Premium Bonds and Fixed ISA's

Stella

Hello All

I wonder if anyone can help me i am a bit of a novice on investing and making the most of my savings and have been considering a few options.

Firstly i was hoping to open a 1 year fixed rate ISA with KRBS, but I dont think i am able to now as I have a nationwide ISA fixed rate bond opened in April 09 and expiring in April 10. Could someone advise if im correct in thinking i can only have one ISA in a year?

Secondly I was thinking of placing around £23,000 in premuim bonds as i believe this are tax free?

Thirdly I am considering fixed rate bond too.

Lastly I am going to open a regular saver account and Im thinking of the Barclays Bank monthly saver.

Do any of these options sound plausible or do any money experts have ideas that may get the most out of my pennies!!

All ideas gratefully received.

Stella
Saving Novice

rb10

Stella wrote: »

Firstly i was hoping to open a 1 year fixed rate ISA with KRBS, but I dont think i am able to now as I have a nationwide ISA fixed rate bond opened in April 09 and expiring in April 10. Could someone advise if im correct in thinking i can only have one ISA in a year?

If you opened the Nationwide ISA in the 2008/09 tax year (i.e. on or before 5th April 2009), then you can open the KRBS one now. Otherwise, if it was opened on or after 6th April 2009, you will have to wait until 6th April 2010 before you can open another ISA (or add to the Nationwide one).

Secondly I was thinking of placing around £23,000 in premuim bonds as i believe this are tax free?

You are correct that Premium Bonds are tax free, but you should be able to get much higher rates after tax on a normal savings account, whether fixed term or instant access. For instant access, Egg is best at the moment, with 3.25% gross/2.6%net, or you can get fixed rates higher than this.

Lastly I am going to open a regular saver account and Im thinking of the Barclays Bank monthly saver.

Just be aware that it's limited to £250 per month, and you lose interest if you make a withdrawal. You can get higher rates elsewhere - there's a thread with all the best ones here - for example Halifax, where you can pay in up to £500 per month, but cannot miss a payment or make a withdrawal.

dunstonh

Secondly I was thinking of placing around £23,000 in premuim bonds as i believe this are tax free?

They are but they are also a complete waste of money for most people.

As it currently stands you are probably better off putting the money in a high interest account, pay the tax and then take the interest to buy scratch cards rather than be in premium bonds.

leveller2911

I have £10k invested since May this year and so far have a 2.5% return, its not great but at least I have a chance of a biggy each month.

dunstonh

leveller2911 wrote: »

I have £10k invested since May this year and so far have a 2.5% return, its not great but at least I have a chance of a biggy each month.

That is more than twice the annual average payout. A good start but dont expect it to continue.

jamesd

Stella, you're currently talking about options that assume that you will spend all of the savings in the next five years. Is that true or do you really expect to retain most of them for longer than five years, so investments like those available within a stocks and shares ISA (including government bonds and share funds) should be considered for some of the money?