Initial Saving Method

Bowlestown

Hi everyone.

Me and a partner of mine are looking to save £200 a month each in order to start a business up in the long run. However we have come into difficulty in deciding how to invest our money initally, as it seems almost worthless to deposit such low amounts at the current rate of interest in savings accounts. We were considering premium bonds and other methods of saving but none seem to make a reasonable ROI at least in Year 1, Just wondering if anyone has a suggestion of how to save starting from £0.

Cheers, Aaron.

Reaper

There's no point in premium bonds for anything other than a bit of fun. The average return is even worse than the savings accounts.

There are no easy answers, rates are low.

I suggest you start by looking at ISAs and regular savings accounts which you can read about on the main site (click the Banking & Savings tab above).

If you are willing to take risks in the hope of better returns and the period you are thinking about is several years then look at investment funds (ie a manager picks stocks for you within your chosen area). That can also be held in an ISA and can also be found on the tab above.

Hoof_Hearted

Lots of regular savings accounts offer a better level of interest, many with a fixed or bonus rate for the first year. Thanks to MSE, we got 7.75% last Dec in a regular saver. Rates for these sorts of accounts exceed most lump-sum accounts and would suit your purpose. 4%+ should be possible, but bale out when the high rate ends.

Primrose

If you're taxpayers, I'd look at ISAs and Regular Savers as you seem to be looking at the more distant future, rather than near term which is probably not necessarily a good time to be setting up anew business anyway. Be sure to keep your savings separate from each other just in case your plans change, and before giving up the day job, make sure both of you have sufficient funds to keep you going for six months and preferably a year in terms of your ongoing domestic expenditures as the first year of any business is usually notoriously difficult in terms of cash flow whilst getting it off the ground.

Bowlestown

Cheers guys for posting. Couple of things I should of really mentioned in my first post:

> I'm not a taxpayer, I work part-time and am expecting to earn about £6k this year (Apr 09-Apr 10). I do not intend to go full time anytime soon, as I'm in the second year of 6th form and will be taking a third.
> My business partner has left sixth form and is also part time, however he will be paytaxer (just) as he expects £10k from this tax year, he is looking for full-time work however, which will obviously increase that.
> The £200 each month is subject to change, we do intend this goes up rather than down through. I have no monthly outgoings and he has a little bit.

We are looking a fair bit into the future i.e 3 or 4 years time. I mean we may decide not to go into business after all but just come out the other end with substantial savings which have earnt a decent amount of money via interest, either way, just want to get the best ROI possible.

Kay_Peel

I don't think it's a good idea to open a joint savings account, when your plans are vague and when your tax affairs are quite different. It might get very complicated indeed!

Instead, I would go for separate accounts, saving £100 each a month. Meet up in 4 years time and see how you've both done.