This is what i've done

mrpete

Hi,
I had a meeting with someone in Natwest to sort out my savings. I know i can probably get a slightly better deal by going to another bank but i want to stay with natwest, but just want to see what you think of what ive done. i've still got over 30 days to cancel anyway

i had ~3 grand in my current account (it was still the "kids" account, card plus i think they call it).

with some of that, i :

- put 1 grand into a cash isa.
- opened up a current plus account, at the moment just transferred 300 quid into it (going to transfer the rest from my card plus to it once i get the current plus card through)
- and starting from next month, every month 100 quid going into a balanced (accumulation) fund thing (type of isa: mini stocks and shares isa)
- and in mid sept i'm going to apply for a credit card (just for cashback, get credit rating, and more secure for online purchases)

was this a good idea? the thing that concerns me is mainly the mini stocks and shares isa thing, on one of the pages i got it says something along the lines of "if you cash in your account at the end of the year: 3, deductions would reduce yearly investment growth to that date: from 7% to 2%", and 5 years if from 7% to 3.3%, and 10 years is 7% to 4.4%. What does this mean? i may decide in a couple of years that i want to take the money out. will that mean that it automatically will get reduced to about 3% interest? even if the markets are at a lot higher than when i began??

I then plan to keep putting 100 a month minimum (but every so often, may put in some extra), and will top up my cash isa hopefully to the full 3k by april next year.

thanks

Lazy_Runner

I would have the following pots of money.

In cash savings (either ISA or instant access account), 3 - 6 months worth of salary/ money to live on. This is incase things go pear shaped.

Once I had this sorted, I would move onto bonds/stock market investment. With this I would do some research in terms of where the fund sits in relation to other funds in the same classificaiton e.g. UK equities. I would then probably use a funds broker to buy the funds of my choice instead of being limited to the offering of one bank.
Not sure how I would go about bond investment. Simplest would be premium bonds but I know that not everybody is a fan. Or you could buy a fund that invested in bonds.

The question is do you really want £2k sitting in a current account (as that is what the situation sounds like)? Wouldn't it be better for the majority of that cash to be in a cash ISA?
Martin recommended the National Savings ISA paying 6.3% yesterday on the radio.

HTH.

dunstonh

never get your advice from a bank. Tied products and it appears poor communication in discussing the investment side.

What do you know about where you are investing?
What do you know about the charges?
Why only one fund and not 2 or 4?
Why such a basic jack of all trades "balanced managed" fund?

What does this mean? i may decide in a couple of years that i want to take the money out. will that mean that it automatically will get reduced to about 3% interest? even if the markets are at a lot higher than when i began??

It means that the tied rep didnt explain the charges to you. You are not getting interest on this investment.

I suggest you cancel the ISA as you are in your cancellation rights period and review it more and either get an IFA to do it or wait until you feel your knowledge is there to do it yourself. The tied rep at the bank is paid a commission which is explicit to your investment. You are not getting the quality of product, the quality of investment or the value in charges and you appear to not have been told/discussed what you are actually paying into.

The concept of regular stocks and shares ISA is good. Where you got your advice and the quality of product is bad.

Ian_W

mrpete wrote: »

and in mid sept i'm going to apply for a credit card (just for cashback, get credit rating, and more secure for online purchases)

You don't get "cashback" on credit cards - only on debit cards which are usually automatically part and parcel of your current account. With a CC it's a "cash advance" which often has fees and interest is charged from when you draw the money, i.e. not from the date your CC statement needs paying, which on purchases gives you "free" credit. A CC is a good idea for the other reasons you mention but read Martin's article as there are often good 0% or low cost offers around but they change frequently, don't just go for a NatWest one cos they're your bank - go for the best [and cheapest] to suit your needs.

jem16

Ian_W wrote: »

You don't get "cashback" on credit cards - only on debit cards which are usually automatically part and parcel of your current account. With a CC it's a "cash advance" which often has fees and interest is charged from when you draw the money, i.e. not from the date.

I think the OP is referring to those credit cards which give a percentage of how much you spend each year as cashback.

My Nationwide credit card does exactly that.

Lazy_Runner

Ooops! Just reread your post and realised you have already opened a cash ISA. As you can't open another one in this financial year, any savings you want in cash should go in there till you reach the limit. (As you may be aware, once you have put in £3000 in the financial year, you cannot put any more in, irrespective of how much you have taken out and hence the current balance).

If you want some flexibility, say 75 - 90% of your cash could go in the ISA dn the rest could stay in your current account?

jamesd

mrpete, I suggest that you read Ok then - How do I choose a S&S ISA to get an idea of what a sector allocation is and then cancel the NatWest ISA and do it via somewhere like Hargreaves Lansdown who will discount the initial charge you pay to buy the fund from NatWest, probably to no charge, maybe to 0.25%.

mrpete

Hmm. So is natwest really that bad?
How hard is it to cancel it?
I know almost **** all about savings. Not really my kind of thing.
And yes 2k in a current account, so i can buy stuff . Need drinking money haha. I don't get paid every month (i freelance, some months i get 2 months worth of pay) so like to keep my current account high)
cheers

dunstonh

Hmm. So is natwest really that bad?

All banks are. The staff are low skilled and the product range limited. An IFA has access to around 18,000 funds through various wrappers, providers etc. The bank tied agent has anything from 1 to 15 funds.

How hard is it to cancel it?

If you are in the cancellation period, you complete the cancellation rights.

jamesd

mrpete, you might consider a current account like A&L that pays interest on the current account balance. Perhaps also do what I do and have a higher interest savings account set up with a standing order to feed money to it from the savings account each month - twice in my case, once for each batch of bills. Takes a little time to set up but it's easy enough once it's done.

Lazy_Runner

mrpete wrote: »

Hmm. So is natwest really that bad?
How hard is it to cancel it?
I know almost **** all about savings. Not really my kind of thing.
And yes 2k in a current account, so i can buy stuff . Need drinking money haha. I don't get paid every month (i freelance, some months i get 2 months worth of pay) so like to keep my current account high)
cheers

Or whichever current account you choose, you could always have a linked savings account. Whenever I have excess money in the current account, I move the money (on the internet) to the savings account and then move it back when needed. Admittedly both current and savings account are with the same organisation so is easy to set up. And as I said, I do the transfers on the internet.