Saving Options (after ISA)

Yuzo

when i have paid the limit of £3600 into my ISA in next years allowance,

.. what would be the best option to do with any new savings during the year?

the only other bank account i have is a barclays current account, that i have had since i was about 16... which my wages are paid into, but dont want to leave in this account, as i get a piddly amount of interest.

the only other option i can think of at the moment, is throwing any new savings into Premium Bonds.... or maybe i should open a new bank account with high interest?

any advice would be great, as i have never really weighed up my savings options before.

nrsql

There's ns&i index linked certs.

Pay .85% over RPI (or .85% if RPI is negative which looks likely tomorrow) for first year. The RPI will be the index at purchase compared to the index at sale (no interest in first year then monthly). Anniversary interest is locked in.

May not look like much but is government backed, tax free and you are covered (ish) if inflation takes off.

Yuzo

nrsql wrote: »

There's ns&i index linked certs.

Pay .85% over RPI (or .85% if RPI is negative which looks likely tomorrow) for first year. The RPI will be the index at purchase compared to the index at sale (no interest in first year then monthly). Anniversary interest is locked in.

May not look like much but is government backed, tax free and you are covered (ish) if inflation takes off.

sorry mate, did not understand a word of that, new to saving as stated in first post

Primrose

The other option you can look at, assuming you are still of working age, is adding additional voluntary contributions to your pension scheme, or indeed starting to pay into an occupational or personal pension scheme. Retirement may still perhaps be a long way off for you, but if that is the case, small contributions added now, will have a long time to accumulate in value, and of course your contributions will be tax free, which makes the investment more worthwhile. The other question is whether you want your savings to be in cash or equities, as you still have another tax-free £3600 of allowance in your annual ISA to be used up which could be used to invest in unit trusts within a tax free wrapper. As we don't know how old you are, whether your long-term savings are going to be put towards buying a property, etc. it's a little difficult to offer options without knowing what your longer term agenda is.

Yuzo

i am 22, currently saving 90% of my weekly wage (living with parents :j), i work 25 hours a week, but have got loads of overtime at the moment, so am saving in the area of £200-£250 per week, so around £900 per month.

i am saving for a deposit on a house/flat,... say in 2 years time.

PS.

as for the pension, dont really want to do this, i want everything to go towards my deposit,... as my main fear is getting hit by all the many bills and payments, then not being able to cope when i first move out... so would rather my mortgage payment be as little as possible.

Baldur

Have you read the Savings article on the main site? That should point out your options for a start.

Yuzo

yes, just been reading through options on the main website.

looks like a simple idea would be to open a regular savings account.. even though i will get taxed 20% on interest, the rates are higher than ISA ones.

the barclays example below looks interesting,

.. i am best filling next years ISA before opening one of these though

---

Rate: 6% AER fixed for 12 mths.
Monthly Deposit: £20-250.
Make withdrawals?: Yes, interest drops to 3.03% in any month you do this.
Miss a payment? Yes
Operated by: Online/Phone/Branch

littlemrtinkle

barclays monthly saver?

and come 6th april you can start depositing into your current or next isa.

paulw19

Yuzo, I am in a similar position to you so maybe my advice will help.

Firstly, have a look at the HSBC regular saver post, this is something that I have recently done. The interest is high (13.5%) if you make sure you get the bonuses by going though TopCashBack and change your direct debits. Even if you dont or you already have an HSBC account, an interest rate of 8% is still appealing. There are other regular savers around with slightly lower rates of interest if you wanted to put more than £250 into this account each month, I wouldnt recommend it though as your money is locked in unless you are prepared to sacrifice interest.

I currently hold no money in a cash ISA, I moved it to a stocks and shares ISA. I really dont see the point in 1% interest, I'd rather take a gamble. Before anybody tells me how bad an idea this is, I do not have all my money there, only what I am prepared to lose! This may turn out to be a slightly longer term investment, again I am prepared for this. I feel 2 years is a reasonable time scale for good returns, but this is open to personal opinion. I certainly expect better returns that I would get from a cash ISA.

I currently have around £5,000 in regular saver schemes paying 12% and 14% respectively that mature quite soon. Once this happens I will be paying into my cash ISA or looking at bonds/further investment in stocks and shares ISA.

Finally, if cash ISA is your preferred route, then your allowance starts again in the new tax year (6th April 2009). I would certainly recommend this option and at least one of the above at your discretion, a lot depends on your attitude to risk.

I hope this helps!

Catlover18

Hi,

I opened the Barclays Monthly savings account but am a little confused by the interest i'm accruing (or not as the case may be!)

I was of the belief that i would be getting 4.67% on the balance that i had in my account. So at the end of the first month after i had paid the max amount of £250, i was surprised to only have 33p in interest! I'm not sure if i've missed something, but this doesn't equate to 4.67%. Does anybody have any ideas actually how this works?

I have outlined their rates for this account below.

Many thanks.

Balance £1+
Gross rate pa% 5.84
Net rate pa% 4.67
AER% 6.00

PinkPig

Catlover18 wrote: »

Hi,

I opened the Barclays Monthly savings account but am a little confused by the interest i'm accruing (or not as the case may be!)

I was of the belief that i would be getting 4.67% on the balance that i had in my account. So at the end of the first month after i had paid the max amount of £250, i was surprised to only have 33p in interest! I'm not sure if i've missed something, but this doesn't equate to 4.67%. Does anybody have any ideas actually how this works?

The net annual (not monthly!) rate is 4.67%, which you need to divide by 12 to get the monthly rate. This makes about 0.39% per month, which is about 97p on a balance of £250. Since you got less than that I'm guessing that the £250 wasn't in the account for a full month at the point where you were paid interest. I think interest is added on the 1st of the month so if you opened it in the middle of the month that would explain the difference.

Remember that the amount of interest you get will increase each month as the balance increases. In the last month you'll have a balance of about £3000 and receive about £11.67 in net interest. You can expect roughly £70 or so in interest (after tax) for the whole year.

Hope that clears things up a bit. It's worth pointing out that a 6% monthly rate would be insanely high - it's equivalent to a 100% annual interest rate, which means that your money would double in a year!

The most common misunderstanding with regular savings accounts is to incorrectly expect 6% (or whatever the rate is) of the final balance to be paid in interest. The average daily balance throughout the year is about half of this, and so the actual amount of interest will be, very approximately, 3% (minus tax) of the final balance. After all, most of the money is only there for part of the year, and banks don't pay interest on money you haven't deposited yet!

If you're moving the money from an existing lump-sum into the regular savings account, make sure that the rest of the money is in a separate instant access savings account earning a good rate of interest.

If you're saving out of your salary/income then the regular savings account is all you need unless you want to save more than £250 a month.