some newbie savings advice please

thomp1983

hi posting on behalf of my girlfriend. she has 4000 pounds in savings that need reinvesting for a year, having looked around i seem to think the halifax regular saver(7% one) and the hisave savings combination on this site is the right one for her.
halfiax have said it's possible to have 2 regular saver accounts at 7% each so she was going to invest in one at £250 a month and the other £83.33 with the money being held in the hisave account upto the day of transfer.
i was wondering if anyone could advise if this is the best option for her money? and also what the rough figures would be she'd earn over the year both before and after tax deduction?

thanks in advance
chris

grumbler

thomp1983 wrote:

...halfiax have said it's possible to have 2 regular saver accounts at 7% each

2 on her name? :rolleyes: http://www.halifax.co.uk/savings/regularsaver.shtml :

Only one account per customer

so she was going to invest in one at £250 a month and the other £83.33 with the money being held in the hisave account upto the day of transfer. i was wondering if anyone could advise if this is the best option for her money?

If she has the second account on someone else name, the best strategy is to put 2*£250 during first 7 months, 2*£150 next month and 2*£25 during the rest: 7*2*£250+2*£150+4*2*£25=£4000

and also what the rough figures would be she'd earn over the year both before and after tax deduction?

With your initial strategy she can expect gross interest about
£4000*(6.5*7%+5.5*5.15%)/12=£246.

P.S. If she isn't a taxpayer, she must submit R85 forms to both banks to have interest paid gross, otherwise 20% tax will be deducted.

moneyandmountains

Is your girlfriend a tax payer?
If so, will she make use of this financial year's ISA allowance (apart from this investment).

It may be worth putting the bulk of the money into a cash ISA, even if only investing for a year (if this allowance is not already being used). Then apply the regular saving calculation, to see if it is worthwhile.

As a tax payer it is always better to pay the maximum you can into your ISA at the start of the tax year, as this means you can save the maximum amount of tax.

thomp1983

she's a uni student so not sure what here tax status is. basically she wants to make the most she can in a single 12 month period on the 4000 and were not sure which option is best

chris