What would you do?

MDMD

How much does your employer pay in to the pension? A rule of thumb (unless final salary) is to pay in half your age when you start paying into a pension as a percentage of your salary. So your contributions plus employer would be at least 12%.

maton91

kidmugsy wrote: »

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.

Would this work considering I only intend to deposit a max of £250 a month? Most current accounts require a minimum deposit.

maton91

MDMD wrote: »

How much does your employer pay in to the pension? A rule of thumb (unless final salary) is to pay in half your age when you start paying into a pension as a percentage of your salary. So your contributions plus employer would be at least 12%.

Thats good advice there, thank you for that. How long would you keep that going for? Let's say you are 40 20% of your salary into a pension is extremely high.

My employer will match what I put in up to 6%. So based on my 5% contributions I am 2% down.

If I begin next year when I am 25 I need to pay in 6.5% with my employer paying in 6%. Then increase by 0.5% each year.

jimjames

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

It's not worth chasing tax free options that pay less. It's better to look at the return regardless of whether you pay tax on it. 5% taxed is still better than 0% or 0.5% in a basic ISA.

maton91

jimjames wrote: »

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

It's not worth chasing tax free options that pay less. It's better to look at the return regardless of whether you pay tax on it. 5% taxed is still better than 0% or 0.5% in a basic ISA.

Yeah that's true.

Will have to look around to see which is best and calculate the interest rate post-tax.

Eco_Miser

maton91 wrote: »

Would this work considering I only intend to deposit a max of £250 a month? Most current accounts require a minimum deposit.

You obviously have not read any of the many existing threads like yours, where it is explained yet again by the patient regular contributors that while you have to pay in £500, or £1500, each month, you don't need to leave it there, and can in fact withdraw (transfer to another account) the required sum, then pay it back, all on the same day, either by faster payment or automated standing order.

maton91 wrote: »

Do these have limits at all? (i.e. interest only up to £3k)

Yes, all the higher interest paying current accounts have limits on the amount that interest is paid on. £2000 for TSB, £5000 for Lloyds, £20000 for Santander.

maton91 wrote: »

Is there a calculator on equivalent interest post tax?

You're a graduate, but need a special calculator to multiply by .8 ? (or .6 or .55).
From next April most interest will be tax-free anyway.

maton91 wrote: »

I don't know anything about investment. Tis includes how much, where and what the risks are.

Perhaps you can advise?

Read monevator

maton91

Eco_Miser wrote: »

You obviously have not read any of the many existing threads like yours, where it is explained yet again by the patient regular contributors that while you have to pay in £500, or £1500, each month, you don't need to leave it there, and can in fact withdraw (transfer to another account) the required sum, then pay it back, all on the same day, either by faster payment or automated standing order.

Right, I didn't know that. No I havent read any of the previous threads which I perhaps should have done but now you have told me that makes my decison clearer so thank you for that.

So what you are saying is if on the 1st of every month Lloyds will ask for £1500 as an example I can then withdraw it back from where it was originally transferred from on the 2nd and Lloyds won't have any suspicions?

Yes, all the higher interest paying current accounts have limits on the amount that interest is paid on. £2000 for TSB, £5000 for Lloyds, £20000 for Santander. You're a graduate, but need a special calculator to multiply by .8 ? (or .6 or .55).
From next April most interest will be tax-free anyway.

Is it worth waiting until April then or get started now?

See reponses in red.

maton91

Thank you for all the advice guys. It does seem after all that Current accounts are the way to go.

So far I have made a decision to do the following when the time is right:

1. Keep open the NatWest account
2. Open a Current Account with high interest (5%) and pay in my £250 a month I wish to save
3. Ensure I deposit x amount it requires every month (£500, £1000 etc...) from my NatWest account
4. Withdraw that amount the very next day back to my NatWest account to satisfy the ts and cs.
5. Repeat every month and ensure the funds do not go higher than the threshold for interest (e.g. 5% interest on funds up to £5000)

I would like to keep the £1000 I have been given and my savings in my CBS ISAs seperate to the above. Is there any restrictions on opening two current accouts from the same bank at the same time and follow the above procedure?


Thanks for your help so far

eskbanker

maton91 wrote: »

Withdraw that amount the very next day

Just to be clear, there is no need to leave it overnight, you can withdraw it again as soon as it's arrived, or even beforehand if you have enough of a balance - the only thing that matters is that there must be inbound payments of at least the minimum required amount each month. By way of example, I rotated minimum payments around sixteen current accounts yesterday and none was in each one for more than a few seconds - I choose to do this manually, while others on here set these up automatically via standing orders....

maton91

eskbanker wrote: »

Just to be clear, there is no need to leave it overnight, you can withdraw it again as soon as it's arrived, or even beforehand if you have enough of a balance - the only thing that matters is that there must be inbound payments of at least the minimum required amount each month. By way of example, I rotated minimum payments around sixteen current accounts yesterday and none was in each one for more than a few seconds - I choose to do this manually, while others on here set these up automatically via standing orders....

Thats fantastic!

It will definitely be standing orders for me, much easier

Is there anything stopping me form opening two Club Lloyds accounts (4%) so one for what I descibed above and one for my ISA savings?