How to start a 5 year rolling savings plan?

merryblue

Hi, very new to this savings board and would really appreciate some of your wisdom. I would like to start saving around £25 every month into some sort of savings plan that I can't get to and after 5 years it will pay out. My plan is to do this every year so that after 5 years I will have a lump sum once a year, paying out £125 a month. Does that sound feasible? Is there any such thing? Or should I be doing something else with my money? I just find it really hard to save and not spend it and I thought this way I couldn't fritter my money away and I would get a nice amount to spend on holidays/Christmas etc. Please help!

Lokolo_2

merryblue wrote: »

Hi, very new to this savings board and would really appreciate some of your wisdom. I would like to start saving around £25 every month into some sort of savings plan that I can't get to and after 5 years it will pay out. My plan is to do this every year so that after 5 years I will have a lump sum once a year, paying out £125 a month. Does that sound feasible? Is there any such thing? Or should I be doing something else with my money? I just find it really hard to save and not spend it and I thought this way I couldn't fritter my money away and I would get a nice amount to spend on holidays/Christmas etc. Please help!

Hmm I don't think such an account exists (although I could be wrong!) Most of the regular saving accounts mature after a year so you wouldn't be able to lock your money away for 5 years.

However you can put it into a normal savings account: an Instant access account or an instant access ISA, where it would not be THAT easy to withdraw. Are you a taxpayer? If so then an ISA is definitely the best option to get tax-free interest, and there are plenty of instant access ISA's available such as Santander offering 3.3% or The AA offering 3.35%.

If you aren't a taxpayer then you can claim gross interest on a standard savings account, Nationwide have one paying 3.1% for example, which penalises you for making more than 1 withdrawal a year so that might be an incentive to keep your money locked away, this is an instant access account so you can add to it at any time and easily move your money if the rate drops.

Ilya_Ilyich

For virtually all savings accounts you will be able to get to the money - just at a loss of interest. Generally speaking as long as you are a basic-rate taxpayer you will probably want to save in cash ISAs - their rates may be slightly lower than other savings accounts, but as long as you're a basic rate taxpayer they tend to win out.

What exactly you do depends on what you're after. One quite nice savings technique is to save for this year in an easy-access ISA (at e.g. 3.3%+ with Santander) then transfer those savings into a 4-year fixed rate ISA and begin again in an easy-access > fixedrate ISA etc. Then in 5 years from now you'll start receiving tax-free savings amount that have been fixed at 4-year rates (typically a bit better than normal rates as compensation for not having the money for so long) and at all times you'll have some easy-access ISA savings that you can dip into if need be!

merryblue

I like the sound of that idea, thanks!:)

VT82

merryblue wrote: »

I like the sound of that idea, thanks!:)

One word of caution - I don't know if there will be many fixed rate savings accounts, ISA or otherwise, that will let you invest as little as £300 (£25 per month x 12). So you might need to alter your plans closer to the time.