What saving account for my needs?

Gas-Man

Hi, need to start a savings account I intend to deposit initially £500-1000 then £500 every month.

I will not need to withdraw any money from there and intend to keep putting this £500 monthly sum in there for around 8 years, after that the savings will be withdrawn into another account. It will still be used for savings but perhaps a smaller amount.

So which would be the best savings account for me?

Lokolo_2

Hello!

Do you earn over the personal allowance? If you do then it may be worth putting this money into an instant access ISA every month and getting tax-free interest on it, if it is instant access then you can easily transfer your ISA to another provider when the rate plummets or you find a better rate elsewhere.

Alternatively you could open a monthly savers account (or 2) where you can deposit monthly and earn a reasonable rate (especially if you aren't a taxpayer!) The snag with this is that you can't put an initial deposit down.

A third option could be just an instant access savings account. The post office gives 2.9% AER for example. This way you can easily access the money.

Something also worth considering is when you have built up a lump sum in the above savings, you can lock it away in fixed term bonds to get a better rate, however its always good to keep money inside the tax-free ISA wrapper so that you build up a tidy amount of tax-free income!

Hopefully this gives you something to go on :beer:

psychic_teabag

One regular saver which does let you put in an initial lump sum is the Santander first-home-saver, provided you qualify (under 35 and have never owned a house). Pays 5% but only up to £300 per month. I think it's open-ended, unlike many regular savers which only last for a year. But many on here would recommend against dealing with Santander.

Because of the games banks pay, a single account is unlikely to offer a good rate for 8 years, so you'll probably have to move the money around. Perhaps accumulate a year's worth of money at a time (in regular savers or instant-access accounts), then move it to fixed accounts (perhaps ISA's if you are, or will become, a taxpayer) and start again for the next year.

Gas-Man

Damn, didnt understand alot of that lol.

Well I earn 1300 per month.

What shall I do?

CLAPTON

makes no sense

how does some-one earning 1300 intend to save 500 per month for 8 years

Eco_Miser

CLAPTON wrote: »

makes no sense

how does some-one earning 1300 intend to save 500 per month for 8 years

By only spending 800 per month.
Since I only spend about half that, I see no problem (except inflation).

Gas-man if you open an savings account and pay £500 a month into it for the next 8 years, you are very unlikely to do as well as if you use several accounts for different purposes, as the best rates are given as bonuses for one year only, or by tying up your money for a fixed period.

I suggest in the first year, pay the money into a Regular Saver account, or maybe two, (high interest, but only on a limited monthly payment, and only for a year); then put the £3,600+interest into a fixed rate ISA (1-5 years, depending on rates available, and your view of future movements in rates). Repeat every year, choosing the best Regular Saver each year, and re-investing the maturing fixed rate bonds as they come up, also remembering to keep the final maturity dates within your planned 8 year timespan.
Each time you re-invest, pick the best rate available at the time.
You could also consider a stocks & shares ISA, investing the £500 each month. Conventional wisdom says this will produce better returns, but there is no guarantee that the market will not have crashed again just before you want to cash in.

CLAPTON

Eco_Miser wrote: »

By only spending 800 per month.
Since I only spend about half that, I see no problem (except inflation).

yes indeed, I can do the arthmetric too

Eco_Miser

CLAPTON wrote: »

yes indeed, I can do the arthmetric too

So why do you think it makes no sense?