£50 per month...where's best to save it?

Missprimmy

I would like to save £50.00 per month for the next 10 years (with the possibility of at least 1 withdrawal per year) I have no idea about savings or isa's, so I'd appreciate any advice on the best way to save. Thank you in advance for any advise.

ValiantSon

The best option would be a regular saver paying 5%. These are linked to current accounts, but it is possible to open an additional current account to access them. They only last for one year, but you can open a new one each year. At the end of each year move the balance of the account to the best paying account (probably a current account )to benefit from further interest.

If you want to withdraw once a year then the regular savers that allow for this are those with Nationwide and Santander.

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts

fiisch

You have a choice between regular savers and easy access savers. The benefit of a regular saver is that you will benefit from higher interest rates, but at the expense of locking the money away for one year. If you are looking at possibly making one withdrawal a year, this would preclude the idea of a regular saver.

HSBC and First Direct offer a 5% regular saver - if you were to save £50 a month over the course of the year you could expect to receive approximately £7.50 interest. You can then recycle this the following year (i.e.: open up another regular saver and save £100 / month to maximise your interest).

Alternatively, under the Savings section on this website, there are easy access savers which allow you to make as many withdrawals as you wish within a 12 month period. If you were to save £50 a month over the course of the year you could expect to receive approximately £1.98 worth of interest.

With interest rates the way they are at the moment and with the amounts involved, initially you will not earn a tremendous amount of interest.

If it were me and to preserve the ability to dip in when needed, I'd open an AA easy access saver at 1.32%. (It's worth shopping around at the end of each year as often, and indeed in the case of AA, the interest rate is a bonus rate for year 1 which then drops for subsequent years). Once you've built up some savings, you could look to have some in easy access and some going into a regular saver to maximise interest earned.

ValiantSon

fiisch wrote: »

You have a choice between regular savers and easy access savers. The benefit of a regular saver is that you will benefit from higher interest rates, but at the expense of locking the money away for one year. If you are looking at possibly making one withdrawal a year, this would preclude the idea of a regular saver.

Not with Santander and Nationwide (as I pointed out above).

fiisch wrote: »

If it were me and to preserve the ability to dip in when needed, I'd open an AA easy access saver at 1.32%. (It's worth shopping around at the end of each year as often, and indeed in the case of AA, the interest rate is a bonus rate for year 1 which then drops for subsequent years). Once you've built up some savings, you could look to have some in easy access and some going into a regular saver to maximise interest earned.

I wouldn't recommend the AA account for two reasons:

1. There have been several posters on this forum reporting difficulties in actually withdrawing their money when they wanted to. Not exactly easy access!
2. The interest rate offered is below the best currently available for an easy access acount, which is 1.35% wih ICICI Bank.

YorkshireBoy

fiisch wrote: »

HSBC and First Direct offer a 5% regular saver - if you were to save £50 a month over the course of the year you could expect to receive approximately £7.50 interest. You can then recycle this the following year (i.e.: open up another regular saver and save £100 / month to maximise your interest).

If you wanted to "maximise your interest" in the second year you'd fund with £250 or £300 per month respectively until your capital was used up, then continue to fund with £50 per month.

Eco_Miser

fiisch wrote: »

The benefit of a regular saver is that you will benefit from higher interest rates, but at the expense of locking the money away for one year. If you are looking at possibly making one withdrawal a year, this would preclude the idea of a regular saver.

No it doesn't. It's always possible to make a withdrawal once a year from an account that only lasts one year. The withdrawal has to be at the end though.
Apart from that, as already pointed out, some regular savers actually allow unlimited instant access, with the only drawback being that you can't replace the money.

jimjames

fiisch wrote: »

You have a choice between regular savers and easy access savers.

There's also the option of a S&S ISA if the money is being kept for 10 years. It meets all the required criteria but the OP needs to be aware the value will fluctuate but should beat inflation over that time