Best thing to do with savings...

gzoom

So I've recently decided to embark on a cost cutting/savings drive over the next 24 months.

The aim is to add about £30K to my short terms savings in the next 2 years.

It's a large figure but should be achievable given me+wife's income.

The start of the saving drive it swap my current BMW which I worked out recently is costing me over £600/month ALL IN for a Nissan Leaf at £250/month.

Sale of the BMW will release about £12K of equity (nearly half of my saving target), and I have £12K worth of cash ISA's maturing.

So the question is what do I do with the equity from the car sale and my current ISA given the truly rubbish interest rates....

My initial thought was to just throw the whole lot into the mortgage, which will would reduce my monthly payment by nearly half (small mortgage). However this would eat up the bulk of saving, though it would mean I would save about £70/month in interest payments on the mortgage (£100/month drop in actual mortgage payments).

Looking at current ISA rates, the best returns even fixed are under <2%, or theres the Halifax 123 account. The returns here are much less than the £70/month I'll save off mortgage interest payments….The advantage of these over the paying off the mortgage I suppose is that it still give me access to the money.

I should add our mortgage is hardly prohibitive, and even without putting any more money in, we are easily on track to clear it all in under 5 years…..Throwing the money in would mean clearing it in 2-3 years.

So would people do??

Given that I would like to have access to the money in the next 2-3 years I’m thinking ISA/Santander 1-2-3 is best.

Is there any other sources of RISK FREE saving I’m not thinking of??

jimjames

What do you need the money for? Is there a set event in next 2 years?

Lots of things you can do but many are more long term. Short term high interest current accounts are hard to beat.

enthusiasticsaver

I would keep some back in the santander 123 as emergency savings and then pay some off the mortgage. What about putting extra into your pension or stocks and shares isa? Are you saving for anything in particular?

gzoom

Nothing in particular in 2 years, but the PCP deal on the car will expire than, so might be tempted to splash out on a new car.