Not a lot but what can i do with £500?

CashStrappedTeen89

Been thinking today i have £500 in my ISA (Standard life @ 2.3% iirc), tbh its pointless for to have an ISA having that amount, another £300 and ill have my buffer but what im wondering is how to use the £500 i have?.

Should i leave it in the ISA?
Just get a normal savings account?
Invest?
Put some in things like premium bonds or shares ect?.

I know its not a lot but i'd like to know what way best to use my money for future reference :beer:...

Cheers

Andy

Consumerist

If you're a taxpayer then it is likely that the cash ISA is the best bet for the first £5,100 of savings in any tax year. If you are a basic-rate taxpayer, you will need 25% more interest in an ordinary instant-access savings account to make up for the tax-free status of the ISA but you might get lucky.

£500 is really not enough to safely put directly into shares because you won't have enough to spread your risk. There are also up-front charges for share dealing which will put a relatively large dent into any gains you get in the long run.

You say you expect to have a "buffer" which I assume is an emergency fund. For this reason too, you should stay in cash in case you need access to your funds at short notice.
.

CashStrappedTeen89

Consumerist wrote: »

If you're a taxpayer then it is likely that the cash ISA is the best bet for the first £5,100 of savings in any tax year. If you are a basic-rate taxpayer, you will need 25% more interest in an ordinary instant-access savings account to make up for the tax-free status of the ISA but you might get lucky.

£500 is really not enough to safely put directly into shares because you won't have enough to spread your risk. There are also up-front charges for share dealing which will put a relatively large dent into any gains you get in the long run.

You say you expect to have a "buffer" which I assume is an emergency fund. For this reason too, you should stay in cash in case you need access to your funds at short notice.
.

Yep full taxpayer, circa 13k a year atm, so investing is out, i may stick next months £100 in premium bonds though, something along those lines.

opinions4u

1. Build up 3 to 6 months net pay in an easy access contingency fund. This could be an ISA (e.g. Santander 3.2%).

2. Then look at things like high rate monthly savers etc (e.g. Principality Building Society 4%) to build up your cash.

3. Then progress to term deposits as your stash of cash builds up.

4. Review everything at least every 6 months.

Prior to all this, know what you're saving for and what your target date is. Is it car, house, holiday or just because you can? Don't forget to consider pensions too.

i may stick next months £100 in premium bonds though, something along those lines.

Statistically a poorer decision that the 2.3% ISA that you described as "pointless".

CashStrappedTeen89

1) Okay, just for ease ill leave it in the ISA, would it be worth upgrading to the latest one at 3.50% through A&L, as soon as i start paying into mine for this year ill be sucsribed and wont be able to change again.

2) Fair enough, any recommendations so i can start looking at them?.

Im just saving for the future at the moment, it could be a house or a car so i have no goals at the moment just to keep saving and not touch it i suppose ...

Regarding pensions i work for the council and pay into that scheme cant remember what its called but i know its one of the best and have just finished applying for my forcast for state which came back at something like £15 a month / 37k iirc not sure what all that jargon means though.

opinions4u wrote: »

1. Build up 3 to 6 months net pay in an easy access contingency fund. This could be an ISA (e.g. Santander 3.2%).

2. Then look at things like high rate monthly savers etc (e.g. Principality Building Society 4%) to build up your cash.

3. Then progress to term deposits as your stash of cash builds up.

4. Review everything at least every 6 months.

Prior to all this, know what you're saving for and what your target date is. Is it car, house, holiday or just because you can? Don't forget to consider pensions too.

Statistically a poorer decision that the 2.3% ISA that you described as "pointless".

topgearfan08

CashStrappedTeen89 wrote: »

i may stick next months £100 in premium bonds though, something along those lines.

If you dont see the point in having the £500 in the ISA, you may as well stick the lot in premium bonds, though when I had £1000 for a year I didnt win a sausage...

My parents have had £100 in each for 22 years I think, not a sausage...

Its only since Ive put 10K in in 2 5k blocks ive got £50...

Better luck next month eh!

Consumerist

CashStrappedTeen89 wrote: »

. . . would it be worth upgrading to the latest one at 3.50% through A&L, as soon as i start paying into mine for this year ill be sucsribed and wont be able to change again.

The 3.50% ISA from A&L / Santander was reduced to 3.20% from 06 April 2010. It has since been closed to online applications and is soon likely to disappear altogether - so you may have missed the boat on that one. You might find this article of some interest

You can transfer an ISA at any time but be sure you do it correctly if you don't want to lose the tax-free status.

I would recommend you refer to the MSE ISA page so that you understand how they work.

CashStrappedTeen89

Consumerist wrote: »

The 3.50% ISA from A&L / Santander was reduced to 3.20% from 06 April 2010. It has since been closed to online applications and is soon likely to disappear altogether - so you may have missed the boat on that one. You might find this article of some interest

You can transfer an ISA at any time but be sure you do it correctly if you don't want to lose the tax-free status.

I would recommend you refer to the MSE ISA page so that you understand how they work.

I undertsand the how ISa's work, i just think having £500 in there doesnt have much benefit at the moment.
I've also done a transfer before actually with the one i have now so that wont be a problem.

Consumerist

CashStrappedTeen89 wrote: »

I undertsand the how ISa's work, i just think having £500 in there doesnt have much benefit at the moment.

If you're getting 2.3% AER in an ISA then you're not doing too badly as it's equivalent to 2.875% in an ordinary savings account (if a basic-rate taxpayer). You may be able to improve on the rate by transferring (if you can be sure you won't lose too much interest during the transfer).

Edit:
You may do better with a fixed-rate ISA account if won't need access to the money for a year or two. Or, perhaps, a fixed-rate savings account may get a better return in the short-term if you don't mind losing the tax-free status.

Just how much benefit are you expecting from £500 ?

CashStrappedTeen89

Consumerist wrote: »

If you're getting 2.3% AER in an ISA then you're not doing too badly as it's equivalent to 2.875% in an ordinary savings account (if a basic-rate taxpayer). You may be able to improve on the rate by transferring (if you can be sure you won't lose too much interest during the transfer).

Edit:
You may do better with a fixed-rate ISA account if won't need access to the money for a year or two. Or, perhaps, a fixed-rate savings account may get a better return in the short-term if you don't mind losing the tax-free status.

Just how much benefit are you expecting from £500 ?

That may be a good idea putting what i have in a fixed rate ISA or savings account i dont really need it tbh i can survive on what im doing now.

Its not the benefit im after really i just want to make sure that im using it the best way. o and its now £800