Where to put my small pot of money?.

Eco_Miser

Some of my instructions were on the assumption that £4000 would be tucked away in a LISA. If that's not the case, then xylophone's method is easier.

Bookowl

Well, currently the small pot of money is sitting in my Nationwide flex account and ultimately I want to take the money out of there and Put it towards a mortgage deposit to hopefully buy a house in the next 3-5 years. As the £8400 is sitting in my current account I wouldn’t move it all across to the suggested accounts.

Eco_Miser

Why not?
And why not £4000 into a LISA before 5 April, and £4000 after 6 April, then get £2000 bonus towards the house cost?

ValiantSon

Bookowl wrote: »

Well, currently the small pot of money is sitting in my Nationwide flex account and ultimately I want to take the money out of there and Put it towards a mortgage deposit to hopefully buy a house in the next 3-5 years. As the £8400 is sitting in my current account I wouldn’t move it all across to the suggested accounts.

Why not? I assume that by your "flex account" you mean FlexDirect. If so, then you are only earning interest on the first £2500 (and if not then you aren't earning any interest). The remaining £5900 can be split across other interest bearing current accounts and regular savers to increase the interest that you will earn. I'm really struggling to understand why you wouldn't do this.

You have had lots of advice and explanations over how best to maximise your return, but don't seem to either have understood, or be willing to act. What is it that you want to achieve? If you need someone to explain it one more time then please say so, otherwise, you have your answer.

Bookowl

Ultimately I want to build towards a mortgage deposit for a house in the next 3-5 years. I'm just slightly apprehensive about moving my phone into the suggested accounts encase I mess it up.

The LISA option seems the easiest option for what I want to do.

ValiantSon

Bookowl wrote: »

Ultimately I want to build towards a mortgage deposit for a house in the next 3-5 years. I'm just slightly apprehensive about moving my phone into the suggested accounts encase I mess it up.

The LISA option seems the easiest option for what I want to do.

I assume that you meant money, rather than phone.

There is very little to mess up. As long as you enter the account details correctly (sort code and account number) for any standing orders then that's it.

Kim_13

ValiantSon wrote: »

I assume that you meant money, rather than phone.

There is very little to mess up. As long as you enter the account details correctly (sort code and account number) for any standing orders then that's it.

This.

Doing a £1 test payment is always advised to make absolutely sure that the details have been entered correctly.

If an account had very little in the way of balance, sending an SO from one to the other can be risky in case the SO leaves before the money has arrived from elsewhere. In these cases a gap of a few days should be left between the payments or the payments done manually so that you know the money is there to cover it.

In other cases (say Nationwide, TSB or Tesco where money is left) there will be no problem as the money is always there to do a £1,000 payment or whatever it may be.

If you opt to make the payments manually, the worst that can happen is you lose month's interest/reward if you forget. I prefer to do mine manually and add a reminder in my diary.

If you're interested in the Nationwide Regular Saver, the FlexDirect allows you to have it without having to pay a minimum amount into the current account. Though if you didn't pay in the £1,000 per month you'd be losing out on 5% on £2,500 for a year in the FlexDirect account itself.

straytoaster

This all sounds fantastic. Off a lump sum of £5k, how much can we expect to make in this manner in our first year?

ValiantSon

straytoaster wrote: »

This all sounds fantastic. Off a lump sum of £5k, how much can we expect to make in this manner in our first year?

That all depends on exactly which combination of accounts you use and whether you move money into regular savers, or just keep it in the best paying current accounts. Purely as an illustration (without saying it is the best option), £5000 could be split between Nationwide FlexDirect and TSB Classic Plus. You would earn 5% on £2500 in Nationwide and 3% on £1500 in TSB, giving you a total return of £204.64, i.e. an effective interest rate of 4.1%.

eskbanker

ValiantSon wrote: »

You would earn 5% on £2500 in Nationwide and 3% on £1500 in TSB, giving you a total return of £204.64, i.e. an effective interest rate of 4.1%.

Not sure how you're calculating that!

If it's just one person with one of each account then that would only cater for £4K in total, and the interest would be £125 + £45 = £170.

If there are two people then both would presumably go for the Nationwide, thereby earning £250.

Or to be more precise, a fully-funded Nationwide FlexDirect would 'only' earn the gross rate of 4.89% as the full 5% AER is only achievable if compounding is possible, so a constant balance of £2500 would actually earn £122.25, i.e. £244.50 for a couple. Same for a £1500 balance in a TSB Classic Plus, the gross rate of 2.96% would return £44.40.