£10,000 to save?

Prof_FrinkProf

Hi all, I have £10,000 that I want to save towards my house fund. I've done a bit of research but wanted to ask a few questions on here.

I know my first port of call should be an ISA, can I invest the whole £10,000 into an ISA?

I know that I'll get a better rate if I put the money into an ISA that is bonded over a number of years, I don't really want to have it locked up any longer than 2 years.

If it makes any difference my current account is with Lloyds TSB and has been for the last 10 years.

Thanks

Lokolo_2

BlAck0ut wrote: »

Hi all, I have £10,000 that I want to save towards my house fund. I've done a bit of research but wanted to ask a few questions on here.

I know my first port of call should be an ISA, can I invest the whole £10,000 into an ISA?

You can only deposit £5100 into a Cash ISA this tax year, so you would have to deposit the remaining £4.9k next tax year, this coming April.

BlAck0ut wrote: »

I know that I'll get a better rate if I put the money into an ISA that is bonded over a number of years, I don't really want to have it locked up any longer than 2 years.

If it makes any difference my current account is with Lloyds TSB and has been for the last 10 years.

Thanks

Have a look on the Banking/Saving tab to see the different ISA's available, you will see some deals fixed for 2 years or less.

If you are with Lloyds, its worth mentioning that you could open 2 Vantage accounts both with £5k in each and move £1k between the two accounts on one day of the month to get 4% interest :beer:

psychic_teabag

You can't save all £10k in a cash ISA in one go. You could have £5k now and then £5k in April (next tax year). Or you could invest all £10k in a S&S ISA in one year, (assuming you haven't already taken out a cash ISA).

An ISA isn't necessarily the best place : Santander's first-home-saver pays 5% taxable, which beats many ISA's despite having tax taken off - you can start that with up to £5k then need to make monthly deposits to keep it going. According to the T&C you could overpay in the second month to get several thousand more in - forfeit interest in the second month, but get 5% on the whole lot thereafter.

Lloyds current account with vantage at 4% beats most instant-access ISA's. (Assuming you pay no more than basic rate tax.)

Prof_FrinkProf

Thanks for the reply guys! When you say basic tax rate what salary would come under that? I'm pretty sure I'm on the basic rate.

I will be saving more money each month, what is my best option? To either take out one Cash ISA before April, then a second after April and then switch any additional savings between the two Vantage accounts? Or ditch the ISA idea and split the £10k savings plus any additional savings into the two Vantage accounts?

What would the difference be in yearly interest?

Thanks

Kohoutek

You need to have a taxable income of over £43,875 to be liable to pay any income tax at higher rate.

Assuming you're a basic rate taxpayer and are prepared to put over £5,000 in a Vantage account, you would need to find an ISA that pays more than 3.14% AER to beat the interest you would receive.

Prof_FrinkProf

I'm not higher rate then.

Reading Martin's ISA guide I think it's unlikely that I'll be able to find an ISA without a fixed term that offers a better interest rate.

Is there a limit to the Lloyds TSB Vantage accounts? I prefer the idea of using this method, it makes it easier for my online banking being able to view all the accounts in one window too, and easier for moving money about etc.

Kohoutek

BlAck0ut wrote: »

Is there a limit to the Lloyds TSB Vantage accounts? I prefer the idea of using this method, it makes it easier for my online banking being able to view all the accounts in one window too, and easier for moving money about etc.

Not to my knowledge. You just need to pay in £1,000 every month, which, bizarrely, includes transfers from one Vantage account to another.

The interest you receive is tiered. For the top rate, you need to have over £5,000 in the account.

Prof_FrinkProf

Just what I need then. I'll try and upgrade my classic account online tomorrow (not working at the moment), if I don't have any luck I'll go to a branch on saturday.

When it comes to needing a second account, could I just set up a standing order to transfer £1000 from my original Vantage account to my new Vantage account and back again each month?

Thanks

Kohoutek

BlAck0ut wrote: »

When it comes to needing a second account, could I just set up a standing order to transfer £1000 from my original Vantage account to my new Vantage account and back again each month?

That's exactly what some people do on this forum - should be fine.

Prof_FrinkProf

Thanks a lot for your advise!

psychic_teabag

BlAck0ut wrote: »

Just what I need then. I'll try and upgrade my classic account online tomorrow (not working at the moment), if I don't have any luck I'll go to a branch on saturday.

You could also try by phone - there's an 0800 number listed on the web page, and I've always found them to be friendly and helpful.