LISA, H2BISA & Reg Saver ... ?

JustAnotherSaver

A month or so ago i was on here on behalf of my brother & sister regards their H2B ISA & cash LISA. With help from the forum it was decided that it was best to leave in a H2B ISA for now due to the much higher interest rate (3.5% vs 0.75%).

The plan would be to save the monthly contribs in to a reg saver and....

... in the case of my brother withdraw from the H2B ISA to bump these contribs up to £4k & then deposit in to the cash LISA

... in the case of my sister, when she has built £4k in her H2B ISA, combined with monthly contribs (will take a couple years i think) then withdraw & put in to cash LISA.

So for example....
brother is at say £4k in his H2B ISA, he pays £200pm. So this £200pm goes in to a reg saver, so come the end of the next tax year he'll have £2.4k. Withdraw £1.6k from the H2B ISA and put it (£4k) over to the cash LISA and repeat.

They're both a good few years from their own place.




But i just thought today, a bit late i know, since the highest paying regular savers are 5% which is more than the 3.5% the H2B ISA is offering, would it be better to withdraw the whole lot, open as many regular savers as needs be & just keep cycling the money through. Then at the end of year 1 chuck £4k into the cash LISA and repeat?
That's more the case for my brother. My sister would be more just cycling through the highest regular saver until the point she meets the £4k to deposit.

Would that be better than leaving it in the H2B ISA and then withdrawing the required amount to send over to the cash LISA?


I know you can subscribe more in the cash LISA but since my sister doesn't hit the max in the H2B ISA and my brother wont be able to pay more than the max anyway and may even need to cut deposits back a bit it does away with that point.

Apologies if too much info but whenever i give too much it's too much and whenever i keep it to the point it's never enough

aj23_2

I do all three. I have a LISA, a HTB paying 4% and two regular savers. I max out all four.

Those 5% regular savers are only for 12 months, and you need a linked current account for all of them, so you'd need to paying in their minimum pay ins and their direct debit requirements. And to get the benefit you'd need to max out the two/three/four/five regular savers, great if you can.

Keep your HTB going as long as possible, as 3.5% on that balance will get larger every year you deposit the max because of the compounding of interest, especially if the rates go up, as you'll benefit from a higher rate paying out on a balance already in the thousands of £.

Building societies I think have better regular savers, as a lot are for longer than 12 months, so the interest will compound and accrue over a longer period and are better long term. Look at Yorkshire, Nottingham or N+P building societies regular savers.

JustAnotherSaver

You do all 3...but is it all for 1 purpose as would be the case here or a 2 purpose minimum, maybe 3?

aj23_2

JustAnotherSaver wrote: »

You do all 3...but is it all for 1 purpose as would be the case here or a 2 purpose minimum, maybe 3?

Well the common purpose is to have bulk savings in order to save toward different purposes such as deposit, emergency fund and pension. At the moment it's just to build it up to have different options.