ISA yeilds so low.. Is it worth it for Student saving?

JC_Maven

Hi Guys,

I was wondering as i have 6k in savings in a Cash ISA it used to pay 2.6% but my account holders only pay 1.9% now for some reason.

Given that inflation has always been around 2.8% this looks like i am making a loss in the real value of my money.

Considering i will also be putting another 5k in this year, what are my best alternatives for a higher yield on my savings?

If there are any ISAs pay over 3% at the moment i would llike to hear it but if not alternative ways of saving and investing would be welcomed.

Thanks,

Josh

innovate

Depending on how long you can put your money away for, you have different options. If it is 5-7+ years, S&S ISAs, perhaps with a passive portfolio, might be a good choice.

If you expect to need your money more near term, interest-paying current accounts and/or regular savers (incl ISA regular savers) might be a better alternative.

Lots of information on these boards about either option.

redbuzzard

We just did a cash ISA each into the Coventry BS at 2.55% for 2 years. 120 day penalty for withdrawal, so accessible at a price, not that we should need to. At least we'll have the tax shelter capacity for the future.

I can't be bothered to mess about with current accounts and regular savers for an extra £20 or £30 a year.

JC_Maven

thanks, could you please provide some links to the helpful threads as this is a bit of a maze!

I will be storing the money for 2 years to a 2 year fixed may be the option but you still only got 2.55 on that?! I remember a year or so ago it was 4% for a three year. Should have done that...

Anything else?

atush

/Are you Stoozing your Student loan, or is this other savings? What rate is your student loan?

Newbie2saving

Yes it is worth it. Once you take these funds out of the tax wrapper you never get that back. So when rates (eventually) do rise (and you're not a student and being taxed) you won't have this benefit. However this assumes you don't need the cash, if you do, you do, and it could be in a better account.

Be careful if you need the money in the next few years, investing doesn't suit this as there isn't enough time in the market. Also you wouldn't want to fix in case you need the cash, if not, fixing should secure you a better rate.

Here is the MSE link for ISA rates;

http://www.moneysavingexpert.com/savings/best-cash-isa

JC_Maven

atush wrote: »

/Are you Stoozing your Student loan, or is this other savings? What rate is your student loan?

Nope not stoozing, not one of those privileged kids unfortunately. Working my butt off while at uni and in my holidays to build I nice little nest for when I leave.

The loan is fixed to inflation.

quantic

Not got anything useful to add, other than that you seem like a smart person and seem to have your head screwed on. Can see you doing well for yourself in the future. Good luck with Uni

atush

JC_Maven wrote: »

Nope not stoozing, not one of those privileged kids unfortunately. Working my butt off while at uni and in my holidays to build I nice little nest for when I leave.

The loan is fixed to inflation.

Loan? you are paying back your parents? Good on ya lol.;)

The reason I asked is, the new loan rate for kids starting last fall is really high, and the rates today are so bad they make stoozing almost impossible for those on 1.5%. Some are on around 3% I think.

JC_Maven

atush wrote: »

Loan? you are paying back your parents? Good on ya lol.;)

The reason I asked is, the new loan rate for kids starting last fall is really high, and the rates today are so bad they make stoozing almost impossible for those on 1.5%. Some are on around 3% I think.

Loan is from the govt (student finance) which is fixed to inflation as far as I know.

If anything my parents owe me money because of how careful I have always been with it and always gave it to them for 'safe keeping' (managed to save around £200 by 10 years old, may not sound like a lot but it was back then) but then if we get into who spent more on whose upbringing I lose on all accounts.

So even if we look at the interest parity condition would you still think this is the best way to go forward, ISA on 2.3? What about when I max out the 5.8k or whatever it is this days, regular saver?

If you dont know interest parity then don't worry about it, the proposed system by you guys sounds fine its just with inflation and all, it cancels out pretty much all gains and then its a game of "how can I lose the least amount of real money".

And thanks quantic Always been interested in finance from very young, don't know why.

zugzwang

I don't know what degree you are doing, but most students would be better advised to work their butt off studying rather than working their butt off to create a nest egg.

A first class degree might soon put you in a job paying £40/hr, whereas before graduation you'll only maybe earn earn less than£10/hr. Numbers are just rhetorical, you'll need to think through what your current and potential earnings actually are.

However a second or third class degree which might merely have hindered your progress in better economic times, might mean no graduate job at all these days.

Frankly, if the degree isn't going to increase your long term earnings potential and chances of successful career, then you wouldn't bother with it would you?

So good that you are coping with money. Great if you are building work experience. But for now, consider keeping your eyes firmly on coming top in your studies, rather than working your butt off to create savings.