Newbie with small savings, switch ISA, Zopa, Club Lloyd?

Mr_Hedgehog

Finance newbie here, be gentle. :A

I put £4000 into a NS&I easy access cash ISA a few months ago, but the rate has gone down so I'm wondering if I should / could move it to either a Stocks & Shares ISA or a fixed-rate ISA, or would I have to wait until the next tax year? I'm also considering investing the money with Zopa (doesn't the new peer-to-peer lending ISA come out soon?)... but that is a bit of a risk. Or maybe I should just put it in a Club Lloyds account, but the whole monthly pay-in thing confuses me, could I really pay in £500, withdraw it and then pay it in again?

I will be able to save £500 a month for the next year, not sure what to do with it - do I add it to the £4k or put it somewhere else? All advice welcome!

Linton

Before thinking about S&S ISAs you need to keep perhaps 3-6 moths living expenses in cash to cover emergencies. In addition you need payment for any major expenses you foresee in the next 5 years or so held in cash ior possibly very low risk investments. Emergency cash needs to be immediately accessible possibly in high interest rate current accounts, but savings for 5 years expenses can be tied up until you think it will be needed. Perhaps P2P could be used for some of it.

Next before you look at S&S ISAs, are you contributing to a pension? Are you contributing sufficient?

Only once you haved seen to these pre-reqs, then it makes sense to start with S&S ISAs.

jimjames

Mr_Hedgehog wrote: »

Finance newbie here, be gentle. :A

I put £4000 into a NS&I easy access cash ISA a few months ago, but the rate has gone down so I'm wondering if I should / could move it to either a Stocks & Shares ISA or a fixed-rate ISA, or would I have to wait until the next tax year? I'm also considering investing the money with Zopa (doesn't the new peer-to-peer lending ISA come out soon?)... but that is a bit of a risk. Or maybe I should just put it in a Club Lloyds account, but the whole monthly pay-in thing confuses me, could I really pay in £500, withdraw it and then pay it in again?

I will be able to save £500 a month for the next year, not sure what to do with it - do I add it to the £4k or put it somewhere else? All advice welcome!

I'd suggest that for £4k a cash ISA is completely pointless unless you have an exceptionally bad credit history and can't open current accounts.

You can get 5% on that amount with TSB and Nationwide. Or use Club Lloyds and get 4%. You certainly can pay in and withdraw again. Most people tend to do that with their salary that's paid into their account.

For the new money you can get decent amounts for regular savers, check the threads here for info as I've never used them myself.

Once you've filled all those options then maybe look at P2P but unless the money isn't needed for well over 5 years I wouldn't look at S&S ISAs. If it is long term money then that's certainly an option too.

colsten

£4,000 in cash, and plan to add £500 to it for a year sounds ideal for a TSB Plus current account, and two Tesco current accounts. That's on what's currently available in the market, and which may chang at no notice.

You need to have a decent instant access emergency cash sum before you can consider investing, or lending out money via P2P.

I'm afraid, but if you have got trouble figuring out how you can avoid the Club Lloyds monthly charge, you are not ready to enter the world of P2P or investments. Not unless you do want your fingers burned, or your entire life to go up in flames.

Mr_Hedgehog

I'm in college at the moment so I don't have a job or a pension. I can save £500 a month because I do odd jobs for my dad and he pays me, not sure that counts? I definitely won't need access to this money for the next year, possibly two, but I don't know about 5... so I guess the S&S ISA is out.

I do find the pay-in concept a little hard to understand. If I open a TSB Plus account and a Nationwide account, could I pay £500 into TSR Plus, then transfer it to Nationwide (after the £250), then transfer it back to TSB Plus... and so-on until the pay-ins are done? That sounds like a lot of effort!

I would prefer to lock the money away for a year and forget about it, is there anywhere offering good rates where this is possible?

jimjames

Mr_Hedgehog wrote: »

I
I would prefer to lock the money away for a year and forget about it, is there anywhere offering good rates where this is possible?

No, not at the moment

masonic

Mr_Hedgehog wrote: »

I do find the pay-in concept a little hard to understand. If I open a TSB Plus account and a Nationwide account, could I pay £500 into TSR Plus, then transfer it to Nationwide (after the £250), then transfer it back to TSB Plus... and so-on until the pay-ins are done? That sounds like a lot of effort!

I would prefer to lock the money away for a year and forget about it, is there anywhere offering good rates where this is possible?

Since you will have £4k spread between the accounts, just set up a standing order to transfer £1k from each account to the other once a month and no further effort will be required.

Edit: and for the £500 per month, you could make use of the TSB 5% regular saver for some of it and perhaps open up an account with first direct and use their 6% regular saver for the rest.

Aretnap

Mr_Hedgehog wrote: »

I do find the pay-in concept a little hard to understand. If I open a TSB Plus account and a Nationwide account, could I pay £500 into TSR Plus, then transfer it to Nationwide (after the £250), then transfer it back to TSB Plus... and so-on until the pay-ins are done? That sounds like a lot of effort!

not really. You put £2000 into the TSB account, and £2000 into the Nationwide account. Then you set up a standing order to transfer £1000 (or whatever the minimum pay-in is for Nationwide these days - I can't remember off the top of my head) from TSB to Nationwide in the first of every month, and another one to transfer the same amount from Nationwide to TSB on the first of every month. Takes maybe twenty minutes to set up, after which you don't have to do anything else for a year. That twenty minutes will earn you £200 in interest over the year. If anyone knows a better way to earn £200 for twenty minutes work I'd love to hear about it.

Mr_Hedgehog

Aretnap wrote: »

not really. You put £2000 into the TSB account, and £2000 into the Nationwide account. Then you set up a standing order to transfer £1000 (or whatever the minimum pay-in is for Nationwide these days - I can't remember off the top of my head) from TSB to Nationwide in the first of every month, and another one to transfer the same amount from Nationwide to TSB on the first of every month. Takes maybe twenty minutes to set up, after which you don't have to do anything else for a year. That twenty minutes will earn you £200 in interest over the year. If anyone knows a better way to earn £200 for twenty minutes work I'd love to hear about it.

So the money is basically being swapped between accounts every month. Do the transfers need to be sent at the exact same time, or is the same day enough? Sorry if I'm being slow, I've never set up a standing order before.

If I do that, and set up a TSB monthly saver account, that still leaves me with a spare £250 saved every month - what can I do with that? Premium bonds?

darkidoe

Mr_Hedgehog wrote: »

So the money is basically being swapped between accounts every month. Do the transfers need to be sent at the exact same time, or is the same day enough? Sorry if I'm being slow, I've never set up a standing order before.

If I do that, and set up a TSB monthly saver account, that still leaves me with a spare £250 saved every month - what can I do with that? Premium bonds?

Transfers done on the same day works fine.. Noooo not premium bonds! That would be equivalent to gambling. Look at other Regular Savers on the MSE website, as you will be saving monthly, They would offer the best rates.

Eco_Miser

Mr_Hedgehog wrote: »

Do the transfers need to be sent at the exact same time, or is the same day enough? Sorry if I'm being slow, I've never set up a standing order before.

You don't get a choice over what time standing orders are sent - they go in the early morning of the specified day (or the next working day if the specified day is a bank holiday or weekend) unless you don't have the funds in the account in which case the bank will try later - see the T&Cs for when and how many times.
In any case, whether by standing order or faster payment, same day is sufficient to not lose interest due to low balance.