Regular Savings or Savings A/C or mix?

socrates

My uncle has an endowment policy maturing - circa £100k.

He is a low rate tax payer, the mortgage linked to the endowment is already cleared. His ISA 's are maxed out.

So heres my advice but I have obviously missed some angles:

He has opened 3 Vantage a/c's and will credit them with £7k each and rotate £1k per month.

He has opened Halifax Regular Saver and will pay in £500 per month.

He has opened the Citisave account - 3.3%

He has opened the Alliance and Abbey £2.5k maximum each accounts.

He is looking into the N&P Regular Family Saver, Nat West RS and RBS RS.

He does not want 1+ year bonds. He wants some kind of liquidity even if its penalised.

My question is:

Is a regular saver @ 5.0% better than the Citi a/c.

Should he forget the regular saver route and all the messing about and just put £50k into the Citi a/c?

Are there any other accounts/options he should be looking at?

Cheers guys....

Milarky

My question is:

Is a regular saver @ 5.0% better than the Citi a/c.

For the N&P account [6%], the interest gain is 2.7% x £1625 = £43.88 before tax

For the RBS/Natwest [5%] is will be 1.7% x 2[accounts] x £1625 = £55.25

Roughly speaking for opening these three accounts he could gain about £100 extra interest. However the accounts to compare are fixed term deposits for 1 year [the terms of these account mentioned] at, say 3.8% - a gain of 0.5% - the same £100 would require a single deposit of about £20,000 - and could then leave the balance of his savings with citibank - still with access.

socrates

Thanks for that - so is he following the correct path - are there any other accounts he should be looking at?

Special_Saver2

Hi socrates,

Well, a few people on the forum have been suggesting opening multiple Lloyds TSB current accounts with the Vantage option - see post 9 on the thread Regular Savings Accounts: The Best Currently Available List! There is a link from the entry on this account in post 9 to another thread with useful information. This account would earn him 4% interest and would make a great feeder account for regular saver accounts if he does not mind having to transfer £1,000 around between the different current accounts each month. It would also then be easy to operate a Lloyds TSB 5% regular saver account (see post 5 on that thread).

Also, if you look at that thread, you can see at a glance which regular saver accounts will interest your uncle by looking at the "Penalty-free withdrawals:" line for each account - many regular saver accounts offer one or more penalty-free withdrawals each year.

SS2

Baldur

Special_Saver2 wrote: »

Hi socrates,

Well, a few people on the forum have been suggesting opening multiple Lloyds TSB current accounts with the Vantage option

On checking in branch today (having just opened my first Vantage online) the LTSB intranet is now indicating to bank staff that a maximum of 3 Vantage accounts can be held by each customer.

socrates

Baldur wrote: »

On checking in branch today (having just opened my first Vantage online) the LTSB intranet is now indicating to bank staff that a maximum of 3 Vantage accounts can be held by each customer.

Thanks for that - I did actually state in my original post he has opened 3 Vantage Accounts already.

Gordias

For that much cash he could also look at feeding the Barlclays Wealth International Bank Regular Saver. It pays 5% and you can put in a whopping £2000 a month.

socrates

Our Regular Saver could be perfect if you don't have a lump sum to invest but want to save on a regular basis - start by saving between £25 and £300 in the first month, then make regular payments every month for the next 11 months, by standing order only from your 1st Account, of at least £25 up to the maximum monthly balance, which starts at £300 in month one and increases by £300 each month thereafter. For example, if you save the full £300 per month for 12 months you would receive approximately £97 gross (£78 net) in interest at the end of 12 months.

During the first 12 months

• 5.00% AER/gross fixed for 12 months

This is taken from First Directs Website.

For £300 per month for a year you would get £78 net

Correct me if I am wrong but putting a lump sum of £3600 in Citibank - after tax you would get more than this - seems the regular savers are a waste of time and effort for lump sums

Baldur

socrates wrote: »

Correct me if I am wrong but putting a lump sum of £3600 in Citibank - after tax you would get more than this - seems the regular savers are a waste of time and effort for lump sums

Suggest that you read about Dripfeeding - http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#dripfeed

and put your figures into the calculator, selecting the "I want to drip-feed" option - http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#savingscalc

socrates

Baldur wrote: »

Suggest that you read about Dripfeeding - http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#dripfeed

and put your figures into the calculator, selecting the "I want to drip-feed" option - http://www.moneysavingexpert.com/savings/best-regular-savings-accounts#savingscalc

I just was doing that as you typed it:

After saving £300 a month for 1 year and 0 months,
you will have £3,723.62 in savings.
meaning you've earned £123.62 interest

This seems to conflict with First Direct

Baldur

socrates wrote: »

I just was doing that as you typed it:

After saving £300 a month for 1 year and 0 months,
you will have £3,723.62 in savings.
meaning you've earned £123.62 interest

This seems to conflict with First Direct

The Regular Savings Calculator gives the following (with the drip-feed option & basic rate tax):

Normal Account
3.3% rate
£3600 saved

Regular Saver
5% rate
£300 per month

After drip-feeding the cash for 12 months...

TOTAL INTEREST EARNED: £122
£44 from the normal savings & £78 in the regular saver.

If you'd kept the money only in the normal savings account you'd have earned £95 in interest.