2 year fix

jampratt

Ive currently got 17k in a stocks and shares isa and 37k with ing @2.75%, I can lock away 30k for a year or two and im thinking about BM 2 year bond @ 3.85% and moving the remaing 7k into a llyods vantage, my question is whether or not this is a wise thing to do? Given that interest rates can only go one way will the BM bond look uncompetitive in a years time? i know theres no real way of knowing, i just like some thoughts
TIA.

Loughton_Monkey

jampratt wrote: »

Given that interest rates can only go one way will the BM bond look uncompetitive in a years time? i know theres no real way of knowing, i just like some thoughts
TIA.

Nobody can tell you this, including, I expect, the Bank of England.

All you can do is what anyone else does. Open your spreadsheet software. Put in a deposit of £30,000 at 3.85% on a two year fix and see what it gives you, after tax, in two years.

Now do another set of columns down the other side, showing a 2.9% rate (or what you think is a decent 'Instant' rate) but start increasing the 2.9% in a pattern that you 'believe' could happen if the BOE starts increasing rates in May/June as they are rumoured to.

See what result (after tax) you get.

Change the scenario into 'best case' or 'worst case' and see what you get. Then make your own decision.

psychic_teabag

In case you weren't aware, you are allowed 3 Lloyds vantage current accounts, so you could have up to £21k @4%