Lump Sum Saving & Regular Monthly Saving

AdamW85

Good Morning All,

This is my second post on the forum in a matter of minutes (first being bank account related) but i'm turning my attention to savings now!

I'd like to get peoples opinions on how best to utilise surplus cash to generate the highest return on investment.

Current Savings Situation

1. Just over £20000 currently saved in Premium bonds. Safe yes, but only earning me ~1% over the past 2 years
2. Ability to save monthly £1000 (strictly for saving, not to be linked with my bank accounts forum post)

I'd like to keep this discussion to low risk investment if possible. I am investing a smaller amount in some medium/high risk investments.

I know some people (including Martin) will recommend paying of mortgage first, but I am choosing not to do this for a number of reasons.

Criteria for Saving
I do not require instant access to the savings, but of course if possible would be a benefit. However access at say a months notice or similar would be ideal.

Given the paltry RoI the premium bonds are getting me I am looking for better ways to utilise this cash lump sum. In addition, how best to utilise the regular monthly savings that I am able to put away?

Are there any clever strategies (like the one I am asking about in bank accounts section) where the regular monthly savings can be moved between accounts to generate higher interests, instead of just leaving in the one account?

I am sure this will prompt differing opinions but anything you are able to offer will be much appreciated!

Eco_Miser

Regular Savings accounts for the £1000 a month and current accounts for the £20000. Since the Regular Savers will be getting 6% - the highest rate currently available with your capital guaranteed, you don't need to (and can't) juggle them about.

https://forums.moneysavingexpert.com/discussion/5374614 lists how much can be saved at each rate.

jimjames

If you already have a mortgage and aren't saving for anything specific, can some of it be invested in a S&S ISA?

atush

Do you have a pension?

How old are you? Do you own a home (i think so as you said you are not paying off mtg). What is this money earmarked for?

I dont agree with martin on the mtg thing. Not a todays rates anyway. It makes mroe sense to save and invest.

AdamW85

Hi, thanks for the replies!

EcoMiser, which regular savers are giving 6%? I cannot see these in the lists?

Jimjames, I could invest in an S&S ISA. Ill be honest I don't know what this is so will need to look at it.

Atush, I do not have a pension as such, but I do have money in various investments that are effectively my pension. I will also be viewing these savings as investments towards future pension.

Im 30, have a mortgage (but choosing not to pay it off). As mentioned money is just investment for future.

YorkshireBoy

AdamW85 wrote: »

EcoMiser, which regular savers are giving 6%? I cannot see these in the lists?

Despite saying in your other thread that you "have been a user of the site for a number of years" you don't seem to have found your way around the site so far, so hopefully this will assist...

At the top of every page are some clickable links to the main sections. Do you see the one entitled "BANKING & SAVING"? If you click that link you'll be taken to a page of articles about, er, banking and saving! The top two articles on that page are entitled "Best Bank Accounts" and "Top Savings Accounts", and you'll find a link to your "5% loophole" article in the former, and a link to the "6% regular savers" in the latter.

Superscrooge

I have pasted the relevant text below from the link on Eco Miser's post

6% on... £800 per month (£308.62 interest)... First Direct Regular Saver account (£300 per month for 12 months, earns £115.96 per year gross interest), Marks and Spencer Bank Monthly Saver (£250 per month for 12 months, earns £96.33 per year), HSBC Regular Saver (£250 per month for 12 months, earns £96.33 per year)

To make it clearer. It you open a current account with First Direct, this then allows you to open a linked regular saver account where you can pay in £300 a month earning 6% interest. The same goes for the other accounts although they have a £250 a month limit.

jimjames is referring to a Stocks and Shares ISA.

If you are looking at investing for a minimum of 5 years and prepared to take a little risk then whilst there are no guarantees. Historically stock market investments will usually beat cash investments and the longer your investment time period the more likely this is to happen. Inside an ISA wrapper any capital gains are free of tax.

I'm a bit confused by your comment that you have various investments that are effectively your pension. It doesn't sound very tax efficient. If you were to set up a SIPP (Self invested personal pension) you would probably be eligible for the government to add 20% to any contributions you make.from your taxed income.

jimjames

Superscrooge wrote: »

I have pasted the rele
jimjames is referring to a Stocks and Shares ISA.

I'm a bit confused by your comment that you have various investments that are effectively your pension. It doesn't sound very tax efficient. If you were to set up a SIPP (Self invested personal pension) you would probably be eligible for the government to add 20% to any contributions you make.from your taxed income.

It's also a bit puzzling why you'd hold investments but not appear to know what a S&S is. Op, Are you sure these are actually investments or just cash by another name?

It makes far more sense, especially currently, to use tax efficient wrappers for investments than for cash so wasting an ISA allowance on cash when you hold investments outside that wrapper and also not in pensions.

A useful site for reading more is https://www.monevator.com

NectarCollector

If you have £20000 already, you could open a Santander 123 account and deposit this in there. and earn the maximum amount of interest as they pay interest on balances up to £20,000 (3% or 2.4% after tax) which is £40 per month. The only catch is that they will be charging £5/month fee from February so Santander will be paying you a net of £35 a month to bank with them.
You'll need to pay in £500 a month and have 2 direct debits, (have 2 household bills go from the account for cashback). After Bills are paid, you can transfer the £500 minus the amount the bills came to back into another high interest account.

you keep earning £35 a month (£420 a year) plus a little bit of cashback and you have the remainder of your £1000 income to gain interest elsewhere

AdamW85

Hi Nectar, thanks for that.

What I cannot get my head around though is why put all into one account (e.g. Santander 123) and earn just 3%, when I can move it between various current accounts and get potentially 6%?

Or am I missing something?

NectarCollector

AdamW85 wrote: »

Hi Nectar, thanks for that.

What I cannot get my head around though is why put all into one account (e.g. Santander 123) and earn just 3%, when I can move it between various current accounts and get potentially 6%?

Or am I missing something?

It will ultimately depend on how much effort you are willing to put in, Personally I know that although I might initially start with similar intentions to yourself, at some point I would start to forget to move money, to check things or life gets in the way.

having the 123 account and the 2 DD linked to it and a SO to pay in £500 a month means that you could essentially forget about it whilst it pays you, just have a SO set up to remove the £35 interest payments and excess from the £500 once a month

It still leaves you with the option of investing close to your £1000/month savings elsewhere or spreading if it requires a bit more focus and coordination to chase the best rates