Are Regular Savers still worth it?

RayWolfe

moneyandmountains wrote: »

2) If applying the MSE Savings Fountain i.e. drip feeding the regular saver from existing savings, then regular savers of less than 8% are probably not worthwhile. In fact, people may actually be losing out compared to a savings account / fixed rate bond.

My point was addressing the above.
The implication that "less than 8% are probably not worthwhile" misses the point that under the present regime, we lose 3 days in and 3 days out whether we are transferring £250 x 12 for a saver or £3,000 x 1 for a bond. Assuming the funds are being transferred and the rates are fixed, any saver paying more than a bond is better.
I agree that if you are getting say, 7.5% on your feeder, then not going for a saver at less than 8% probably makes sense. However, if you have to transfer to any account the lost 3 days applies regardless.
I think we all agree, however, that the top monthly savers that last for more than a year are the very best option.

bristolleedsfan

RayWolfe wrote: »

I think we all agree, however, that the top monthly savers that last for more than a year are the very best option.

one point that people are making is that now that the gap has closed between the top ongoing regular savers ( by fact that yorkshire RS wasnt increased last time,whereas fixed 1 and 2 years having risen considerably) it is now more advantagous to put a lump sum of any proportion ( unless 1 withdrawal in the year might be required) in a 1 year fix (6,50/6.55) than feed it into the highest paying ongoing regular saver ( 7%) drip fed from a (6%) account.
As some of the top paying ongoing regular savers have been apparent loss leaders for certain building societies the gap between them and other savings products may narrow further.

moneyandmountains

RayWolfe wrote: »

The implication that "less than 8% are probably not worthwhile" misses the point that under the present regime, we lose 3 days in and 3 days out whether we are transferring £250 x 12 for a saver or £3,000 x 1 for a bond.

Ok. I wasn't sure what you meant originally.
The calculation of interest lost I did originally for the regular saver was based on the £3000 amount so I was confused by the comment at first

Perhaps we need to add in a hassle charge
Don't get me wrong, I am fully in favour of regular savers as long as you go in eyes open.

Initially, I was mainly concerned that regular savers may provide minimal gains / a loss over leaving your money in a standard savings account if applying the dripfeeding concept.
I guess you have highlighted that fixed rate bonds have the same problem. i.e. it may be better to leave your money in your standard savings account.

I see the following situations as equivalent (assuming £3000 saved over a year)
Standard Savings account + Reg Saver (combined rate)
Fixed Rate Bond (AER = combined rate)
In this situation, the bond is probably less hassle than timing payments to occur during weekdays.

For amounts greater than this, a fixed rate bond is probably better.
Obviously, this is subject to the normal considerations about comparing fixed rates with variable rate accounts.

Special_Saver2

Re: Feeder accounts for regular savers

stphnstevey wrote: »

Martin's articles on best savings accounts probably covers this (for RS or just to stash your cash).

Not up on this but thought ICICI and IceSave were some of the best

The ICICI and IceSave accounts are not particularly good as feeder accounts because you cannot transfer money directly to your regular saver accounts. You would have to transfer money from these accounts to a current account and then from the current account to the regular saver accounts.

The Sainsbury's account however allows you to transfer money directly to other accounts (not just current accounts) and pays just 0.05% gross less than ICICI, so it would make a good feeder account. There is some question as to whether it can be used for all regular savers (see thread below) which is why I am waiting for confirmation from others before including it in my own thread.
See: http://forums.moneysavingexpert.com/showthread.html?t=475213

RayWolfe

moneyandmountains wrote: »

Perhaps we need to add in a hassle charge

Yea, I'll buy that. Do you know where I can get the cheapest?

RayWolfe

bristolleedsfan wrote: »

As some of the top paying ongoing regular savers have been apparent loss leaders for certain building societies the gap between them and other savings products may narrow further.

Yes, I think the fashion for them is passing. I now see companies offering "Stepped Accounts". I haven't seen them since the mid 90s. I guess as new guys come out of marketing college, they come up with "new" ideas which we, who have been saving for some time have seen before.

bristolleedsfan

RayWolfe wrote: »

Yes, I think the fashion for them is passing. I now see companies offering "Stepped Accounts". I haven't seen them since the mid 90s. I guess as new guys come out of marketing college, they come up with "new" ideas which we, who have been saving for some time have seen before.

yep true, in the 90s a lot of people did well out of the stepped accounts, leeds offered a 3 year one recentlly, wasnt very adventurous though

dlevene

moneyandmountains wrote: »

I see the following situations as equivalent (assuming £3000 saved over a year)
Standard Savings account + Reg Saver (combined rate)
Fixed Rate Bond (AER = combined rate)
In this situation, the bond is probably less hassle than timing payments to occur during weekdays.

For amounts greater than this, a fixed rate bond is probably better.
Obviously, this is subject to the normal considerations about comparing fixed rates with variable rate accounts.

Right I'm really confused now (probably because I know nothing about fixed-rate bonds ).

Basically, if I have a lump sum of £4000-£5000 that I want to save for maybe 2-4 years, I should scrap all of this drip-feeding malarkey and go for a fixed-rate bond?

If so, two questions. 1. Where can I find info about the best bonds(s), and 2. If you do take into account the fixed/variable issue, then does it become not-worth it again? A 1 year bond at 6.5% seems pointless when it will be matched by the Sainsburys ac @ 6.25% if it follows the next widely expected BoE rise before the end of the year.

I thought I had this figured out! Damn and blast :mad:

RayWolfe

dlevene wrote: »

1. Where can I find info about the best bonds(s

http://www.moneyfacts.co.uk/searches/savings.aspx

moneyandmountains

dlevene wrote: »

Basically, if I have a lump sum of £4000-£5000 that I want to save for maybe 2-4 years, I should scrap all of this drip-feeding malarkey and go for a fixed-rate bond?

Have you got a cash ISA? That would be my first port of call.

After, that it depends on what rate of tax you pay.
Index linked savings certificates are pretty good for higher rate tax payers, if you can commit to the 3 year term.
(Note: you can cash them in early, just you lose interest)

Alternatively, you could save the excess £1k-2k in a standard savings account and perhaps put in another cash ISA next year. As you say 2-4 years, this would give you some liquidity without having to withdraw money from term savings in the first year.