regular savings?

bludger

Hi,

I'm going to let out a house which will bring me in £650 monthly, gross. I want to have this amount paid in to a separate account with the idea of getting interest on it. I hope to keep the savings, untouched, for at least five years.

Most regular savings accounts seem to have upper limits which are below the £650 involved. Accounts such as First Direct have a minimum monthly amount which is above it.

So I'd welcome advice, please, on how to benefit to the maximum possible on this sort of income stream. I'm quite prepared to drip feed from the one account to another if this helps.

irishjohn

You could open more than one regular savings account - most seem to have a monthly limit of £250 so you may need 3 accounts. They tend to run for a year as well so you could use the accumulated sum at the end of the year to feed a cash ISA with a lump sum. Then start again with other regular savings accounts to feed next years ISA

torbrex

There is a Regular Savings thread which is updated regularly and may be able to direct you to something suitable.

innovate

bludger wrote: »

Accounts such as First Direct have a minimum monthly amount which is above it.

You misunderstand - the First Direct £1.5K per month refers to their Current Account, not their Regular Saver. The max you can pay into their Reg Saver is £300 a month.

Whilst you must have a First Direct Current account to get the Reg Saver, it is very easy to bypass the £1.5K requirement - - all you need is one of their normal savings accounts with £1 in it.

The First Direct Reg Saver is the jewel in the crown, for as long as they pay 8% AER (which might not be much longer, who knows). So you'd definitely want one of these, plus perhaps some others for the remainder.

You could also look at cash ISAs since they pay the interest net of tax. You are allowed to pay £5,640 this financial year into a cash ISA, and £5,670 next. Many people save up a lumpsum in Regular Savers (if it pays more interest than a cash ISA) and then put it into cash ISAs on maturity.

If you have a much longer horizon, some 5 to 10 years, you could also consider a S&S ISA, where the max contribution this FY is £11,280, minus any cash ISA contributions.

Another consideration could be your retirement income - have you got a pension sorted out? If not, or if you can invest more into it, consider putting some of your income towards your pension pot - e.g. by upping your contribution to your work place pension, or setting up / increasing contribution to your SIPP.

Yorkie1

If the rental property needed money spending on it (e.g. new boiler), would you have sufficient funds elsewhere to pay for it - or would you need to draw on the rental funds?

If you withdraw money from the FD regular saver, I think you lose the interest rate - you'd need to double check T&Cs of that and other accounts.

atush

yes, you need to hold some of this money in easy access to pay for repairs/maintenace, taxes etc.

So open a regular saver with some and put the rest in an Easy access savings acct (or an ISA if you haven't filled yours for the year).

bludger

Thanks to all who replied. You've clarified my mind on what to do.

I do have the rest of my finances sorted and will now set up a separate current account to feed into whatever savings account I eventually choose.

I'm probably going to use a S & S Isa this year too.

Happy Christmas and a very prosperous New Year to everyone.