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Saving Strategy_Multiple Accounts + Stoozing
Legoboy_2
Posts: 8 Forumite
Hi all,
I've been doing some research over the past few months using this site and I've come up with a saving strategy below that I would really appreciate feedback on.
Firstly, background info.
Age: 29 years old.
Income available for savings per month: £1000-£1200
Housing status: Rented accommodation living in London
Current savings: £4000
Credit Rating: Average but improving (default on a phone contract for £150 (!) from 6/7 years ago cleared from my record last month)
Debt: none - aside from student loan
Ambition: Circa 5-year outlook to save for a deposit on a house
Strategy:
Step 1:
Switch to TSB for £130 switch fee + £5 per month (7 months) + 3% on balance of £1500. (additional £5 not achievable due to Stoozing - see Step 11 below)
Step 2:
Pay 2no, direct debits from account to keep active
Step 3:
Open NationWide FlexDirect account - Min payment £1000/month. 5% interest on balances up to £2500 and transfer £2500 from savings into Nationwide account to qualify for 5% interest.
Step 4:
Once direct debits paid from TSB account, transfer £1000 to Nationwide account to keep the account active.
Step 5:
Keep £1,500 in TSB account to qualify for 3% interest, but a day later, transfer the rest out of the TSB account to other accounts that have a better interest (Question: is this acceptable?)
Step 7:
Transfer £333 into LISA Stocks & Shares (AJ Bell)
Step 8:
Transfer a portion of savings into accessible savings account matching monthly outgoings - Birmingham Midshires 1.3% interest.
Step 9:
Transfer a portion of savings into fixed-rate savings (3 years) - Vanquis Bank 2.25% interest.
Step 10:
Transfer a portion of savings to an investment fund i.e AJ Bell.
Step 11:
Use 0% interest rate credit cards for daily expenditure and transfer all matching expenditure into accessible savings account - as per Step 8
*** A simpler option would be to cut out the two current accounts (TSB and Nationwide used in an effort to get the free cash from switching!) and simply opt for the Nationwide account at 5% - with the rest remaining the same!
I really look forward to your feedback!
Many thanks in advance.
LB
I've been doing some research over the past few months using this site and I've come up with a saving strategy below that I would really appreciate feedback on.
Firstly, background info.
Age: 29 years old.
Income available for savings per month: £1000-£1200
Housing status: Rented accommodation living in London
Current savings: £4000
Credit Rating: Average but improving (default on a phone contract for £150 (!) from 6/7 years ago cleared from my record last month)
Debt: none - aside from student loan
Ambition: Circa 5-year outlook to save for a deposit on a house
Strategy:
Step 1:
Switch to TSB for £130 switch fee + £5 per month (7 months) + 3% on balance of £1500. (additional £5 not achievable due to Stoozing - see Step 11 below)
Step 2:
Pay 2no, direct debits from account to keep active
Step 3:
Open NationWide FlexDirect account - Min payment £1000/month. 5% interest on balances up to £2500 and transfer £2500 from savings into Nationwide account to qualify for 5% interest.
Step 4:
Once direct debits paid from TSB account, transfer £1000 to Nationwide account to keep the account active.
Step 5:
Keep £1,500 in TSB account to qualify for 3% interest, but a day later, transfer the rest out of the TSB account to other accounts that have a better interest (Question: is this acceptable?)
Step 7:
Transfer £333 into LISA Stocks & Shares (AJ Bell)
Step 8:
Transfer a portion of savings into accessible savings account matching monthly outgoings - Birmingham Midshires 1.3% interest.
Step 9:
Transfer a portion of savings into fixed-rate savings (3 years) - Vanquis Bank 2.25% interest.
Step 10:
Transfer a portion of savings to an investment fund i.e AJ Bell.
Step 11:
Use 0% interest rate credit cards for daily expenditure and transfer all matching expenditure into accessible savings account - as per Step 8
*** A simpler option would be to cut out the two current accounts (TSB and Nationwide used in an effort to get the free cash from switching!) and simply opt for the Nationwide account at 5% - with the rest remaining the same!
