simple advice on fixed rates

cagneyfan

Hi, I hate having to deal with where to put my cash. Everything goes into a blur!

I would just like some simple advice. £30,000 due to mature at the end of this month- where best to put it? Fixed rate at 1 year, or is 2 the better choice (what's the chances of interest rates shooting up!)

I don't particularly need access, but it's always a nice option to have - although I don't mind tying it up for a year definately, possible two, with no access.

I look at the main site but like I said, it all blurs.

natman

Not too sure if you have used up ISA allowance this year, it may be worth of getting money in that sharpish, into a decent paying ISA, Then getting ready to pay £5100 into the 2010 - 2011 ISA allowance, so that £3700 and £5100 taken care of in ISA fund.

Fix term -
I personally would go for one year - the best at the minute is -
http://www.wesleyan.co.uk/CONTENT/about/wesleyan_bank/fixed_rate_deposit_account.aspx at 3.5% for a year, which is as good as things get.

Interest rates wil probably go up a bit, also with ISA season coming up, hopefully some banks and building societies will be fighting for the £5100 that we can invest.
http://www.aldermore.co.uk/savings/cash-isa.aspx has a good paying fix ISA for 12 months at 3.05%.

You could also have some in instant access for rainy day money -
The AA has instant access at 3% http://www.theaa.com/savings/savings_calculator.jsp

Basically if you can get your savings up to around 3 - 3.75% your doing well in todays market.

Good luck!

Baldur

natman wrote: »

.......so that £3700 and £5100 taken care of in ISA fund.

A slip of the fingers, presumably?

The current tax year's allowance is £3,600 for those <=50 years of age by 5th April 2010.

DiggerUK

mandy jo,
Debts must be taken care of first, then treats, then a rainy day fund. You will be able to put 5,100 in a Cash ISA in April, and make sure this years is topped up if need be.
If you can put some away for 3 or 5 years then go with National Savings Index Linked. With uncertainty over interest rates, I think they are the best option for that time frame.

Best of fortune.

princeofpounds

The likely direction of interest rates from here is up, but no-one is entirely sure when.

Banks price their interest rates from a things called the yield curve, which is the market's best guess of where interest rates will be in the future over various timescales.

So the return on a 2yr account will be more or less equal to the return on a 1yr account followed by the expected return on a one year account in the second year.

You can't guess the future path of interest rates any better than the accumulated wisdom/stupidity of the market, so it's really futile to try.

Of course some banks are able to offer more competitive products than others so your chief concern should be getting the best rate for the time period you pick and making that time period most suitable for your personal circumstances.

Ifts

mandy-j0 wrote: »

I would just like some simple advice. £30,000 due to mature at the end of this month- where best to put it? Fixed rate at 1 year, or is 2 the better choice (what's the chances of interest rates shooting up!)

Have you checked to see if your current savings provider that you already got the £30K with offers any Fixed Rate Loyalty Bonds, some savings institution make them available only to maturing Fixed Rate Bond account holders.

If not Wesleyan Bank, is offering 3.5% AER on its 1 Year Fixed Rate Deposit account, from £1,000. Any withdrawals during the term are subject to a 180-day interest penalty.

(Personally at the current rates I would not fix for longer than 1 year unless withdrawals are allowed)

natman

Baldur wrote: »

A slip of the fingers, presumably?

The current tax year's allowance is £3,600 for those <=50 years of age by 5th April 2010.

Ha Ha, Yeah - Baldur is spot on, thanks for highlighting my error!!! Sorry!!

barginunter

I've just put some money away in a 5-year fixed account at 5.1% with AA.com.