Savings accounts... are they really worth it?

BSingh

I have been recently setting up various bank accounts, regular savers and online savers.... and just looking at the returns and the money that I would be getting back... I am just wondering... its not really all that is it?

For example... regular savers (the top ones) would give you maybe £130 net over the year .... thats about £11 a month! Not much really..

And online savers... (obviously depending on how much you put away...) would again give you £20 - £30 a month on average..

I was just thinking.. to make some proper and significant money.. it might be better to invest money in other things... like property... (carries a bit of risk) but property prices have been rising steadly over the decade... so you stand to gain ALOT more than these savings accounts (about £30-£40 a month... which can often just go one a nice top or nice jeans! lol)

What you guys reckon?

missile

Look after the pennies, £130 is a lot of money to some people.
If you have the cash go invest in property, but if it were that easy ...... As you say there is some risk and if you do not know what you are doing a LOT of risk. You also ought to factor in your buying, selling agents and solicitor fees, stamp duty and TAX if it is not your primary residence.

Paul_Herring

For example... regular savers (the top ones) would give you maybe £130 net over the year .... thats about £11 a month! Not much really..

You're looking at the RS in isolation; you shouldn't. You should look at them in conjunction with a feeder account earning a decent amount of interest.

For example (figures given at 22%) on £3000 over 12 months in a 5% feeder account would earn you on £120.

A 5% feeder account starting on £3000 reducing to £0 feeding a RS at 10% starting at £0 ending at £3000 would get you £65 from the feeder account + £130 from the RS account totalling £195.

to make some proper and significant money.. it might be better to invest money in other things... like <snip>

That comes under investing where there's more short term risk, and is (contrary to the implcation of the board title) totally different from saving

RayWolfe

BSingh wrote:

And online savers... (obviously depending on how much you put away...) would again give you £20 - £30 a month on average..

I reckon you're comparing chalk and cheese. If you get 30 quid a month then that equates to around £7,200 at 5% gross. I think you need a bit more than £7,200 to buy a house ... lets say £172,000. That woud give you nearer £717 a month at 5%.

Graham_Devon

I don't get what the OP is saying here? Not everyone gets £30 -£40 a month.

To invest in a house you need significant funds, not £30 - £40 a month?

For instance I get just over £110 per month (net), other people get £1000 a month, others £0.95p per month.

Like someone else says if your getting £30-40 a month in interest, how you gonna buy an extra house with it?

Sure, there are ways of making better profits, but they involve more risk, as a house does.

tomstickland

A savings account isn't really supposed to be an income generator. It just keeps your funds up with or above inflation whilst you save them.
Investments, like property, are funds you can afford to lose on the hope that they'll gain.

Phoenix79_2

I'd rather have the £12 or month or so interest on my ISA than not have it at all! Its not a lot but its better than nothing.

gil13

Savings accounts, ISA's & RS, online all have a part to play, if you put the effort into working it all out, managing the accounts then you can make some gains by recycling money. That's not a bad endeavour is it. I would be interested in hearing how other posters have their system set up, e.g what feeder account works best, that allows you to set up standing orders directly without you having to pay in salary for example. I have heard some posters have over 30 !! That's mind blowing, but I assume they manage it all without problems. Would be interested to hear what sort of interest they are earning from it in a year and on what sums saved. This will of course compound over the year unless they are taking out income.

tomstickland

I've rationalised a bit recently, but did have around 15 accounts for most of this year.
At the moment I've got a LTSB and A&L current account, paying 4% and 5%, a LTSB monthly saver at 10%, just finished with the A&L reg saver, spare money goes into HiSave (5.45%, though they've just sent me a 5.65% offer),
slow stooze money from credit cards.
I've recently closed the Barclays account, First Direct and a few credit cards. I've got a dormant A&L Online Saver and premier saver. They don't have decent rates on these but I have £1 stuck in the accounts. Oh, I've also got a Cahoot savings account but have never used it. About £1.5K of my funds are tied up on gambling loophole operations, about £1K of that at Betfair. This made me around £2000 last year via free bet offers and cashback.

I reckon I made around £600 last year as a combination of interest and referall offers.

You have to take this in the spirit of MSE; take control and enjoy managing your affairs. A combination of savings and getting the most from your money adds up to a better quality of life and it's fun.

Next month is the LTSB saver scheme thing, worth £80. I've also applied for a Sky credit card because they have 12 months 0% and skypoints can be turned into free bets, which works at about 2% cashback.

RayWolfe

tomstickland wrote:

You have to take this in the spirit of MSE; take control and enjoy managing your affairs. A combination of savings and getting the most from your money adds up to a better quality of life and it's fun.

I thoroughly agree with this point of view particularly the fun part. I will chase the last 1/4% because I enjoy it and have the time to do it (or make the time because it's fun!)
However I fully understand the point of view of those who find it a chore. But hey, this is MSEland.

macca64

The way people talk, you'd think the only asset classes available were property and cash, everyone seems to forget about everything else.

Yeah you can put your cash in property, but will a property pay your bills if your unemployed, if you get an unexpected car expense?? Not saying it's a bad idea, but you need to have a balance. Some cash, some property, some shares, some UT's, some bonds etc etc.

People also would rather invest in property than saving for retirement etc, which sometimes amazes me. Hasn't the stock market outperformed all asset classes over the long term?