Whats the best way to save 100K

icon_boy

Hi there,

I do a lot of reading here, don’t really post much - in need of some advice

I've managed to clear the majority of my debts, which has taken a good couple of years, I'm glad this is over and it’s given me the discipline to save of which I’m so grateful, it been a tough journey!


I’m now in a position to be able to save around £2000.00 per month, this will not be easy, but with the help of my wife – we believe we can manage this.



The savings objective here is to put down a bigger deposit on a house or even perhaps be able to build a new house (would need a specialist mortgage for this), obviously these will be decided within 5 years from now.


Would love to hear from you guys, on how to make my money work hard from me, from what I see the interest rates seem very low. I have two questions I’d like to ask?


I’m thinking of a 5 year bond and exhaust a cash ISA and how does interest payments work on a savings/bond account work?

ChopperST

Have you read -

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Nationwide Flex Direct
Santander 123
Lloyds Vantage would all be options for you

Best paying at the moment are current accounts as opposed to ISA's.

I'd also look at first direct regular savers.

You mention bonds - do you have cash saved now that you could deposit as a lump sum - Aldermore are offering 3.2% for a 5 year fixed term bond, the interest rates drop obviously with reducing terms.

gordongekko

What level of risk are you looking for?

ChopperST

gordongekko wrote: »

What level of risk are you looking for?

OP mentions that his timescale is 5 years and the money is required for a house deposit / building fees, therefore his risk profile has to be low.

ColdIron

I'd be wary of a 5 year fixed deposit. Interest rates are very low now and you could be locking yourself into something that looks very poor in 3 years time. Less than 2 years ago Aldermore were offering 3.55% on a single year fix

ChopperST

ColdIron wrote: »

I'd be wary of a 5 year fixed deposit. Interest rates are very low now and you could be locking yourself into something that looks very poor in 3 years time. Less than 2 years ago Aldermore were offering 3.55% on a single year fix

Totally agree, difficult to advise the OP further without knowing if he has a lump sum now or they are starting from £0

icon_boy

thanks for the response guys, I will certainly look into the pro's and con's of the bonds.

The First Direct looks interesting, but have to open a current account, something Im not willing to do, also the limit is pretty low.

Why are Saver's not being rewarded?

icon_boy

ChopperST wrote: »

Totally agree, difficult to advise the OP further without knowing if he has a lump sum now or they are starting from £0

I'd be begining from £0, should have made that clearer...

opinions4u

Why are Saver's not being rewarded?

Google "credit crunch" and read up on how governments want us to spend our savings to kick start the economy.

Low interest rates disincentivise savings.

ColdIron

icon_boy wrote: »

I'd be begining from £0, should have made that clearer...

Most fixed deposits won't allow you to add additional funds so I'd say they were of no use to you

ChopperST

icon_boy wrote: »

The First Direct looks interesting, but have to open a current account, something Im not willing to do, also the limit is pretty low.

Why are Saver's not being rewarded?

Savers aren't being rewarded because the government is printing money and lending it directly to the banks - its called funding for lending. The banks don't need to pay you anything for your cash as they can borrow from the BOE for practically 0%

You can get 5% on £5000 between yourself and your partner for 12 months simply by moving £1000 in and straight out every month with Nationwide. £60 each in "reward payments" from the Halifax per year for depositing £750 and paying it out the next day and having two active direct debits. Santander 123 will give you 3% on up to £30k for £500 in and out each month and they'll pay you cashback on your utility bills which for most people dwarves the monthly account fee.

I'm sure if you speak to the nice person at your bank they'll offer you a big fat 0.05% APR for an instant access savings account and you can watch your savings be eroded over the next 5 years by inflation.

Remember this guy from the Nationwide ads?

http://img.thisismoney.co.uk/i/pix/2009/03/nationwide1_203x150.jpg

If you're not willing to do a bit of legwork, then you play right into the banks hands.

GL whatever you decide to do.