Regular saving

crisis_management

Quick question; I need to save 1000 - 1250 per month over the next 3.5 yrs for a specific purpose. i am a basic rate taxpayer (or at least my wife is). What is the most efficient way of doing this? I've searched the "best buys" but I'm pretty confused. Any help would be greatly appreciated:)

xrjtg

The simplest method is to open the highest paying savings account you can find, and pay the money into it each month. You asked for efficiency though, so onto the finessing.

Regular savers are generally the best place for new money, as the pay a premium rate of interest in the hope that you'll keep the money in a lower paying account after the year ends. A typical offer at the moment might be 4% AER when you pay in between £25 and £250 a month, so one downside of this approach is that you would need to open multiple accounts.

If you have a moderate lump sum (or after you have accumulated a lump sum) the best place at the moment is Lloyds Vantage current accounts, that pay 4% AER monthly on balances between £5000 and £7000 provided you credit £1000 a month, although this can be a transfer from elsewhere, and the money doesn't need to stay in the account. It actually beats or equals most regular savers at the moment if you have the £5000 up front, the main exception being the Lloyds Monthly Saver, which is currently paying 5% AER.

Cutting across the above we have the issue of ISA allowances. In general these should be used before other options (possible exceptions include cases like the Lloyds Monthly Saver if you can't get 4% in an ISA wrapper). Two ISA allowance would just about cover your planned savings, so this may just about decide the issue for you. This list suggests that there aren't any good regular saver ISAs available at the moment though.

Whilst we're at it, you might as well open a Halifax Reward account for the £5 a month each if you haven't got one already.

Good luck wrestling with the constraints outlined above!

crisis_management

Thanks, that's helpful. I have already got the ISA angle covered, so I think I'll have to go down the multiple accounts road. Adding on Martin's piggybanking technique for different saving goals, I can see I'm going to have accounts coming out of my ears.