What to do with £12,000?

emvy

I've been saving since the beginning of uni (5 years ago) and have got £12,000 sitting in one of my graduate current accounts earning ZERO interest! :doh: Not that interest rates are that brilliant anyway but anything is better than nothing!

I'm interested in your suggestions for best non-ISA way to save this 'properly'. I've just opened an HSBC regular saver account for future monthly savings so that's not an option. Access to about £2,000 would be good for emergencies but the rest can be put away for at least 3 years. I like having most of it in the same place at the moment but that's not essential. Thoughts?

rb10

£2,500 in a Nationwide FlexDirect at 5%.

The rest in a Santander 123 at 3%.

Both of these are current accounts. The Santander account also pays cashback on direct debits.

This would give you over £300 interest per year, after 20% tax.

ELDS

Originally Posted by ELDS View Post:
Hi,

I have 12k I wish to deposit in an instant access savings account. I will not be making any other regular payments in and may need to make withdrawals. Any recommendations?

Thanks.

Sorry for gatecrashing!

I have looked at these 2 options but both appear to require regular monthly deposits of £500 or £1000 and 2 DD's set up (in the case of the 123 Santander).

What is there out there for a one off deposit of 12k?

hcb42

why no isa?

Vortigern

ELDS wrote: »

I have looked at these 2 options but both appear to require regular monthly deposits of £500 or £1000 and 2 DD's set up (in the case of the 123 Santander).

For those regular deposits you just transfer £1000 from one account to the other, and then back again.

eskbanker

ELDS wrote: »

I have looked at these 2 options but both appear to require regular monthly deposits of £500 or £1000 and 2 DD's set up (in the case of the 123 Santander).

What is there out there for a one off deposit of 12k?

The reason the current accounts are recommended so often on here is that 'normal' savings accounts have such poor rates just now - look at the best savings article linked above and you'll see that the best current variable rate is about 1.7%, with fixed rates nudging above 2%.

Using current accounts to get better rates does involve a bit of effort to satisfy the Ts & Cs, but in rb10's example above you can move £1K from Nationwide to Santander and back every month in order to meet the funding requirements of both accounts. For DDs, the most cost-effective use of the 123 is to use that to pay utility bills or other DDs that generate cashback, but if you have nothing suitable you can pay into some savings accounts via DD or make charity donations.

Many of us feel these hoops are worth jumping through for (relatively) decent rates but it's your call!

emvy

hcb42 wrote: »

why no isa?

I've used up this year's allowance so needed other options for now thanks rb10, and there was me comparing savings accounts and not even looking at current accounts!

Should probably have occurred to me already with the amount of Santander 123 ads everywhere at the moment...

rb10

ELDS wrote: »

I have looked at these 2 options but both appear to require regular monthly deposits of £500 or £1000 and 2 DD's set up (in the case of the 123 Santander).

Do you not have a salary of over £1k net? Just get that paid in.

And most people have at least two direct debits that can be transferred from their existing current account.

There's often around £50 available through Quidco for switching to Santander as well.

MrRee_2

Buy property - plain and simple - nothing will come close to giving a return like it over the long term.

Assuming you are paying rent (dead money).

EdGasket

MrRee wrote: »

Buy property - plain and simple - nothing will come close to giving a return like it over the long term.

Assuming you are paying rent (dead money).

I beg to differ.
When you come to sell a second home, you pay a very high amount of capital gains tax. While owning you have to insure and maintain it and pay council tax even if it is empty. If you get subsidence you will probably make a loss as it is extremely difficult to sell a house that has suffered subsidence. Rental income is all well and good if things go alright but it only takes one lot of bad tennants to trash the place or cost you a fortune if they refuse pay rent and won't move out.
I looked into property investment but calculated that on average, returns from the stockmarket were similar to but a lot less hassle than buy to let.

eskbanker

MrRee wrote: »

Buy property - plain and simple - nothing will come close to giving a return like it over the long term.

Assuming you are paying rent (dead money).

EdGasket wrote: »

I beg to differ.
When you come to sell a second home, you pay a very high amount of capital gains tax. While owning you have to insure and maintain it and pay council tax even if it is empty. If you get subsidence you will probably make a loss as it is extremely difficult to sell a house that has suffered subsidence. Rental income is all well and good if things go alright but it only takes one lot of bad tennants to trash the place or cost you a fortune if they refuse pay rent and won't move out.
I looked into property investment but calculated that on average, returns from the stockmarket were similar to but a lot less hassle than buy to let.

I don't think the advice was actually to buy a second property solely for investment purposes, I read it more as general guidance that owning your own home is a better long term bet than renting?