 years your money may not have grown so you've lost out.

Also the Barclays FTSE thing is a bit of a gamble, they are never worth it really. You could end up 4 years down the line with the same amount of money but no interest, if you want to take the risk with this you can, however, just putting it in a savings account will mean you get some return.

With A&L you have to have your salary, at least £500 a month going into it to get the £100, so if you want you can.

Other than that you've got it sorted.

You may want to open an instant access savings account to put tha £400 a month into just in case the worst happens, or if you want to save up for things such as - car insurance, tax, holiday, xmas presents etc.

tokyophil

Lokolo wrote: »

Also the Barclays FTSE thing is a bit of a gamble, they are never worth it really. You could end up 4 years down the line with the same amount of money but no interest, if you want to take the risk with this you can, however, just putting it in a savings account will mean you get some return.

This is the one I was seriously thinking about. With the FTSE being so low now, would it be a worthwhile gamble? And if so, would you say the 40% is a good rate of return?

Cheers

GoodRiddance

tokyophil wrote: »

This is the one I was seriously thinking about. With the FTSE being so low now, would it be a worthwhile gamble? And if so, would you say the 40% is a good rate of return?

Cheers

I was considering this also.

If you invest £5000 in a savings account and get tax free interest you could expect a return of say £6200 after 5 years with the following interst rates

Year 1 - £5000 + 3.5% = £5175
Year 2 - £5175 + 3.5% = £5356
Year 3 - £5356 + 5.0% = £5624
Year 4 - £5624 + 5.0% = £5904
Year 5 - £5904 + 5.0% = £6200

Thats a complete guess at future interest rates but its probably generous and gives a guide on what the return is.

Invest £5000 in Barclays Capital Protection and

Year 5 - £5000 + 40% = £7000

With the cyclic nature of the economy I would predict the FTSE 100 to be higher in 5 years time than it is now but Im 23 with no expecrience in this kind of thing. If you dont mind taking the risk it seems worthwhile.

Anyone with useful input?