Long Term Savings

Macce

I currently have a Cahoot Savings Account paying 5.65% however this will drop thier standard rate in June when my 1Yr introductory rate finishes.

With interest rates predicted to fall this year should I start looking at a Fixed Rate 1-2 year savings account ?

I also came across Halifax's 5.7% fixed ISA. Where you can choose a period of 1-5 years. Am I correct in thinking you can only deposit a max £3000 each year into this account ? as I am slightly confused with the one of the condtions being:

"No additional deposits or part withdrawals are allowed during the chosen term"

I currently have £16,000 in my Cahoot Account so I wont be able to put all of it into the ISA over the 5 year period , so recommendations on where I should put the remainder of my savings would be good.

TIA.

Reaper

To answer some of your questions:

£3000 is the most you can put into a cash ISA in any tax year. The Halifax Fixed ISA also says this is minimum too. That's why no more can be added. None can be taken out during your chosen term as is common with fixed interest rates.

Nobody knows for sure what will happen to official interest rates. The majority view seems to be that over the next year interest rates will fall slightly, although probably only 0.25%. But like I said nobody really knows.

Where you put your money depends on too many factors to advise here. Such as whether you are willing to take a risk.

Walletwatch

To add to what Reaper has said, if you do decide to fix your exposure, it might make sense doing so at the earliest, as again, my personal opinion is that the fixed rate options that are available today may not be around six months down the line.

If you do decide to retain the money in your Cahoot account till mid 2005 though, you can get a feel of the market at that stage, and who knows, the interest rate may actually be 25-50 bps higher, giving you even better variable rate deposits.

deemy2004

I currently have a Cahoot Savings Account paying 5.65% however this will drop thier standard rate in June when my 1Yr introductory rate finishes.
TIA.  

Me too !

Ive already transferred and fixed my ISA's at 5.8%, yeh, now its 5.7% - And thats for a FIVE YEAR TERM ! Not 1-5.

Fix it now while you have the chance AS likely product rates will fall, even if base rates don't.

Since August 04, I have been steadily fixing various products, where the only funds now remaining or with the cahoot (in wifes name).

What I've done is already fixed much of the cahoot money from 0%  cards, so the cahoot will go towards repaying them, unless I get more 0% cards in which case the cahoot money will have to be rolled over into some other short-term or instant access product that tallies with the bulk of the ending 0% cards.

Unfortunately there arn't any fixed rates better than 5.65% (apart from the halifax ISA at the moment), so best thing is to keep the excess over £3k in the cahoot for now and fix it at the time of maturity.

Maybe if theres a sterling crisis and money market rates rise following the election the timing may coincide with the end of the Cahoot offer, and there is some sign of this starting to appear (very early days), i.e. bond markets are looking a little expensive.

oramgepekoe

How about moving some on a monthly basis to a Regular Saving account such as the Derbyshire at 5.85% assuming that you comply with all the conditions regarding saving and withdrawals.

http://www.thederbyshire.co.uk/savi/easyacc/easyacc_keyfeat_regsav.html

cheerfulcat

I also came across Halifax's 5.7% fixed ISA. Where you can choose a period of 1-5 years. Am I correct in thinking you can only deposit a max £3000 each year into this account ?
TIA.  

The £3000 is your annual mini cash ISA limit; you can of course transfer any previous years' mini cash ISAs to the Halifax account ( assuming that you're not tied into a term account elsewhere ).

Cheerfulcat

Milarky

Just want to check if the quoted 5 year rate from Halifax of 5.7% is 'simple' or 'compound'?

[The way to know this, I assume, is that if they say 'earn 5.7% AER' then it has to be compounded, but if they don't use the 'AER' term then it would be a flat rate - of 1.285 ^ [1/5th] or 5.143 AER]

deemy2004

Just want to check if the quoted 5 year rate from Halifax of 5.7% is 'simple' or 'compound'?

[The way to know this, I assume, is that if they say 'earn 5.7% AER' then it has to be compounded, but if they don't use the 'AER' term then it would be a flat rate - of 1.285 ^ [1/5th] or 5.143 AER]

5.7% AER.
So compounded, they will probably sent an statement on anniversary showing the interest credited to the account for that year. I recall an earlier discussion on this topic in November.

Macce

OK thanks for the replies.

I have decided to go for a 3Yr fixed Halifax ISA @ 5.7% as I dont want to lock my money away for any longer than that.

Another question, have heard on the grapevine that MR BROWN may review the ISA situation and restrict people to a max of £1000 per tax year whats the likelyhood of this happening in the next 3 yrs or is it just pot luck?

Source: http://business.timesonline.co.uk/article/0,,9554-1396657,00.html

deemy2004

OK thanks for the replies.

I have decided to go for a 3Yr fixed Halifax ISA @ 5.7% as I dont want to lock my money away for any longer than that.

Another question, have heard on the grapevine that MR BROWN may review the ISA situation and restrict people to a max of £1000 per tax year whats the likelyhood of this happening in the next 3 yrs or is it just pot luck?

Source:  http://business.timesonline.co.uk/article/0,,9554-1396657,00.html

Its 5.7% for 5 years, 3 years is a poor 4.95%

Yeh, highly likely they will get extended to 2009 at 3k per tax year.