Where should I put my money?

caeler

I have some money, approx. £8K which I intend to pay towards my mortgage in December 2012. (End of my current arrangement so intend to get a new deal at the same time).
At the moment this money is sitting in a basic savings account which I think gets 0.01% interest. So I think it is worth putting this money somewhere better for 10 months, provided I can get easy access to it. I thought perhaps a Cash ISA? The virgin money cash isa at 2.85% looks good.
Any suggestions?

caeler

I've just read the post about 'what should I do with 30K' and seeing all the flaming it got for lack of punctuation, lack of P's & Q's and suggesting one should do their own research - I thought I'd reclarify the above firstly with a please but secondly I posted because I didn't want to miss any obvious options. The last time I chose a savings account I managed to accidentally pick something fixed term which caused all sorts of problems. Also I'm looking for a second opinion which I hope is okay. So thank you in advance to anybody who does have any helpful comments for me. Ta.

psychic_teabag

If you pay tax at basic rate or less, 4% from a taxable Monmouthshire flexible saver gives a better return after tax than an ISA at 3%. (I think that account is still available ..?)

That's assuming you're happy to use online banking (and don't live near an monms branch) - nice thing about the virgin one is that you get the same rate at a branch as you do online, if that's your preference.

Cash ISA is almost mandatory for longer-term savings, but for short-term savings you can think tactically.

EDIT: one caveat with the monms account : you'd need to leave it open until the anniversary to get the bonus - just leave £1 in it or something.

caeler

I'm a higher rate tax payer so I probably should stick to the isa even though this is quite short term? I like your suggestion over tactful thinking. Thanks.

atush

As a HRTaxpayer my question is why isn't this years Isa already full? you should be using your allowances and topping up pensions.

caeler

atush wrote: »

As a HRTaxpayer my question is why isn't this years Isa already full? you should be using your allowances and topping up pensions.

It's not being used because I have been very neglectful! I've never really ever had extra money before and I depleted my savings this time last year when I bought my house. Ideally I'd like to start collecting isa's whereas I know this one I'll need to cash in pay towards my mortgage. Wrist slapped, thank you!

I topped up my pension this year with my bonus, via salary sacrifice so got extra NI savings too.

I think I'm still looking at the Virgin Money isa, because I know I will close it within the year I won't qualify for any bonus.

atush

Def fill the ISA, and put the rest in easy access. Then put the rest in the highest paying easy access you can find.

but if this is your only savings, unless you can bulk it up in the next 10 months, I would not use it to pay off your mtg. You need an emergency cash fund fo 3-6months spending always. Tucked away in ISAs to save on tax. Then save money to pay off your mitg (or better yet over pay each month- this is what I do).

So look over your spending so you can trim it back and save more ;-)

caeler

All very wise advice. Since buying my house I'm in a position to save 50% of my salary. I've made a largish purchase this month on furniture but I'm not expecting any more major outlay. I'll sort out the isa this week with a view to keeping hold of it. I think you are right that I shouldn't push all my savings into the mortgage incase I need it. After all it was only 2 years ago I was at risk of redundancy!

caeler

I'm rather liking the ING 3% isa, instant withdrawal with interest paid monthly.

VT82

caeler wrote: »

I think I'm still looking at the Virgin Money isa, because I know I will close it within the year I won't qualify for any bonus.

Most 'bonuses' are unconditional, i.e. you get the headline rate throughout, even if you close it before the bonus end date.

They are just called bonuses so the rate can be dropped after the bonus expires. It's a way for the banks to say the cost to them is cheaper than it actually is - they can assume x% stays in the product once the rate drops from say 3.1% to 0.5%, meaning that the overall cost is 2.8% instead of 3.1%. They can even account for it like that in their Annual Reports for the year when it is 3.1%.

It isn't always true that bonuses are unconditional - for example the Monmouthsire account only pays its bonus on the anniversary if the account is still open.

But in your situation, don't be afraid of a bonus account. just check it carefully.

caeler

Thanks VT82 - this is sort of advice I was looking for.