£50 a month instant access cash ISA until £500, help me chose?

EthelbertHumphry

I want to start putting £50 into an easy-access cash ISA each month and build up £500 quickly (not urgently), what ISA should I go far. I know the decision ultimately comes down to me but I would like to know what instant-access ISA you would put your £50 a month in.

Extra details: I just spoke with a financial advisor on the phone who suggested I put at least £50 a month into an easy-access cash ISA to build up an emergency fund (e.g. emergency car repairs). He said this should be at least £500 (preferably closer to £1500 or 3 months net salary totalling £1680 [apprentice wage]). This is to cover me so that when I start to invest in things like stock options and the like then I can just use the ISA money and not sabotage the investment.

Archi_Bald

How big is your instant access emergency cash fund? You shouldn't be investing until you have some 6-12 months living costs, plus perhaps some cash for car or boiler breakdwons etc, in an instant access cash resource.

EthelbertHumphry

Archi_Bald wrote: »

How big is your instant access emergency cash fund? You shouldn't be investing until you have some 6-12 months living costs, plus perhaps some cash for car or boiler breakdwons etc, in an instant access cash resource.

Non. Isn't keeping cash under the mattress bad because of the devaluation? Or do you mean some sort of current account that pays small interest?

My parents were terrible with their finances, so I am learning from the bottom up. I have a bank account with low money and a credit card that has not been maxed out and is setup to pay in full each month so I am going from there, got my job about 1.5 months ago..

TrustyOven

http://monevator.com/what-should-a-new-investor-do/

http://monevator.com/its-an-emergency-fund/

Those are good places to start with.

I personally wouldn't recommend investing unless you have spare cash for emergencies and possible job loss (3 to 6 months expenses as minimum).

Also Cash ISAs pay very little interest right now, seems almost pointless to use them to build up the emergency fund or to build cash reserves for buying investment assets. You could look at current accounts that pay interest to help you out there.

Please don't actually hold cash under the matress - if you were on the mobile, dialling 999, and desperately asking for the fire department, I'm not sure you'd have time or think to stop to grab the cash before it burns up with everything else.

jimjames

EthelbertHumphry wrote: »

I want to start putting £50 into an easy-access cash ISA each month and build up £500 quickly (not urgently), what ISA should I go far. I know the decision ultimately comes down to me but I would like to know what instant-access ISA you would put your £50 a month in.

Extra details: I just spoke with a financial advisor on the phone who suggested I put at least £50 a month into an easy-access cash ISA to build up an emergency fund (e.g. emergency car repairs). He said this should be at least £500 (preferably closer to £1500 or 3 months net salary totalling £1680 [apprentice wage]). This is to cover me so that when I start to invest in things like stock options and the like then I can just use the ISA money and not sabotage the investment.

For under £4000 a cash ISA is totally pointless. You will get a far, far higher rate of interest using TSB current accounts at 5%.

Debsnewbudget

I think you just need to pick one and go with it to get you in the habit of saving £50 a month. The interest rate is not that important at the moment it's the habit that needs to become the focus. My advice would be to Set it up as a standing order every month the day after pay day.
I am pondering whether to chose an ISA linked to my bank so that every day when I log on I can see it and congratulate myself
OR put it somewhere else so I get a nice surprise every time I log on
Good luck with getting into the saving habit

EthelbertHumphry

Thanks for the help guys. I have opened the TSB classic current account and will use the 7 day switch service when it becomes available to me.

I also realised that it would be much better to pay off debts earlier rather than save a significant amount. So I will pay off my vehicle insurance first, then vehicle finance. Then I will open an instant-access cash ISA.

I will also build up three months salary in my TSB account.

Eco_Miser

There is no point in having a cash ISA until the interest it pays is greater than the after-tax interest available from current accounts, which currently does not apply until you have much more than £30,000. (*2xTSB, Nationwide, Lloyds, Santander, 3xBOS, Tesco)