New to savings

Najmul

Hi, I'm new here. Great site with some great tips.

I'm in my first full time job now and looking to start saving properly. I've only ever had a current account. I have a £2k lump sum I can start saving with straight away. I can put away £600 each month.

I've read about ISA, cash ISA, regular savings etc but I'm still confused!

I'm looking for longterm investments. Any tips on how and who to save with to maximise my returns?

McKneff

Hello there and welcome to the boards

If you are a taxpayer then ISA is your best bet as they are tax free savings.

And for further advice it depends of your idea of risk when it comes to stocks and shares and what you consider 'long term'
Please also say how old you are.

Najmul

I'm 23 years old. When I say long term, I mean 3-5 years.

I'd like to keep it all cash for now. So Cash ISA is only for £3600 max per year? I hear people saving £10k+ in ISA accounts, which are those?

Lokolo

You can put £3,600 in an ISA each tax year.

So Year 1 Total in ISAs: £3,600
Year 2: Total in ISAs £7,200
Year 3 Total in ISAs: £10,800

etc.etc.

The allowance is going up to £5,100 next April.

fullstop

Najmul wrote: »

I'm 23 years old. When I say long term, I mean 3-5 years.

I'd like to keep it all cash for now. So Cash ISA is only for £3600 max per year? I hear people saving £10k+ in ISA accounts, which are those?

Previous years contributions to ISA's which are carried over and continue to earn tax free interest.

Najmul

Oh I see. So after the first year, is interest payed on the total balance or just on the additional £3600 I can save each year?

So which ISA pays the best considering I'm willing to go for a 3-5 year plan with restricted withdrawals?

agsnu

Najmul wrote: »

Oh I see. So after the first year, is interest payed on the total balance or just on the additional £3600 I can save each year?

Total balance. See http://www.hmrc.gov.uk/leaflets/isa.htm for information on ISAs.

So which ISA pays the best considering I'm willing to go for a 3-5 year plan with restricted withdrawals?

http://www.moneysavingexpert.com/savings/best-cash-isa
http://www.moneyfacts.co.uk/money/savings/8/fixed-rates-isa.aspx
etc

Najmul

Considering the relatively low interest rates on ISAs, am I not better off just saving it in a regular savings account like Halifax 5% or Barcalys 4.25%...?

flyingscotno1

Najmul wrote: »

Considering the relatively low interest rates on ISAs, am I not better off just saving it in a regular savings account like Halifax 5% or Barcalys 4.25%...?

You might well be at times. When Barclays was doing 6% a Cash ISA had to be above 4.8% for basic taxpayers- my RBS one is 3.5%- even less for new customers!

The problem with regular savers is you cannot just chuck £2K in, but if you are paying in regular small amounts (usually max £500 or £250) from salary they're great. Alternatively you chuck the money in a high interest current account (Lloyds/Abbey/A+L) and drip feed it in.

Najmul

flyingscotno1 wrote: »

The problem with regular savers is you cannot just chuck £2K in, but if you are paying in regular small amounts (usually max £500 or £250) from salary they're great. Alternatively you chuck the money in a high interest current account (Lloyds/Abbey/A+L) and drip feed it in.

Thanks. That sounds like a good idea.

Eco_Miser

Najmul wrote: »

Considering the relatively low interest rates on ISAs, am I not better off just saving it in a regular savings account like Halifax 5% or Barcalys 4.25%...?

You may well be. However once money is in an ISA it is earning interest tax-free forever (until you take it out or the government closes the scheme) and you're only allowed to put £3600 a year in (more from next year). Over 5 years thats £18,000 plus interest. You are allowed to switch between ISA providers (subject to possible withdrawal penalties and acceptance provisions) to get a better rate if one becones available..