50k Savings / Investment

oysteroyster

Hi all,

Hoping one of you financial geniuses out there might be able to help me with my savings dilemma. I generally consider myself to be fairly savvy and on the ball when it comes to basic savings and investments (I'm one of those annoying people that is rotating money in multiple Current Accounts to take advantage of the interest offered), but all the figures and options have been spinning around in my head for the past few weeks and I really need some objective advise.

Here's what I currently have:

CURRENT ACCOUNTS:
Santander 123 3% on 20k - £27,500
Lloyds Club Lloyds 4% on 5k - £5,000
TSB Classic Plus 5% on 2k - £2,000 x 2 accounts
(Also have First Direct and M&S Current Accounts for Linked Reg Savers below. Also had Nationwide Current Account for 5% interest, but I've recently gone beyond the 1 year limit, so the interest has dropped - have to wait 12 months to open new one).

LINKED REGULAR SAVER ACCOUNTS:
First Direct 6% - Drip Feeding £300pm
Lloyds 4% - Drip Feeding £400pm
M&S 6% - Drip Feeding £250pm

ISA:
Santander ISA (1.7% recently dropped to 0.5%) - £12,000

So, what with my regular savings accounts having recently matured, my savings in Santander 123 have now gone above the £20k interest threshold to over £27k, and the recent drop in my ISA rate to 0.5%, I'm basically looking for a new home for just under £20k of my money. I've maxed my Current Account balances and there aren't many more to choose from (maybe opt for multiple 3% Band of Scotland and Tesco accounts?)

Given I'm only in my 20s and likely to need money for a house deposit in the medium term, I'm not looking to tie my money up for too long (probably not more than a year). Given the woeful ISA rates and the likelihood I'll have to withdraw it for a deposit in the not too distant future, I'm thinking I should probably ditch it altogether? Have been considering P2P lending, but I can't decide which is best for the short-ish term. Are there any better options I should be considering? Don't mind a little bit of risk, but nothing massive. And if it makes a difference, I'm self employed and just about tipping into the higher rate tax bracket.

If anybody has any ideas, I'd be hugely appreciative! What would you do? Thanks!

xylophone

I'm self employed and just about tipping into the higher rate tax bracket.

Are you using your pension scheme to best advantage?

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

http://www.hl.co.uk/pensions/interactive-calculators/tax-relief-calculator

As you say, the three BOS accounts and a couple of Tesco could be an option, particularly as you may need the cash in a hurry for a house deposit.

Ballard

Santander's Direct ISA saver currently pays 1.25%. You're not going to get rich on this but if you wanted a safe investment then switching from the 0.5% account and adding the surplus from the 1-2-3 account would (presumably) be an option.

oysteroyster

Are you using your pension scheme to best advantage?

I'm probably committing the cardinal sin, but I've not even got around to setting up any sort of private pension scheme yet. *Gulp*. Where to start.

Santander's Direct ISA saver currently pays 1.25%.

For simplicity, it's certainly something I'd considered but surely I could do better for not that much additional effort?

saintalan

Couple of things, you could try using the Nationwide to switch to Co-op or Yorkshire for some transfer bonus.

You could try (yes, try) to open another Santander a/c or if you have an OH or potential OH you could try a joint a/c.

Cheers

Alan

oysteroyster

Thanks Alan. I'm actually in the process of using my Nationwide for a switch to M&S to take advantage of the £100 M&S gift voucher. Obviously I'd rather have the cash offered by switching to Co-Op or Yorkshire but I don't have any Direct Debits using the Nationwide account (or any going spare I could transfer across) which I'd need to switch in order to meet their criteria.

Interesting idea regarding trying to open a second Santander 123 in my own name, I'll look into that. Otherwise, a joint account may indeed be a possibility.

bigfreddiel

Premium bonds and/or investment bonds from ns&i

fj

TomJ

Nationwide Flexdirect for another £2500 at 5% and their linked ISA at 1.6% seem sensible for ekeing a few more pennies out of your current strategy...

arbster

oysteroyster wrote: »

I'm probably committing the cardinal sin, but I've not even got around to setting up any sort of private pension scheme yet. *Gulp*. Where to start.

If you're a higher rate tax payer then this is your highest priority, in my opinion. Even relatively small contributions (5-10%) into a pension at your age will pay dividends over and over when you're my age... especially with the government effectively giving you 67% on top!

Please, please start reading up about SIPPs and Personal Pensions as soon as possible, and ask any questions you have on this excellent forum. I've recently (at the age of 42) become aware of how neglected my pensions have become and will be pumping a significant proportion of my disposal income into mine for the next 15-20 years. You can avoid this by getting started now.

arbster

oysteroyster wrote: »

Given I'm only in my 20s and likely to need money for a house deposit in the medium term

Of course, given this, you will need to forecast your monthly outgoings and work out what you can afford to put away for the long term.

oysteroyster

Nationwide Flexdirect for another £2500 at 5% and their linked ISA at 1.6% seem sensible for ekeing a few more pennies out of your current strategy...

Thanks Tom but unfortunately I already held this account for a year until recently and now the interest rate has dropped to 1% - will have to close and wait 12 months before I can access the 5% rate again.

If you're a higher rate tax payer then this is your highest priority, in my opinion.

Yes, you're absolutely right, arbster - I really need to get my ducks in order and prioritise my future and pension. It's so hard to motivate yourself to put your money into something you won't see back for decades!

Beyond buying myself my first home, I'm wondering if getting into property might be a good investment for the future too. My OH's father has already helped her to build up a portfolio of five properties, so perhaps exploiting their knowledge and contacts might be wise and embarking on a buy-to-let or two.