Saving £1,000 per month

salparadise_2

Hi,

My partner and I are looking to put away £1000 a month over the next 5 years. We don't intend on withdrawing any of it during this time. I'm a little confused as to what option to go for regarding a savings account? Finding it difficult to find something over 5 years that doesn't ask for all of the investment at the beginning - or maybe I'm just misunderstanding!

Any advice would be great,

Thanks,

Sam

opinions4u

What are you saving for?

It could be that investments bought via an IFA could be a better option for this. www.unbiased.co.uk.

Assuming you are only thinking about savings accounts, I'd have to suggest each of you maxing out your cash ISAs and making sure you keep an eye on the interest rate position (and switching providers occasionally) is most likely the best option.

Take a look at comparison sites like www.moneyfacts.co.uk/savings, and look at regular saver type accounts as well.

salparadise_2

We're not saving for anything in particular but we know it'll be £1000 a month and that we won't be touching it.

I'd like to put it away and add to each month for the 5 years via standing order rather than switch providers etc.

Many thanks for your advice, I'll check out that website.

salparadise_2

I've found two potential options.

One is the Post Office Reward Saver at 2.5%.


Or the online saver at 2.75%


The other is the Halifax Web Saver Extra at 2.6%.



Please let me know if either of these are ill-advised!

apt

They are okay, but opening up Lloyds Vantage accounts will give you 4%.

ricky.patel89

Wrong thread, delete

Rob_192

To maximise your returns you are going to have to do a bit of work here. Firstly, I am assuming you are looking at savings rathers than investments. At 5 years you are approaching the timescale where investments might be considered, but that's only for the initial money you put aside, the rest will be in for less time and won't necessarily have time to ride out the peaks and troughs.

So, assuming savings accounts, as you say most long term savings accounts are looking for you to deposit a sum of money and leave it tied up for a given period, so not suitable for you at the moment. There are some other excellent accounts such the Lloyds Vantage account as mentioned above by apt, but this only pays 4% on balances between £5k & £7k, therefore again not suitable for you yet.

What you need in the short term is Regular Saver accounts. These offer a great rate of interest but only for a limited sum per month and then after a year the money is transfered into an account which usually pays a crap rate. So, what you need to do is initially get some good Regular Savers accounts and bang in the max you can per account. First Direct offer 5% and you can each put in £300/month, however you will need to have a FD current account. There are various others who offer 4%, so you will need to research this and work out what's best for you. Two accounts each would be needed to enable you to deposit £1,000/month.

After the first year, you will have £12k + interst to play with and here's where something like the Lloyd's vantage accound may come into play - you will have to research what's available at the time. You can then carry on with the Regular Saver and repeat this process year on year. After the first year, you may then decide to put your £12k+ into a 4year fixed rate saving account.

The other thing you need to consider is Isa's - you don't mention your tax status, but as you will know Isa's are tax free. The rates on Isa's at the moment are not great, but if you're saving for the long term then it makes sense to build up as big a pot as you can in your cash Isa and hope that rates pick up - the effect of compounding on an accumulated pot will be significant in the longer term. You can put up to £5,100/year each in a cash Isa, so your £1,000/month could go mostly into Isa's. When comparing rates you need to consider that a rate stated for an Isa is actually what you will get and it will continue to grow tax free, whereas the rate you see for a savings account will have the tax deducted at the compound rate and then if you're a higher rate tax payer, you will loose a bit more when you do your tax return. This means the rates will be closer than at first glance.

It's really not that much work and well worth the effort.

R