I really look forward to your feedback!
Many thanks in advance.
LB
0
Comments
-
Not needed first month, see £2500 in step 4, but needed every month thereafter.Hi all,
I've been doing some research over the past few months using this site and I've come up with a saving strategy below that I would really appreciate feedback on.
Firstly, background info.
Income available for savings per month: £1000-£1200
Current savings: £4000
Strategy:
Step 1:
Switch to TSB for £130 switch fee + £5 per month (7 months) + 3% on balance of £1500. (additional £5 not achievable due to Stoozing - see Step 11 below)
Step 2:
Pay 2no, direct debits from account to keep active
Step 3:
Open NationWide FlexDirect account - Min payment £1000/month. 5% interest on balances up to £2500 and transfer £2500 from savings into Nationwide account to qualify for 5% interest.
Step 4:
Once direct debits paid from TSB account, transfer £1000 to Nationwide account to keep the account active.
Why not, it's a current account. But what 'rest' is there? and which are the higher paying accounts?Step 5:
Keep £1,500 in TSB account to qualify for 3% interest, but a day later, transfer the rest out of the TSB account to other accounts that have a better interest (Question: is this acceptable?)
from where?Step 7:
Transfer £333 into LISA Stocks & Shares (AJ Bell)
Why? You've got two current accounts paying more interest.Step 8:
Transfer a portion of savings into accessible savings account matching monthly outgoings - Birmingham Midshires 1.3% interest.
What savings? You've got all your current savings in current accounts earning higher interest.Step 9:
Transfer a portion of savings into fixed-rate savings (3 years) - Vanquis Bank 2.25% interest.
dittoStep 10:
Transfer a portion of savings to an investment fund i.e AJ Bell.
The credit card's OK, but where is the money going into the savings account coming from? And a regular saver at 5% or 2.25% would be better to hold the money.Step 11:
Use 0% interest rate credit cards for daily expenditure and transfer all matching expenditure into accessible savings account - as per Step 8
3% is higher than 1.3%, so keep TSB.*** A simpler option would be to cut out the two current accounts (TSB and Nationwide used in an effort to get the free cash from switching!) and simply opt for the Nationwide account at 5% - with the rest remaining the same!
Rather than Vanquis at 2.25% fixed, why not Nationwide Regular Saver at 5%, and the various Virgin RS also at 2.25% currently (so far each lasts 14 months if you get in early, and new ones come out approximately every two months)Eco Miser
Saving money for well over half a century0 -
Thanks for the review Eco.
Please see my responses below.Not needed first month, see £2500 in step 4, but needed every month thereafter.
Agreed.
Because the maximum one can hear 3% interest on is £1500. Any balance greater than this is 0.Why not, it's a current account. But what 'rest' is there? and which are the higher paying accounts?from where?
From the current account that I get paid salary into. Which after one month, would be greater than the maximum allowed of either £2500/£1500, therefore need to put elsewhere.
As above, these have a limit to how much you can have in the account earning the higher rate.Why? You've got two current accounts paying more interest.What savings? You've got all your current savings in current accounts earning higher interest.
As above.dittoThe credit card's OK, but where is the money going into the savings account coming from? And a regular saver at 5% or 2.25% would be better to hold the money.
As above, from salary that cannot be kept in the high interest current accounts due to limit.
As above - limit on 3%3% is higher than 1.3%, so keep TSB.Rather than Vanquis at 2.25% fixed, why not Nationwide Regular Saver at 5%, and the various Virgin RS also at 2.25% currently (so far each lasts 14 months if you get in early, and new ones come out approximately every two months)
Good point on the Nationwide Regular Saver - I'll look into it0 -
You didn't make clear which were one off transactions, and which were to occur every month.
You are allowed something like a million pounds in the current accounts, though you only get interest on the first £1500/£2500.
