Advice please

kajiee

HiI have spent a little time today reading the posts and am confused.Can someone explain dripfeeding ?And, whats the best way to save £750 per month ?At the moment I have a Abby current account and I have just opened the Sainsbury's online saver account, but, do I need to get a regular saver ?Where and how does the drip feeding thing come in ?I know I should get an ISA, and I will, but, what else. I read on Abby site that the regular saver stops after 12 months, where then do you put the lump sum ?Please help, im so confused !

sav4it

hi kajiee.
Dripfeeding is for when you've already saved a sum and want it to work harder for you.
Say you had £3000 already sitting in your sainsbury's account. To make a bit more money, you would pay into a RS a little each month from your savings account ( dripfeed) to your RS which works out a bit better than just leaving it in your sainsbury's account.
edit: just read your post again. You should pay into an ISA first I think until you reach the £ 3000 limit

sav4it

I'm assuming you are starting saving from scratch here with no savings to date and there are 8 months left of this financial year.
I would:
Firstly open an ISA and pay in £750 for 4 months then
Save £750 for the remaining 4 months and as soon as 6th april 2008, pay in the saved £3000 into your ISA ( you could pay in £3600 actually).

sav4it

When you are ready to go down the RS route, not all RS stop after one year. YBS for example carries on but you mustn't exceed the limit in the account.

edit:
This explains things well:
http://www.moneysavingexpert.com/savings/which-saving-account

Beate

You can usually open another Regular Saver when the first one has expired, that works with HSBC anyway. Regular Savers are actually best when you haven't got a lump sum already but you want to save a fixed sum each month from your salary or such like, then let's say you pay in £250 a month that gives you £3,000 a year, which at a rate of 8% would be the equivalent of 4% annual interest on the lump sum. The best Regular Saver rate is Alliance&Leicester's 12%, but you only get it when you open their Premier Account. That would be the equivalent of roughly 6% annual interest on the lump sum, so once you have saved for a year, why not put those £3,000 in an ISA which pays around 6% tax-free, or put it into a savings account that pays over 6%.

sav4it

Beate, surely if OP is a tax payer, it's better to pay into an ISA first?

djbd1973

sav4it wrote: »

Beate, surely if OP is a tax payer, it's better to pay into an ISA first?

Definitely. ISA first as a MUST until you reach the paying in limit of £3000 currently. Then a high rate savings account and from that account, 'drip feed' (as described earlier) into a regular saver your maximum monthly contributions that are allowed. You may even be able to get more than one regular saver going depending on how much each regular saver allows to be paid in each month, and its terms for opening each regular saver. This will help gain good interest on your money and make it work for you.

Beate

I agree actually. Perhaps I did not describe my method very well but I do see that the OP must not lose their ISA allowance. What I do every April is pay a lump sum of £3,000 into my ISA, and pay £250 every month into my Regular Saver, which after a year makes up the £3,000 lump sum I pay into my ISA etc. etc. This way I always fill up my ISA at the earliest opportunity and continue saving the next lump sum as I think it would be financially foolhardy to dripfeed £250 into my ISA instead, as that has a lower annual rate as my Regular Saver. On the other hand an ISA will have an evergrowing balance each year, as usually Regular Savers are only for a year and you have to start saving afresh each year. So I am getting the best of both worlds. Does that make sense?

kajiee

Ok thanks, I think I get it.So, this is what I plan to do, let me know if you think it's not a good plan.Save with Sainsburys and also max out my ISA allowance.Then, drip feed Yorkshire BS (£500 per month RS) from my Sainsburys account !Good Plan ?Then if I still have cash to drip feed into another RS, what's the next best place to look into, Abby etc ?Thankyou so much for all of your help.