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Santander 123 still a good saving option?

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  • economic
    economic Posts: 3,002 Forumite
    What is everyone's overall portfolio strategy with these types of accounts, as a higher rate tax payer the Santander 1.5% is only worth 0.9% net to me (I've already used up my £500 tax free savings elsewhere). With inflation being around 3%, that means that this account would not be a 'savings' account as it would lose me 2.1% per annum.

    im looking to use the 123 account as my sole savings account as it offers instant access and cashback and one of the highest rates. i have savings in other accounts which i am looking at investing so eventually the 123 account will be my sole savings account.

    i am not working so any interest wont be taxed. this may change but i am pretty sure it wont in the 40% tax bracket. i also have about 50k in P2P which i am looking to increase to around 60k in the coming months. as a percentage of networth it would still be only around 7% and i am comfortable with this.

    on the 60k p2p and using a 6.5% net interest on the P2P loans thats £3900. plus the 1.5% on the 123 account on 20k which gives a total interest income of £4200 pa. below the personal allowance amount.
  • chucknorris
    chucknorris Posts: 10,793 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    economic wrote: »
    im looking to use the 123 account as my sole savings account as it offers instant access and cashback and one of the highest rates. i have savings in other accounts which i am looking at investing so eventually the 123 account will be my sole savings account.

    i am not working so any interest wont be taxed. this may change but i am pretty sure it wont in the 40% tax bracket. i also have about 50k in P2P which i am looking to increase to around 60k in the coming months. as a percentage of networth it would still be only around 7% and i am comfortable with this.

    on the 60k p2p and using a 6.5% net interest on the P2P loans thats £3900. plus the 1.5% on the 123 account on 20k which gives a total interest income of £4200 pa. below the personal allowance amount.

    The P2P is absolutely fine, as is the using Santander as your current account. My issue is that I've just realised that my original preferred retirement portfolio isn't correct for my position. It would have been too heavy in equities. The main problem would have been that I would have really suffered in a market correction, because what I could have invested post correction would have been a tiny fraction of what was already invested, so I wouldn't be able to 'average out' on the price paid.

    So that left me thinking which asset(s) should I divert to, I don't like bonds or savings accounts because the net reward is lower than inflation! Hence my comments about these current accounts, fine for one or two, but I wouldn't want to deliberately target a loss too much, by having many of them. What I came up with for my target retirement portfolio was:

    40% equities (much lower than originally targeted)
    23% fixed pension (DB/SP)
    22% investment property (hold 1.5 properties for a decade longer)
    5% bond (try and find a bond(s) paying near net inflation)
    5% P2P (newly added to my target portfolio)
    5% cash (regular savers, NSI cert, savings accounts)

    I could reduce my equity holdings further if i could:

    - Conjure up some more relevant income and but more additional pension in the teachers pension scheme.

    - If my experience works out well with P2P I could increase my holding up from 5%.
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
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