Help Needed for a youngster

wiseman405

Arr. Thanks very much. Sorry for all the questions but i know you guys and gals have experience unlike the youth of today (me).

So do you think it is best to max out the ISA for this year. Or shall i put the maximum into the Halifax saver because that is only open for one year.

Put £250 into the Halifax which would = About £3000 for this year + Tax.

And just put £235 a month in the ISA which would be = £2645 intotal duing the next 7months?

Where would i make my most money. Bearing in mind the Halifax is for 1 year. and the ISA in effect is for as long as i want?

Thanks
Tom

TomsMom

Tom, you might want to look for other regular savers as well as Halifax.

If you go to moneysupermarket.com and tick "regular saver" you will get a list of banks/building societies that do them and their rates, click on individual ones for details.

I have one with Yorkshire Building Society, apply at branch or I think you can by post. You can vary amount each month, minimum £10 maximum £500. You can make as many deposits each month (as and when you can afford) as long as you don't go over £500 for the month. You can make one partial withdrawal per year. You must make 11 out of 12 payments in each account year. You can pay in at branch, post a cheque or do it by standing order or BACS. The current rate is 7.1% Gross/AER - 5.68% net which includes the bonus for making no more than one partial withdrawal. You do not have to transfer your money anywhere when the 12 month period is up, you can keep it going indefinitely until your total reaches the maximum permitted of £20,000 then they will write to you and advise of options, you may close or start again.

oliveoyl

Max your ISA out every year.

With the ISA, using 6% as interest guide and £3,000 as the allowance, paying in £250 per month (for demonstration purposes).

Year 1 £3,000 in, £ 90.00 interest, so £3,090.00 carried over
Year 2 £3,000 in, £275.40 interest, so £6,365.40 carried over
Year 3 £3,000 in, £471.92 interest, so £9837.32

Total at end of year 3 £9837.32

With the Regular Saver, paying in £250 per month, using 7% as interest guide

Year 1 £3,000 in, £84.00 interest after tax @ 20%
Total at end of year 1 £3084

Year 2 lump sum of £3084.00 put in savings account @ 6% £148.03 interest after tax
Year 2 £3,000 in, £84.00 interest after tax @ 20%
Total at end of year 2 £6,316.03

Year 3 lump sum of £6,316.03 put in savings account @ 6% £303.16 interest after tax
Year 3 £3,000 in, £84.00 interest after tax @ 20%

Total at end of year 3 £9703.19

Difference

Y1 £ 6.00
Y2 £ 49.37
Y3 £134.13

As you can see, the compounding of the interest and tax benefits add up the longer you keep your money in. If you're only going to be saving for a year, then it's negligible, but over that, the ISA is the clear winner.

wiseman405

Cant thankyou enough you two! Great help from both of you.

This is my plan for a few years.

Max my ISA out in this 7 month period.

Keep on adding £200 into the regular savers account each other. At the end of the years term i will transfer all that money into my ISA. Which will minimize the monthly payments for that year into the ISA. That means i can put more away into the regular savers account.

Then i will do the same every year until i can afford a HIGH deposit for a house

Does that make sense?

Thanks again!!

Tom

Lokolo

Ok from reading this its been very useful, I am planning to put my student loan into an ISA.

the question is, how do you know the limit is going to raise from £3000 to £3600? I mean, which government website has information about news such as this,

Also, do they review it every year? or was this raise just a general decision over time?

Thanks,

djbd1973

Lokolo wrote: »

Ok from reading this its been very useful, I am planning to put my student loan into an ISA.

the question is, how do you know the limit is going to raise from £3000 to £3600? I mean, which government website has information about news such as this,

Also, do they review it every year? or was this raise just a general decision over time?

Thanks,

Hi Lokolo - I first saw it on this site in the ISA section but there is this link as well from the BBC you might want to have a quick look at -

http://news.bbc.co.uk/1/hi/business/6475891.stm

TomsMom

wiseman405 wrote: »

Cant thankyou enough you two! Great help from both of you.

This is my plan for a few years.

Max my ISA out in this 7 month period.

Keep on adding £200 into the regular savers account each other. At the end of the years term i will transfer all that money into my ISA. Which will minimize the monthly payments for that year into the ISA. That means i can put more away into the regular savers account.

Then i will do the same every year until i can afford a HIGH deposit for a house

Does that make sense?

Thanks again!!

Tom

Does that make sense???????????????? Blimey Tom where did you get your financial sense from? If only one of my two children (now in their 30s) had half as much money sense as you I'd be one happy mummy!

Only one other thing I would say and that is don't leave it too long before you start a pension fund. The younger you start it the cheaper it will be. I saw a thread on this the other day and it made so much sense. This is the thread http://forums.moneysavingexpert.com/showthread.html?t=547434 post number 10.

oliveoyl

Yes, perfect sense... and before you know it you will have accounts coming out of your ears!

Just don't forget to have some fun along the way - you're only young once.

wiseman405

thanks again! I have had too much fun treating my self! Not so much going out but buying expensive things!! Thats going to stop!

Thanks for all the confidence as well as the advise!

Tom

Rose_Crow

Well done Tom! Nothing really to add, just wanted to give you a pat on the back for being so savvy at only 16!