Starter saver seeks advice

Basil_Hume

Hello all - just hoping for some advice on my savings. :money:

I'm 25 and have a bit of disposable income as a result of recently changing jobs. I've sold my car, meaning that I have a modest amount in savings and no motoring costs (cycle to work).

I worked at Citizens Advice Bureau as a student, which motivated me to use Microsoft Money to keep an eye on my finances. Hence I've managed to survive challenges such as moving out of home without accumulating debt, though until recently I haven't been able to afford savings.

The car sale means that I currently have £3k in a cash ISA (05-06 year) @ 4.25% - it's not the best deal, but I do like to support my local BS. I also have £1.5k in a normal account @ 1.5% with them, which is too low a rate - though I'm intending to transfer that to a Co-op Saver @ 3.5% until I decide at what point to bung it in the cash ISA before April '07.

My savings target is currently £300 pcm, rising to £400+(?) when my partner returns from her travels abroad in the summer (I pay the rent for now). Obviously this is going to amount to slightly more than the £3k Mini Cash ISA limit, so I was wondering what to do. I have just entered the 40% tax band.

My aim is to build a decent level of savings, for no particular reason. I'm pretty risk averse and don't feel able to gamble on a share ISA right now. What are the other options?

Cheers.

ReportInvestor

Hi Basil,

Are you with Hinckley, Leeds, Mercantile or Scarborough? If Scarborough then they do a regular saver ISA paying 6%. If Mercantile, then I can see why you want to stick with your local BS .

As a higher rate taxpayer you are going to struggle to beat inflation after tax in a savings account over the long term.

You might consider pension saving to just keep you out of the higher rate tax bracket (you pay 60p for each £1 of pension bought).

But I guess that your main goals are likely to be short/medium term saving towards buying a house - in which case you are just going to have to grin & bear it.

Birmingham Midshires Internet Easy Access issue 6 @ 4.9% gross, does at least allow you to match inflation after tax.

Regular savers are among the best payers. Halfax 7% Fixed is one that you can open without having to switch your current account.

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