What would you do?

maton91

Hello all, new to the forum.

I am a 24 year old graduate who has just started a new job having worked for another company after graduating in 2014. As part of starting the new job I have been given £1000 as a 'welcome bonus' which is fantastic.

I currently have two ISAs (one inactive) with the Coventry Building Society at 2.0% and 2.2% (the open ISA is at 2.2%) and a Graduate account with Natwest (no interest).

At present I am not regularly depositing anything into my ISAs but I am depositing on average £150 a month in my NatWest account. This will increase to £200-£250 a month once setting into my new role. This account in the long term will go on a house deposit but I sometimes use this account for payment (about one transcation a month on average) which I pay back gradually from my main current account (Tesco Bank) so it is always replenished.

Because of the above it has got me thinking on how to move forward with this. I have £1000 to play with which I would ideally like to save but I also have another account that is regularly deposited but not gaining anything (i.e. interest). I have looked around and saw that there is an ISA that CBS are advertising (fixed rate at 2.4% until 2020) but also 'Easy Access Cash ISAs' which I have never heard of before; these being low interest accounts (1%-1.5%) but are tax free and no penalties for withdrawing.

Looking at the above I see two scenarios:

1. Keep the open 2.2% CBS ISA and deposit the £1000 in that and transfer all funds from my Graduate account to an Easy Access Cash ISA
2. Keep the Graduate account, move all ISA savings into the new 2.4% ISA account and do not touch for 5 years

Another option I have thought of is by transferring the Graduate account funds into an Easy Access Cash ISA and invest the £1000 into shares but I do not know anything about that and what the risks are.


I would lie to hear some people's opinions on this. I look forward to the advice.

missile

Company pension might be worth investing in?

maton91

Hi, thank you for the reply.

Sorry I forgot to mention I will be paying 5% of salary into the company's pension scheme. It is another option mind

george4064

Have you considered investing some of your cash, given your young age (same as mine funnily enough) you have time on your side, thus you can think long-term and investing your money?

colsten

Your 2%+ ISAs are most likely fixed rate/term ISAs that wil not allow additional deposits.

Your Natwest account sounds like a very low interest account.

Your Tesco current account hopefully pays you 3% AER on up to £3K. You could have a second one of those but you could get better interest at, say, TSB where you could get 5% AER on up to £2K, and a Regular Saver account that takes up to £250 month, also at 5% AER.

What do you get at Natwest?

How much have you got in your ISA, and what is the interest rate of your ISA? You would almost certainly get a lot more interest elsewhere!

What is your employer's pension scheme, how much do you contribute to it?

maton91

Thanks for the reply.

This is something I have considered but I don't know anything about investment. Tis includes how much, where and what the risks are.

Perhaps you can advise?

LHW99

Or if you want to keep it as cash, look at interest paying current accounts such as Santander or TSB?

kidmugsy

Open a current account at TSB paying 5% p.a. and open one of their regular savers too, paying the same rate. Study the T&Cs and ensure that you abide by them.

colsten

maton91 wrote: »

Perhaps you can advise?

If you provide more info, and answer the Qs you have been asked, people may be able to provide better suggestions.

maton91

colsten wrote: »

Your 2%+ ISAs are most likely fixed rate/term ISAs that wil not allow additional deposits.

One ISA is currently closed but will continue to gain interest. My secondary ISA is open and will still allow me to deposit funds. This I believe to be a variable interest annually however.

Your Natwest account sounds like a very low interest account.

Yes, my NatWest account is a Graduate account with no interest whatsoever. Currently being used as a piggy bank if you will.

Your Tesco current account hopefully pays you 3% AER on up to £3K. You could have a second one of those but you could get better interest at, say, TSB where you could get 5% AER on up to £2K, and a Regular Saver account that takes up to £250 month, also at 5% AER.

Correct with the Tesco account, but this requires me to deposit £750 a month to waive the £5 monthly fee; I won't be doing that in a secondary account unfortunately. I have considered a secondary current account but the fact I hope to save at least £3000 a year into it I don't want this to be taxed (if possible) but also want to get the best possible outcome which allows me full access without penalties.

What do you get at Natwest?

See above. Still get benefits such as 16-25 rail cards and Tastecards but insignificant for the long term.

How much have you got in your ISA, and what is the interest rate of your ISA? You would almost certainly get a lot more interest elsewhere!

I have currently over £7k in total, 50/50 in each. The closed account is at 2% and the open one is at 2.2%. Unsure where you have seen better interest rates for an ISA, unless you are talking about Current Accounts and calculating interest post-tax?

What is your employer's pension scheme, how much do you contribute to it?
Currently with the company's pension scheme. I will be paying 5% of my salary into it which the company matches. My knowledge on pensions are limited; I will have to find the information for further detail

See answers in red.

maton91

LHW99 wrote: »

Or if you want to keep it as cash, look at interest paying current accounts such as Santander or TSB?

Do these have limits at all? (i.e. interest only up to £3k) Is there a calculator on equivalent interest post tax?