TSB has a saver for 2%, Virgin has several currently at 2.25%, the next one may be higher, and there are other building societies with Regular Savers which don't require a current account with the society.
See https://forums.moneysavingexpert.com/discussion/608697.
Unless Vanquis Bank has a different model for their fixed rate accounts, these are intended for largish sums occasionally, not small sums monthly, so not really suitable.
The Regular Savers mostly have flexible payments-in, and easy access if needed, so you can set up a few for the day after payday (but watch for the consequences of non-banking days), and don't bother if your current accounts have more or less than optimum for a few days, the difference between 2%/2.25%/3%/5% and 1.3% should cover that.
That's not a reason to not have the account.As above - limit on 3%
After you've fed a few regular savers it wouldn't be. Personally, I have sufficient current accounts that one of them is not 'full', this is used to hold the temporary excesses. It's only 1.5%, but that still beat 1.3%. You could perhaps have Tesco or BOS accounts at 3%. See post 9 of the thread linked above.From the current account that I get paid salary into. Which after one month, would be greater than the maximum allowed of either £2500/£1500, therefore need to put elsewhere.
Regular Savers generally pay the highest rates, which is why there is a massive 10 year old, 169 page thread on them.Eco Miser
Saving money for well over half a century0 -
Are you sure that funding a S&S LISA is a better bet than a cash one? Five years isn't a particularly long-term horizon even for a one-off investment so it's somewhat less so for a monthly drip-feed one where, as time goes by, each new monthly contribution will be invested for less time, thereby increasing the risk.Circa 5-year outlook to save for a deposit on a house
[...]
Transfer £333 into LISA Stocks & Shares (AJ Bell)
[...]
Transfer a portion of savings to an investment fund i.e AJ Bell.
Investing seems like a good option during this current bull run but obviously that'll end at some point, and if the downturn is close to your target five year timescale, you wouldn't have time to wait years for a recovery (or you'd have to defer your purchase).0 -
I agree with eskbanker stock investments carry around 10% probably of loss over 5 years. The loss might be much higher than 10% too. See graph in below link. What fund were you thinking of investing in with AJ Bell YouInvest?
https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/
Also given we are more than half way through the tax year you might want to contribute more than £333 per month to make full use of this year's LISA allowance.
Alex0 -
The problem with S&S investments is timing. Be unfortunate if the market were to fall 15% at the time you wished to purchase. Timing of such event isn't predictable either. Markets get spooked when the unexpected occurs.0
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Step 3a) Open a second TSB (Classic) account. Stick 2 direct debits on it.
Step 3b) Have a friend recommend you to Nationwide
Step 3c) Open NW FlexDirect account, switch the TSB Classic and net an extra £100
Step 3d) Open a NW Regular Saver at 5%
Step 4a) Open another TSB Classic account (no credit file search is made)
Step 4b) Open a First Direct account and switch the TSB Classic. Net another £125.
Step 4c) Open a First Direct Regular Saver at 5%
Step 5a) Open another TSB Classic account.
Step 5b) Open a Marks and Spencer account and switch this TSB Classic. Get £125 M&S Gift card, which will pay for dinner for a few weeks.
Step 5c) Open M&S Regular Saver at 5%
And once more for HSBC. But you get the idea by now.
0 -
The general idea is right and worth pursuing but to open multiple TSB classic accounts may require visiting in branch. I just attempted to open a second TSB account after 10days of opening the classic plus and the following message appeared. This happened whilst being logged into online banking.binaryuniverse wrote: »Step 3a) Open a second TSB (Classic) account. Stick 2 direct debits on it.
Perhaps not the quickest route to switch accounts.Sorry we cannot offer you a secondary account online at this time. However, you may be able to open another account in your nearest branch or by calling us on 03459 758 758..You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.0 -
Maybe so. I've been with TSB a couple of years now. The first time I opened a TSB Classic account, alongside my Classic Plus, they required some more info, which was done in a quick phone call. Subsequent ones have been done within days.0
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