Your Savings advice required!

RedDonkey

I've been reading the very useful moneysaving advice on these forums for the last few months, as my OH and I set about looking for a flat to buy and understanding the whole horrible purchasing process, but hadn't yet posted until today. Due to a change in OH's job circumstances and consequent uncertainty about being able to make mortgage payments, we've pulled out of the whole process (with some regrets and apologies to the vendor), luckily before any major expenses were incurred: no searches or surveys were carried out, so we should be getting our advances back.

Which all leaves us looking to continue renting for the next 2 years, and just under £30000 saved up for the deposit. So my question is - what's the best way to go about maximising the interest on this amount so that it's as big as possible in two years' time? £26000 of the money is currently sitting in two Nationwide eSavings accounts (5.55% gross, 4.44 net); another £3500 is in a Nationwide ISA (no payment yet made this year) at 5.6%. We're willing to contemplate a small element of risk, but would find it hard to swallow if we ended up with less than we started with - not very courageous, I guess! As I said above, the money will almost certainly be needed in 2 years' time, but until then most of it can be left alone.

A little more info: we're both debt-free, barring my student loan which I am not eligible to start repaying for 2 years. No credit cards at the moment.

I'll be interested to hear people's thoughts on this!

Jonbvn

Make sure you max-out your ISA's this year ASAP. There is an article here.

With the rest NS&I index linked savings certs are good at the moment, due to high RPI. You can save up to 15k per issue per person and the real goody - they are tax-free. However, they are not instant access - you have to stay-in for a minimum of a year to get any interest.

IMHO, 2 years is far too short to consider S&S, and it seems you are risk averse.

RedDonkey

Thank you for the comments, very helpful!

With the rest NS&I index linked savings certs are good at the moment, due to high RPI. You can save up to 15k per issue per person and the real goody - they are tax-free. However, they are not instant access - you have to stay-in for a minimum of a year to get any interest.

Now this sounds interesting. If we left £15k in there for 2 years, say, what kind of return would we be looking at?

IMHO, 2 years is far too short to consider S&S, and it seems you are risk averse.

Yes, fairly risk-averse! I was thinking something similar - if we could afford to leave the money for a decent amount of time, I'd be willing to consider something more speculative, but we will need all or most of it in 2 years' time and there just seems too much of a risk of a negative return in that timeframe.

One other question about something Martin says in his article:

Only one mini-cash ISA per year. You can only have a Mini Cash ISA with one provider in any tax year – you can't split it. However you can hold cash-ISAs from different years with different providers.

Does this mean I can open another ISA with a different bank or bs this year, and keep the Nationwide one? And if so, can I pay £3000 into each of them or is it £3000 combined? If it's the latter, I guess it's better just to pay into the one I already have, which already has £3500 in it, right?

dancingfairy

You can have 1 ISA for each tax year so you can add £3000 to the Nationwide one for this tax year or start one somewhere else if you prefer. What you have from previous tax years is irrelevant to where this year's goes. Don't forget you and your OH can have 1 each for this tax year (and each new tax year). The Nationwide one seems to have a reasonable rate of interest ( not the best so it just depends whether you want this years at a higher rate somewhere else or whether you prefer the convenience of having them all in the one place. You could always transfer your previous years to a new provider as well to maximise interest. Note: you will need to approach the new company and ask them to do a transfer : if you remove the money it will lose it's tax free status so you need to transfer it.

Jonbvn

RedDonkey wrote: »

Thank you for the comments, very helpful!


Now this sounds interesting. If we left £15k in there for 2 years, say, what kind of return would we be looking at?

Rates can be found here. Note that since RPI fluctuates it is not possible to determine the exact return. However, at current RPI, they are quoting 5.65% AER tax-free. This rate is excellent, outside of an ISA.

HTH.

RedDonkey

Thank you Jonbvn and dancingfairy, lots to think about there and I'm a bit clearer about what to do with this money. :beer: