Investec High 5 poor value?

twokcc

I've got an Invetec High 5 account which I thought represented a reasonable interest return when I opened my account in June this year. Got a few fixed term bonds maturing so being offered different period savings to reinvest funds with existing banks etc. i.e. AA 7.21% bond offered a 2 or 5 year deal at 4.27%/5.03% for monthly interest payments(high 5 paid monthly) both of which aren't bad rates bearing in mind that funds will go immediately from old savings account on closure day straight into new account following day. So don't have hassle of opening account with a new provider or loosing interest whilst money from old AA account is transfered to my bank account. BUT both above accounts are 90 day notice accounts and so are same notice period as Investec High 5 but paying an extra 1-1.5% interest above high 5 rate. In previous months opened other accounts with 90 days notice i.e Newcastle 5 year bond and Coventry 5 year bond. Seems the market is changing, when I made the deposit with Investec most bonds were for full term with no withdrawal options and most were for 2 years plus. Thought this was too long a period both in terms of no access and I expected interest rates to increase before the end of 2009. Prepared to tie money up for 1 year with no access and had expected better interest paying 1year bonds to be offered. But seems to have gone the other way- to get a decent interest return having to invest for longer but being offered 90days notice for withdrawals. Investec High 5 now looks past its sell by date, any opinions on this before I close account?

gozomark

Investec is the average of the best five instant access accounts, so its always possible to beat Investec, esp if you compare with 90 day notice accounts.

twokcc

exactly my point, its based on instant access account interest rates but is a 90 day notice account. Now that there are more 90 days notice accounts the interest rate is looking lightweight.

RayWolfe

If you want to chase rates, there is no point in having an account that can't do it as well as you can. The point of these accounts is that it saves you the bother.

dougz_2

twokcc, why are you comparing it to a bunch of fixed rate accounts? The important point is that the high5 rate can go up in future and if that happens those fixed rates could be the ones looking really poor then. (and BTW the AA is not 90 day notice, that is the penalty)

Jonbvn

OP,

You are comparing apples with oranges.

If interest rates remain at their present low levels, then the High 5 account will provide less return than the available fixed rates. However, when rates start to increase (since they are can't go lower!) the High 5 account will provide a better return than a lot of the present fixed rates.

Finally remember that this is not a zero sum game. What me and the OH do is hold some money (>25k) in the High 5 account AND we have several fixed rate accounts (mostly ISA money).

Primrose

I was considering some money in High 5, if only to save the constant hassle of continually chasing the best rate when fixed term bonds mature. The main question is: How long do you want to tie your money up for? There arn't too many 90 day accounts around. Obviously if you keep the minimum sum of £25K in there, the amount of lost interest is fairly minimal. If you have much larger sums to save, then you can earn more in fixed rate bonds. But there comes a point when the amount of time and research involved in always chasing the best rate can become tedious and I think this is where the High 5 account fills a gap. It doesn't look as if interest rates are going to increase much in the short term so unless you have a large sum of money invested with them which would earn you a lot more interest elsewhere, it might be worth hanging onto the account for the time being. If we suddenly find ourselves in an environment of rapidly increasing interest rates, then closing it and moving your money elsewhere might then become more worthwhile.

withnell

Note also that now Moneyfacts are including higher bonuses in their league tables, the investec rate will increase over the next week

Jonbvn

Primrose wrote: »

If we suddenly find ourselves in an environment of rapidly increasing interest rates, then closing it and moving your money elsewhere might then become more worthwhile.

I'm somewhat perplex by your comment. Should rates start to rise then the High 5 account interest rate will also rise. In such circumstances it is surely better to have the High 5 account than a fixed rate account?

[Deleted User]

investec offers extremely good value as part of a varied savings portfolio. I for one don`t want to spend my valuable time, rate chasing, hence my dh and I are both fully invested. For us it goes hand in hand with fixed rate bonds, instant access and various other savings vehicles

Besides that, their customer service is top notch and they treat you like a real person

Primrose

jonbvn - yes you're probably right. It's just that sometimes you can grab a good rate in a fixed rate bond if an institution needs the money whereas some of the others can lag behind which could cause the High 5 to be slightly less compketitive for a little. I suspect it's a case of swings and roundabouts and for anybody who doesn't have time to rate chase or who can't tie their money up for extended periods of time, it's a competitive option.