savings account or mini cash ISA??

anskills

im sure this would have been covered before but i cant seem to find an old thread.

basically i have £1k i would like to put into a savings account or ISA of sorts.

i would then put in another minimum of £100 a month from my salary.

i would like to be able to access it at any time as i may be about to purchase a buy to let property and would need the money for the deposit. if the BTL goes ahead i would also be planning to put in any profit from that. to be honest though the profit for the first 5 years would be minimal so i dont really want to take that into account for just now.

1) so basically where would my money be best put?

2)is there anywhere on here that can explain exactly what an ISA is im unsure.

3) where is the best savings account with online access and high interest rates just now?

thanks

kevin

anskills

4) also is it better to go for an account paying monthly (like ING 5%) or yearly (like Alliance & Lester 5.35%)? do they work out roughly the same in the long run?

chiny

anskills, I suggest your best bet is to read about "The savings fountain" on this board which will give you a good start http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1091670686,99383,

It is simple to compare interest rates - generally I find that ISAs pay less gross but of course the tax angle makes the difference.

An interesting time to start BTL with wobbles arguably appearing in the capital cost of housing. I expect BTLs to be cash-positive from day 1 - what can happen in Year 5 to make more money ? There is a particularly useful IR leaflet on capital & revenue - can help. There is no substitute for a decent financial model before you sign up. This is not an easy way to make money, no matter what tv + tabloids may suggest.

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Chiny

isasmurf

1. If you're a taxpayer you should always use up your ISA allowance before using a 'normal' savings account.

2. See Martin's article on ISAs. He has also done one on Instant Access Savings Accounts. and Click here for more articles on Savings.

3. Best accounts are for ISAs, A+L Direct ISA at 5.4% (but be warned there is a £25 for transfering out - you should be OK if you just want to withdraw the money), or Abbey Postal 5.35% (no charges). Rumours that First Direct are to launch an e-ISA with an 8 month intro period at 6.25% soon.
Best Instant Access Savings is A+L at 5.35%. Other MSE'ers will put me right if I am wrong.

4. You should always compare the AER rates. The AER will show what interest is worth should you keep the interest in the account for a year. Martin gives a good explanation in his Instant Access article above.

anskills

chiny wrote:

An interesting time to start BTL with wobbles arguably appearing in the capital cost of housing. I expect BTLs to be cash-positive from day 1 - what can happen in Year 5 to make more money ? There is a particularly useful IR leaflet on capital & revenue - can help. There is no substitute for a decent financial model before you sign up. This is not an easy way to make money, no matter what tv + tabloids may suggest.

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Chiny

decent flats in arbroath can still be had for under £20k only needing decoration. at the end the year a dual carriageway between arbroath and dundee will be complete, as the house prices in dundee are very very high there has been a gradual spread along the coast (only small villages though) and arbroath is the next biggest town to dundee. with greater transport links and a general revamp of the area and harbour, along with more jobs being created, it is a fairly safe bet that house prices will rise in line with dundee (maybe not quite to same extent) and all the other villages. ive spoken to solicitors and estate agents and all are predicting the 'boom' within a year. i would like to take a small chance and get in on it before its too late.

in order to get the 20% deposit, fee's for mortgage and solicitor, fully re-decorate place and put a small amount aside, i would need to take out a £5k loan over 5 years at 5.8%. hence i would not see much of the profit (maybe £40 a month until the rise and a bit more after) until i had paid back the loan in full.

im looking at this to be a more long term investment than expecting £100+ profit every month just now.