Splitting 30k-40k on a fixed term scale...??

Nine_Lives

Should soon hopefully have the above amount available to put into savings accounts. The intentions are to split this over a fixed term scale.

I don't yet know the exact figures that will be allocated to which account. Some will go into an easy access "just in case". Some will go 1yr fixed, 2yr fixed & so on.

Looking at the fixed savings accounts:
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

1yr: 3.55%
2yr: 3.90%
3yr: 4.00%
4yr: 4.15%
5yr: 4.60%

Looking at that scale, i'm thinking there's very little point in lumping an amount in the 3yr -vs- the 2yr just for the sake of an extra 0.10% for 12 months. I'd be inclined to think lump the 3yr allocation into the 2yr & then see when it matures, or lump it into a 4yr instead.
Similarly the difference between 3yr & 4yr is nothing great. So i'd be thinking of picking 1 over the other rather than both.

This is different to the original intention of some in instant access, some in 1yr, some in 2yr all the way up to 5yr. I see the difference in some & think what's the point.

What's your view on the situation? Outsider opinions always welcome.

gkerr4

personally, I wouldn't 'lock' my money into anything at the moment - perhaps 12months if you needed to - you just don't know how things are going to change with regard to interest rates etc - or if you might need the cash before the term is up - things are so uncertain at the moment.

it's not like any of them are particularly "great" rates - they are all under inflation so the 30-40k is still losing money, just not as slowly as sitting under the mattress.

I think if you have 30-40k and you are genuinely not likely to want access to it for the next 3-4 years - i'd up my risk profile and look at something stock/ shares -based - even if it was just a tracker or some other low-cost fund.

just my 2p

LardyCake

The system you describe (a savings ladder) is what I use for part of my cash deposits. The advantage of spitting it over 5 term periods is that there is always some deposit(s) maturing in any year if need access or if rates improve that part of your "pot" can take advantage of another term at the bottom of the ladder.

Nine_Lives

gkerr4 wrote: »

- you just don't know how things are going to change with regard to interest rates etc - or if you might need the cash before the term is up - things are so uncertain at the moment.

Hence the split - as said, each year there should be an amount maturing.

Also for your final point - there will be an amount saved in instant access.

Things are uncertain, yes, but one thing that is certain is that if i just stick it in your typical saver, it wont make as much as if i do it this way. Bit of a no brainer, but there you go.

psychic_teabag

Could perhaps keep some back in instant-access in case there's a new issue of saving certificates.

From time to time, long-term fixes come along with get-outs (3, 4, or even 6 months notice). Not aware of any at the moment, and they tend to get snapped up quickly when they are announced in Martin's weekly mail. Not sure if it's worth having more in instant-access in the hope that one will turn up.

Could drip-feed into regular savers rather than fixing for a year. eg drip-feeding from instant-access at 3.1% to monmouth @4% should give an average rate of 3.55% matching the fixed-term, but you don't give up instant-access. And of course you could drip into regular savers offering more. Then if something better does come along, you could switch any instant-access not yet committed.