Fixed Rate Bond

Ifts

PompeyPete wrote: »

She uses the interest to supplement our income pot on maturity.

Heres another way you could go about achieving better rates if you are prepared to lock the money away for a little bit longer:

Do you live off savings interest?

When using fixed rate savings, you won't usually get paid monthly interest. Therefore many who rely on interest earned from savings as an income stream don't fix, even though they're paying higher rates. Yet there's a workaround.

Here's an example (ignoring tax for ease of explanation)...
You've £100,000, and can get 5% in a year-long fixed account and 3% in an instant access account. You'd like roughly £5,000 of interest from these savings to supplement your income.

Put £95,000 in the fixed account, and £5,000 in the instant access. Then spend the instant access money over the year, knowing the £4,750 interest earned in the fixed account will make up for it. Then you're effectively getting the high rate and spending the interest.

This way you can grab the higher fixed rate accounts, but retain access to enough cash in the meantime.

http://www.moneysavingexpert.com/sav...interest#fixed

PompeyPete

buffman wrote: »

I try and organise my finances so that I have a fixed rate bond maturing every month or so. It gives added flexibility. Assumimg that you have used up your ISA allowances and ensuring that your wife invests no more than £85,000 per provided, I would invest £85,000 with Cahoot (3.6% for one year), £85,000 with Coventry (3.65%) for 18 months and the balance in an instant access account (e.g. ING paying 3.24%). If in a few months time, a better rate becomes available, you can decide whether or not to transfer the instant access money to it.

My missus is 'locked-in' for a year, until the end of July, but since opening her account [only 6 months ago] with ING at 3.24% it's steadily tumbled, and for new applicants the interest is now down to 1.5%.

Prudent savers have every reason to feel thoroughly cheesed-off!

PompeyPete

The money (£60K) in the ING account @ 3.24% reaches the 12 month point very soon, and the interest dips to 0.5%.

The ING account has been very useful, and easy to operate, but it's reaching the end of it's life.

We've also got Halifax (£75K) and Cahoot (£78K) bonds maturing this November and next July.

And inspired offerings about what's best to do with the £60K in the ING?

Cheers

PP

2010

Well Pete we`re all in the same boat as regards savings rates

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they are crap thanks to this government`s cheap lending and not daring to put the squeeze on mortgage payers by making them pay the true rate.
Basically savers and tax payers are subsidising mortgage payers.

2% or thereabouts is the best for a one year fixed at the moment.(Kent & Reliance)
Easy access about 1.55% with the AA.

http://moneyfacts.co.uk/compare/savings/easy-access-accounts-with-bonus/

You could top up to the £30k limit on premium bonds.

jimjames

Based on the description of employment I'm assuming you are both not retired.

As such you may want to consider other options than keeping so much in cash. In an income fund you would get over 4% dividends. The capital isn't guaranteed but I would imagine that below retirement age it is more important to keep pace with inflation that needing to be sure the capital is a specific value as long as you have an emergency fund available.

Might be worth looking into.