Best Way to Invest £125 a month

billytruffin

I have £125 a month to invest in a hih interest savings account. I'm looking for something reasonably low risk (I already have a high risk share portfolio). what would be the best account to go for? The Lloyds TSB 8%? Or would I be better off using my ISA allwance?

any help much appreciated, thanks in advance.

James

mattih5

Hi,

There are a couple of options available for your monthly savings. Personally I like to fill my tax free amount each year, this equates to £250 a month if contributing from April 6th - April 5th.

The next option would be to contribute to a monthly savings plan or regular savings account, I think the best rate on offer is Alliance & Leicester's Regular Saver with an interest rate of 12% which (I think) equates to around 10% after tax at the basic rate. The only issue with Regular Savers is that they usually require you to use their current account with a minimum monthly deposity of £500. Regular Savers also require a minimum monthly investment of £10 and a maximum amount of £250.

Alternatively, the Lloyds TSB one you have mentioned seems ok, although I don't know the full details/requirements of this account. Other accounts are ICICI or Hi Save which both offer attractive rates.

Hope this helps,

clear_blu

Barclays Regular Savings pays 12.5% but you have to open a current A/C and pay in £1000 monthly. They will accept payments between £25 and £250 a month into the regular savings A/C and it has to run for a year.

billytruffin

Thanks for the info.

I don't really want to switch my current account as I have it with first direct and are very happy with them. Is there a way around the current account catch? Also what does the 8% work out at after tax? Is it just your income tax rate deducted from the gross interest?

mattih5

Aren't First Direct charging £10 per month for the priviledge of using their current account?

I don't know of a way around the current account thing, I want to open the Alliance & Leicester regular saver (12% interest), I opened my current account with them a couple of week before this offer was available. Unfortunately, it is only available to new current account holders.

wheely

First Direct are only going to charge if you dont have any other products with them (ie savings account, insurance etc) or if you have less than a certain ammount going through your current account every month.
In fairness, FD have to be one of the best banks i have ever used.

billytruffin

agree first direct are the best bank I have ever used. Just open a savings account and stick a quid in it and you will avoid the £10 charge.

Cypher

jamesw2000 wrote:

Thanks for the info.

I don't really want to switch my current account as I have it with first direct and are very happy with them. Is there a way around the current account catch? Also what does the 8% work out at after tax? Is it just your income tax rate deducted from the gross interest?

The LTSB account works out at 6.4 % for a basic rate payer and 4.8% for a higher rate payer. (This is a regular saver though so not all your money will earn the full 8%)

The LTSB is a two year regular saver so gives the benefit of all money saved in year one earning the full 8% in year 2. It does actually work out very similar to the A+L 1 year 12% deal, as the money made in year 1 with the A+L would then move to an ISA and earn money anyway whilst you restarted a second year regular saver.

The LTSB is a variable deposit between £25-£250 a month and withdrawals are allowed. I'm not sure how flexible the Barclays and A+L ones are.

With the LTSB account you can just open the standard current account which doesn't require any salary to be paid in. The Standing Orders to feed the Regular Saver can still come from your First Direct Account. I don't think you would even have to use the LTSB current account once its opened.

billytruffin

Looks like Lloyds TSB is the best option then..or perhaps an index tracker?

Ian_W

You're mixing up two very different beasties there james!

Your title says "invest" but you've been posting about regular savers.
Saving = the almost certain [barring Armageddon or world wide financial melt-down] return to you of your cash + the stated interest when you want it or at the end of the term.
Investment = your investment may not be worth as much as you put in, there again it could be worth a great deal more. You take a risk for MAYBE a greater reward, there again maybe not - because it is a risk.

Index tracker? Which index? What if it tracks the index down because the market falls a lot, rather than up which is what you hope? I'd stick to regular savers for now but use the site to find out about investments. If you've got the time and are prepared to take a risk [and it doesn't have to be huge like gambling] then investments will always beat savings over the longer term. Trackers though, you're avin a laff, aintcha?