Where would you put your money?

Simon11

Hi All:D

I'm saving for a house and just finished a work placement year. I could easily put away £800 a months, however now im back at uni I only have my part time job to rely on resulting that I will struggle to put away £800 every month.

I have two different saving accounts

Santander First Homer Savers account
I get a variable rate of 5% but 4% after tax.(This will applyas I will def earn more than tax limit). I can invest up to £300, however I only get the 4% rate if I invest between £100-£300 every month. If I don't manage to get that, I get 0% on interest for that month only (I just have over £6k at the mo)

Newcastle ISA Fixed for 1 year at 3%
I can invest up to £500 every month and must invest minimum of £100 for 9 out of 12 months to get the 3%. However I opened this account in June with first payment. At the moment, I have to put in £500 every month up to April 2011 otherwise I will loose out on my Tax free Isa £5,100 for the year. If I was to invest in this account after April tax year 2011, then I will then be forced to only use this account to deposit my 2011 Isa money, with most likely hood is that I switch again for a good rate.

In short, while my interest on the Santander account is higher (Note variable but I doubt this will go down), I could therefore miss out on filling my Isa for this tax year

So rather confusing and there is no clear answer, Where would you put your money? Ie if you had £100 to save a month, £200, ect:D

I look forwards to your reply:)

Rob_192

Simon

If you're saving for a house, the Isa money will presumably be used for a deposit at some point. What sort of timescale are you talking about? There is only any real benifit in putting the full amount into your cash Isa if you are looking at long term savings. If you are only talking abount 2 or 3 years then you would be better putting the max that you can into the higher rate savings acc.

Clearly you need to meet the minimum requirements on the Newcastle Isa to get your 3% interest, so you need to be paing at least £100 for the minimum 9 months, but the rest would be better off in the acc earning 4%.

Only if your looking longer term would I max out the Isa and even then you're relying on cash Isa interest rates picking up significantly in the future.

R