New savings strategy - help please (isas & savings accounts)

daisysteiner22

hello wise mse forum!

having steeled myself to debt free status (using tips from the site! thanks!) i now find myself with a "well done" chunk of cash from my newly retired parents (who wanted to make sure i wouldn't waste it - very sensible) and the future prospect of being able to save a big chunk of my salary each month now my spending is carefully budgeted. Please could i ask for your help in working out where to put it?

lump sum - £6,000
monthly savings - £800-£1000

I think the first place is an Isa, but that only takes me to the £3k limit (if i have understood correctly which could be wrong). Is the next step to find a high interest savings account, and bundle everything else in there for the next year, until i can pop another £3k away come the new financial year?

and i know the Isa rate it likely to go down in the second year, so am i able to move the first £3k to a better rate just before the april cut off, then top it up again when the year ticks over to take advantage of the better rate?

i appreciate any help/guidance on any of the points - i appreciate i'm in a very fortunate position to be able to save so much, so want to make sure i behave sensibly (unlike in my rather careless past!).

Massive thanks in advance xxx

daisysteiner22

have already realised my first mistake - the isa limit is just under £6k. so that's already one major change!

MoneySaverLog

This is what I'd do...

£5,640 straight into the best paying ISA, you may wish to open up a Nationwide Flex Account and get their Exclusive ISA for paying in £750 a month and making them your main current account.

Next get yourself 2 regular savers, First Direct £300 per month at 8% and HSBC at 6% for £250 a month Anything over that look to invest perhaps or if you're looking to save in the next best instant access savings account or chose Lloyds TSB for their Vantage accounts 3% on 3-5K. You can have up to 3 of these.

Then when the regular savers mature, close them down and move the money into the following years cash ISA. Review the interest rates every year though as they will crash after a fixed period.

innovate

Congrats, daisy, to have got to where you are now financially, sounds are on a good road!

For the immediate future, I agree to a large extent with what MoneySaverLog suggests - - - though you have just missed the 4.25% Nationwide ISA rate, and their new 3.5% can be had at others who don't have so many pre-reqs. Check Kazza's list for the current best deals (do take each with a pinch of salt though, e.g. Kazza still shows Nationwide @ 4.25% - - always confirm with the provider).

Don't expect anyone to provide you with an instant ideal solution for yourself - -- - spend some more time reading through various threads, moneyvator, the fabulous monkey with a pin, and Tim Hales's Smarter Investor, to mention but a few non-MSE resources.

You sound young, with a fully screwed on head, so take some time to make the decisions that are right for yourself. Think long-term - and even if it sounds far away, think about your income when you don't work any longer (pension or whatever you want to call it) - - you got to start making provisions for it a long time before you need the income! Google e.g. "how much to invest in pensions" - there are loads of sites offering information and advice. Soak it all up, make careful choices before you invest in anything. 6-12 months reading / thinking / deciding time might be your best first big investment. You need to have as much as possible information, apply it to your circumstances, and then make your decisions. Don't rush into making any longer term commitments.

The future is what you make it to be and it can be fabulous!

MoneySaverLog

I missed out on the Nationwide one as subscribed to Lloyds TSB this year and did not realise they had dropped their rate so quick. Still the same really applies and agree about getting a pension if you don't already have one set up.

xylophone

£5640 into an ISA - you could use the Cheshire http://www.thecheshire.co.uk/landingpages/Direct-Cash-ISA/ (watch out for when bonus ends) and don't forget that when you want to move at the end of the bonus period you must ask your new provider to arrange the transfer.

Coventry on-line saver for a year with your regular savings (limited withdrawals to help stiffen your resolve). http://www.coventrybuildingsociety.co.uk/savings-and-investments/easy-access/online-saver/online-saver.aspx?WT.ac=OnlineSaverspotlight

Review your situation after a year?

daisysteiner22

Thanks so much everyone - it would appear i have a bit more research to do, but i have loads more direction! thank you all very much xx

badger09

Some good advice above.

This is also a decent Regular Saver, where you can save anything between £20 & £1000 per month. 4% (including bonus) and up to 4 penalty free withdrawals per year


http://www.monbs.com/flexible-saver-issue-2/