Graduate who has just filled ISA, next steps?

mini111

Hi all,

I graduated this June and went straight into employment. I have been saving as much as I can and filled my ISA allowance for the year this months. The problem is that each money I will get a decent sum paid in but I am not sure where I should put it. I don't want to leave it in my graduate account as I'll get no interest and I'll probably end up spending it all too.

I lack expertise in the trading side of things and wont have a big enough chunk to start doing that.

Where should I put my money if I want to get a good rate but can't be certain that I will keep it in all in there for a year without needing to touch some of it (I may need a deposit etc). My graduate account is with HSBC incase that has any impact on the account I should take?

Any help is much appreciated!

mark55man

What a nice position to be in.

Depending on what risk you were happy to take you could start investing in things that would let you use your capital gains allowance, but wouldn't give you too much taxable income.

Also unless you are already or would become a higher rate tax payers, buying UK shares for income (ie dividends) is tax free as it is taxed at source (taking it very simply)

Other tax free investments include some forms of gold but its probably a bit early in your investing career to be doing that.

Really though the question is what do you need the money for - if its long term (5-10years+) then stocks or some funds would be sensible - if its to buy a house then its more difficult as you don't want to need the money just as the stock market is having a slump

TBH at the moment just saving a bit of a nest egg in cash wouldn't be too bad an idea first direct do a 6% special offer. Or put them in premium bonds if you want a flutter but keep the capital safe

plus you need to explore your appetite to risk - as a youngster more risk now could equate to better returns but not if you sell every time it loses 10%

mark55man

plus trading and investing are different - the cheapest way to invest is to select a portfolio and leave it alone forever

bigadaj

mini111 wrote: »

Hi all,

I graduated this June and went straight into employment. I have been saving as much as I can and filled my ISA allowance for the year this months. The problem is that each money I will get a decent sum paid in but I am not sure where I should put it. I don't want to leave it in my graduate account as I'll get no interest and I'll probably end up spending it all too.

I lack expertise in the trading side of things and wont have a big enough chunk to start doing that.

Where should I put my money if I want to get a good rate but can't be certain that I will keep it in all in there for a year without needing to touch some of it (I may need a deposit etc). My graduate account is with HSBC incase that has any impact on the account I should take?

Any help is much appreciated!

Might be worth clarifying if you have filled your cash isa, put it all into shares or done half and half.

Might be worth confirming the exact sums you are looking at as well, sounds like around £500 per month to me?

I'd be hammering into regular savers if I were you potentially splitting this with an index shares fund such as lifestrategy. I'd want maybe 10k in reasonably accessible cash in your position, by which I mean savers that are accessible with a penalty. Next decision is them whnether you are buying a. House in the near future or not, if so then keep in cash, if not then looking at equities.

Also pension provision is a consideration, this can be tax efficient though you may have this covered already.

organic_wanabe

Have you opened a Santander 123 account where you will get 3% gross on balances between £3,000 and £20,000? It is tiered for balances under £3,000. There is also a £2 per month fee but this can be offset if you pay certain direct debits from the account. My son also graduated in July 2013. I advised him to open a Santander 123 and he gets his salary paid into it. He has direct debits set up on the account to pay his phone/broadband, council tax, electricity which pay cashback. You need to set up a minimum of 2 Direct Debits. He has a balance of around £14,000 sitting in the account and nets around £32 per month from Santander. I advised him to get this account (my husband and I have 3 between us) as, unlike other accounts, it gives a fair rate of interest for sums up to £20,000 (most other accounts it is only up to around £5,000) and, at present, is ongoing (most other banks only give good interest for a limited period). Also, the money isn't tied up if you need it for a house deposit or to buy a car. Hopefully, having this account will will mean that he wont need to keep chopping and changing accounts. Like you he has filled his Cash ISA but he will probably also do an S&S ISA to his full limit - he is an Investment Graduate so is building up a bit of knowledge before he commits his money!

mini111

organic_wanabe wrote: »

Have you opened a Santander 123 account where you will get 3% gross on balances between £3,000 and £20,000? It is tiered for balances under £3,000. There is also a £2 per month fee but this can be offset if you pay certain direct debits from the account. My son also graduated in July 2013. I advised him to open a Santander 123 and he gets his salary paid into it. He has direct debits set up on the account to pay his phone/broadband, council tax, electricity which pay cashback. You need to set up a minimum of 2 Direct Debits. He has a balance of around £14,000 sitting in the account and nets around £32 per month from Santander. I advised him to get this account (my husband and I have 3 between us) as, unlike other accounts, it gives a fair rate of interest for sums up to £20,000 (most other accounts it is only up to around £5,000) and, at present, is ongoing (most other banks only give good interest for a limited period). Also, the money isn't tied up if you need it for a house deposit or to buy a car. Hopefully, having this account will will mean that he wont need to keep chopping and changing accounts. Like you he has filled his Cash ISA but he will probably also do an S&S ISA to his full limit - he is an Investment Graduate so is building up a bit of knowledge before he commits his money!

Hi thank you for the information. What I don't understand is why these bank accounts require direct debits to be made? Could I just make a direct debit to my other account?

For reference im saving around £500-800 a month at the moment. Im not too keen on investing in stocks though as ill probably need the money for a deposit at somepoint.

bigadaj

mini111 wrote: »

Hi thank you for the information. What I don't understand is why these bank accounts require direct debits to be made? Could I just make a direct debit to my other account?

For reference im saving around £500-800 a month at the moment. Im not too keen on investing in stocks though as ill probably need the money for a deposit at somepoint.

You can set up a charity direct debit, well two, for a couple of pounds a month. Alternatively you get cash back on your council tax, gas, electric, telephone etc which will help pay the fee. Needs funding from an external account but you can set up a standing order for this from your main account, and then transfer back the following, or even the same, day.

jimjames

mini111 wrote: »

Hi thank you for the information. What I don't understand is why these bank accounts require direct debits to be made? Could I just make a direct debit to my other account?

That's their rules to get the rate offered so unless you follow them you won't get that amount.

If you are saving and need the money within a few years then stock market investments may not be suitable although for long term money they tend to be a good option.

Archi_Bald

mini111 wrote: »

Could I just make a direct debit to my other account?

Direct Debits between current account are not possible (you would use Standing Orders for regular payments between current accounts).

Direct Debits are generally for a service provider (utility, mobile phone co, credit card company etc) to collect your monthly payments. There are some savings accounts that you can have in your name and that allow funding by Direct Debit. You probably would want to track or two of these down.

kidmugsy

Why not just set up direct debits to two investment schemes?

See p45 and below
http://www.theaic.co.uk/sites/default/files/statistics/attachment/AICStats31Oct2013.pdf

Eco_Miser

Lloyds, BOS and TSB offer 3% on £3000-£5000, with no charge, no direct debits, and no time limit. (Like Santander, they could drop the rate anytime, but they haven't yet). You can have three accounts at each of the banks, and the required monthly payments can be internal transfers.

If you are going to be saving rather than investing, you'll probably end up wih lots of thes accounts, plus the higher rate but time-limited accounts from Naionwide and Clydesdale/Yorkshire.