Small sum of money to invest - Help please

Dithering_Dad

Amnesia180 wrote: »

When you say work out how much I spend, and multiply by three. That would come to more money than I have left over.

All you're doing when you multiply by three is working out how much money you need to cover you for three month's worth of being unemployed. Once you've saved this much up in a cash ISA you can then look at other investments. So say you're paid £1000 per month and have £100 left at the end of the month for savings you would need to save £2700 in your cash ISA as emergency savings (£900 x 3).

Depending on your job security and how easy it is to pick up a new job in your industry you may want to increase the three month's figure. For example, I am a contractor and so work on a temporary basis where I could have periods of unemployment to cover me between contracts. I therefore put away enough money to pay for my household bills and such for a period of 6 months.

Amnesia180

Thanks for clearing that up. It's really helped.

Well, according to this - I will need just short of £1500 to cover me for 3 months. It would be closer to £2000 including food bills etc.

So, I'm not far off my target.

I've worked out I could get around £200 per month (if I put my mind to it) into the ISA. Meaning I could put £1000 into the ISA now... (save £600 in my regular saver for now) and in 10 months time have the full £3000 in there.

Now, just to decide what ISA to take... the NS&I seems the best, however - it doesn't take too kindly to transfers I believe?

sparklymessygirl

Hi Amnesia,

I have the NS&I ISA.
It is correct that this ISA does not take transfers in from pre-existing ISAs but I don't think (from reading your post - may be wrong) you have one so that shouldn't worry you.
I transfered a pre-existing ISA into a better performing one and then for this tax year (i.e. for new money) opened a NS&I ISA.
Why not put the whole £1600 into the ISA? - you can get it out at any time.

Sparkly

Amnesia180

After doing some more research it turns out there are some savings accounts that also offer a 6.3% or even 8% in some cases!

Would these be better for me than a mini ISA?

Amnesia180

sparklymessygirl wrote: »

Hi Amnesia,

I have the NS&I ISA.
It is correct that this ISA does not take transfers in from pre-existing ISAs but I don't think (from reading your post - may be wrong) you have one so that shouldn't worry you.
I transfered a pre-existing ISA into a better performing one and then for this tax year (i.e. for new money) opened a NS&I ISA.
Why not put the whole £1600 into the ISA? - you can get it out at any time.

Sparkly

Yes, I think I will put the whole £1600 into it... and in 8 months I will have hit the £3k limit.

Say I get £3k in my first year.. I'd be allowed a further £3k for my second year - does this mean I could have a total (potentially) of £6k in one ISA account? Or does it mean I'd need a different mini ISA for the second allowance of £3k?

Hope that makes sense :-)

And yes, I think I'll be going for the NS&I - I have the minimum £1000 to put in, and I don't have any other ISA... Do they charge to transfer money to a different ISA (for instance if I want to change next year?) and do they have any catches I should be made aware of?

Thanks,
Amnesia

jem16

Amnesia180 wrote: »

After doing some more research it turns out there are some savings accounts that also offer a 6.3% or even 8% in some cases!

6.3% is certainly achievable but then you have to deduct tax at 20% or 40% if higher rate taxpayer. That brings it down to 5.04% and 3.78%.

The 8% would not be achievable on most savings accounts. It tends to only be regular savers and then you are limited to around £250 per month and cannot put in a lump sum. This reduces the overall interest rate per annum.

Would these be better for me than a mini ISA?

Unlikely. The ISA is a tax-free savings account. So you will get the full 6.3% if you chosse the NS&I ISA.

jem16

Amnesia180 wrote: »

Yes, I think I will put the whole £1600 into it... and in 8 months I will have hit the £3k limit.

Say I get £3k in my first year.. I'd be allowed a further £3k for my second year - does this mean I could have a total (potentially) of £6k in one ISA account? Or does it mean I'd need a different mini ISA for the second allowance of £3k?

Yes you can put another £3k into your ISA on 6th April 2008. You can have a different ISA if you wish but there is no need, especially if you are already in the top paying ISA.

Hope that makes sense :-)

And yes, I think I'll be going for the NS&I - I have the minimum £1000 to put in, and I don't have any other ISA... Do they charge to transfer money to a different ISA (for instance if I want to change next year?) and do they have any catches I should be made aware of?

Thanks,
Amnesia

No catches, no penalties and no charges.

Just keep an eye on the interest rate and transfer if you want to. The only problem you will have is finding an ISA that will accept transfers.

Amnesia180

jem16 wrote: »

Unlikely. The ISA is a tax-free savings account. So you will get the full 6.3% if you chosse the NS&I ISA.

Doh!! The tax-free savings account in the title explains it all.
Apologies :-)

Can you apply online? I've compared to other ISA accounts and I match the £1k minimum for this one, and don't have other ISA so don't need to worry about the transfer. Seems like an ideal starter account for me.

Thanks for all the help!

jem16

Amnesia180 wrote: »

Doh!! The tax-free savings account in the title explains it all.
Apologies :-)

Can you apply online? I've compared to other ISA accounts and I match the £1k minimum for this one, and don't have other ISA so don't need to worry about the transfer. Seems like an ideal starter account for me.

Thanks for all the help!

Yes you can apply online. Go here;

http://www.nsandi.com/products/disa/applynow.jsp?invest-now-button=Invest+now%A0%A0%3E%3E

Amnesia180

jem16 wrote: »

Yes you can put another £6k into your ISA on 6th April 2008. You can have a different ISA if you wish but there is no need, especially if you are already in the top paying ISA.

Another £6k?
Sorry, I don't think I explained myself properly.

2007 - ISA 1 has £3k in it.
2008 - ISA 1 still has £3k in it. I have another allowance so put another £3k into it. Now I have £6k in ISA 1.
2009 - I find interest rates have changed etc. I open ISA 2 - Can I transfer all £6k from ISA 1 into ISA 2 and still be allowed a further £3k for my 3rd year?

Or will I have to keep the £6k in ISA 1 to continue getting the interest.

jem16 wrote: »

The only problem you will have is finding an ISA that will accept transfers.

But the interest rate at the moment seems pretty good. And like you said, most ISA don't accept transfers (at top paying rates) so I'm not really losing out.

Thanks again.