Who has been consistent with high interest rates?

Sevster

Hi to all money saving experts

As you can see this is my first post so please be nice!

I too may be emigrating next year (looks like a trend at the mo) and will have a spare £80k. I am a very cautious person by nature and have never dabbled in anything higher risk than savings accounts :-/

I would obviously like to keep my money here and will not need this money until about 5-7 years. I will not be a UK resident and so I will not be able to open accounts whenever there is an attractive rate on offer. I would like to open various accounts before I go but would also like to know which banks or bs' have consistently had the highest interest rates in the best buy tables (if any). That way I can just concentrate on those that have previously offered best value. No guarentee of future I know but it's a start!

To throw a spanner in the works I may consider putting the money into an index-tracker if someone can convince me that this is a better idea than above. More risk I know but they seem to be getting good reviews!

I would be very grateful if anyone can help with the banks and to make up my mind!!

Milarky

Sevster,

Given the amount you should consider 2 or 3 different accounts, I suggest [small risk of banking failures minimised where current  investor protection is capped at £31,700]. Also opening several accounts now would allow you to move money between accounts, would it not? You'll want 'online' access being away to keep abreast of your holdings.

Egg at least have the longest interest-rate guarantee I am aware of, even if not the best in the short term. They will match the Bank of England rate until 31 December 2007. Although this is far from the 'best' they may come out with further offerings [as they did this year] and as an existing customer, opening new accounts with them should be possbile [or am I wrong on that?]

ING [Dutch Owned] started very well, but have lost 'respect' for not increasing their rates as quickly as others. But they still pay a healthy rate and interest is added monthly. They are online, but you need a UK bank account to open a/c and withdraw [I think you can still pay in to the account yourself by BACs, however]

You might also consider [as you mention] a 'guaranteed equity bond' [but you would need to check exactly what the 'guarantees' were!]. Tax and the term of the product would be an issue here, since these all [as far as I know] pay out the accumulated interest after about 6 years, so that you will have a large tax bill in one year, but nothing for the rest.

... just a few thoughts  ;)

Sevster

Thanks Milarky

Your thoughts are very welcome.

Anyone else who wants to share the homework with me is also welcome to do so! ;D

Reaper

I'd agree with Milarky. The trouble is that the only guarentee is that whoever offers the best interest now won't be by next year. Unfortunately there is no one consistent company. Instead they offer an individual account at a great rate of interest until they have acheived their target number of investors then start milking them by letting the interest rate fade away. It never goes up again, if they need more savers they just launch a new account.

Mutual building societies claim that in the long term their interests rates are better because they do not have to pay dividends. There is logic to that but their record is patchy.

There are two types of trackers. There is the simple tracker which invests directly in the stock market. Your investment goes up and down (almost) directly with the index. They are easy to understand and have low charges. Almost everybody offers them.

The other type are those which offer stock market growth while at the same time protecting your original capital. Sounds great for cautious investors but they vary a lot and there is a lot of small print to read. You shouldn't take one out until you are sure you understand it. Last week's Sunday Times rated the "Citigroup Enhanced Growth 3" plan the best of the bunch which is a 6 year scheme.

I guess you can shelter the first £3000 in a mini stocks and shares ISA as long as you do it before you leave (in addition to a cash ISA). That way when you return you can get any growth tax free.