Where best place for my savings?

danlightbulb

TheShape wrote: »

Why wouldn't you now be able to access the regular saver deals?

I wouldn't describe the 5% regular savers as crap.

I assumed that they apply a year from account opening, and ive had these accounts longer than a year.

But also, a regular saver billed as 5% is in practice only 2.5% because of the drip feed effect. Then it only lasts a year anyway so you get say 2.5% x £250 x 12 which is only £75, then have to move your money anyway.

What would I need to do to earn 6% on the whole £20k from day one? and how much risk would this carry?

AlanP_2

danlightbulb wrote: »

I assumed that they apply a year from account opening, and ive had these accounts longer than a year.

But also, a regular saver billed as 5% is in practice only 2.5% because of the drip feed effect. Then it only lasts a year anyway so you get say 2.5% x £250 x 12 which is only £75, then have to move your money anyway.

What would I need to do to earn 6% on the whole £20k from day one? and how much risk would this carry?

You won't get 6% pa on the whole £20k from bank / savings accounts from day one.

You (and a partner / spouse for joint accounts) should be able to get a 3.5 to 4% average by using a combination of Current Accounts and Regular Savers but you don't want the hassle.

Other options:

P2P but much higher risk with no FSCS protection so could lose all of your capital.

S&S ISA - higher risk than savings but with FSCS protection and unlimited upside potential - but you are subject to vagaries of markets. Can be accessed anytime but might be worth less than you invested on that particular day you need it

Pension - Get a 25% "return" by funnelling it through a pension and receiving the HMRC tax relief. Not accessible until 55+ and there are potential implications you need to consider before taking money out (MPAA etc.)

All depends on your timescale, objectives and (for pension) your age and relevant income.

danlightbulb

8Id have done the current accounts if tesco still allowed direct debits from their savers accounts, but the end to that means its a real hassle having to move my real direct debits around.

I cant lock the money away because its for a house deposit so ill need it at some point in the next 2 years, exactly when is unknown.

The Marcus account seems the easiest option for now. Has anyone got any feedback on the account, safe, easy to withdraw, good online interface etc?


Edit - just been through and worked out how many accounts id need to get the best out of current accounts and regular savers. Id have to split my money over 7 different accounts, most requiring a min pay in or a number of DDs. For all this effort, an extra £300 a year in interest (£592 instead of £300 if i stick the lot in Marcus at 1.5%).

Albermarle

Assetz Capital operate an instant access account paying 4.1% and a 30 day notice account paying 5.1%.
Both can be included in and IFISA, so no tax to pay.
However although these look and are operated like a savings account , they are in fact backed by P2P loans . In normal circumstances you can deposit and take money out with ease. However in the event of a big problem with the company, or the loans, then your money could become inaccessible for a while and lost altogether in a worst case scenario.
Having said that they have a good reputation and lots of people have money in these accounts earning these nice returns for zero effort Maybe be worth a calculated risk for say £5 K of the £20K

danlightbulb

Albermarle wrote: »

Assetz Capital operate an instant access account paying 4.1% and a 30 day notice account paying 5.1%.
Both can be included in and IFISA, so no tax to pay.
However although these look and are operated like a savings account , they are in fact backed by P2P loans . In normal circumstances you can deposit and take money out with ease. However in the event of a big problem with the company, or the loans, then your money could become inaccessible for a while and lost altogether in a worst case scenario.
Having said that they have a good reputation and lots of people have money in these accounts earning these nice returns for zero effort Maybe be worth a calculated risk for say £5 K of the £20K

Thanks.

But just looking at this option in a bit more detail. If I put £5k in this and the other £15k in Marcus, Id earn the grand sum of £130 a year extra. Is that really worth the risk of putting £5k in a company that spells the word assetz with a Z at the end?

It just feels like this is an inconsequential extra amount of money for risking what is a lot of capital for me. £10 a month extra could be gained by reducing my beer consumption by 3 pints a month. Its nothing.

yorkshireOAP

danlightbulb--you sound as frustrated as me with this savings interest rate thing. Like many on here I have played the current accounts and savings linked accounts by drip feeding for 12 month spells. Rewards do not reflect the effort. I opened a Marcus account and put a sum in Oct. My B.Midshires 1.47 (ish) account matures Jan 2019. I have now decided to move that 8K to Marcus also, until a better deal turns up. That bonus will of course mature in Oct 2019 and search again. Tying money up for 2/3 years, I agree do not seem to bring fantastic rewards.

Kernel_Sanders

danlightbulb wrote: »

But also, a regular saver billed as 5% is in practice only 2.5% because of the drip feed effect. Then it only lasts a year anyway so you get say 2.5% x £250 x 12 which is only £75, then have to move your money anyway.

A common misunderstanding, amongst several you have made. You are getting 5% per annum on every pound of your daily balance. You've completely ignored the potential earnings of the rest of the funds. People on here have many thousands of pounds in regular savers at any one time because they are taking out new ones and funding current ones with matured proceeds. They are not getting 1%!

danlightbulb

@Kernal sanders thanks, but i dont follow. I think even Martins article on the main site highlights that the drip feed effect means you dont get the full 5% on the whole balance after 12 months.

And dont these regular savers rates only last 1 year? So you have to do the whole process again a year later. And there arent a huge number of these regular savers accounts out there, being tied to current accounts?

eskbanker

danlightbulb wrote: »

@Kernal sanders thanks, but i dont follow. I think even Martins article on the main site highlights that the drip feed effect means you dont get the full 5% on the whole balance after 12 months.

The point is that when people indignantly claim that you only get half the advertised rate, it's a false assertion because of course the closing balance has only been in a regular saver for a very short period of time, so it would be unreasonable to expect interest on money that wasn't in the account!

So, a more accurate way to look at it is that you do get the published rate according to the balance in the account at each stage during the year. The average balance will be roughly half of the closing balance, so it's more realistic to see the interest as full published AER times half closing balance, rather than half published AER times full closing balance. Ultimately it's the same answer but you wouldn't believe how often people come on here moaning that they only got half the interest they were expecting and how they've been ripped off, etc....

danlightbulb wrote: »

And there arent a huge number of these regular savers accounts out there, being tied to current accounts?

The best ones are indeed tied to current accounts but there are plenty of others, as per https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/ and Special_Saver2's excellent thread at https://forums.moneysavingexpert.com/discussion/5776240/regular-saver-thread-new-and-restarted

Nobody's trying to force you to use regular savers though, just highlighting that their use helps maximise return on your money, but entails quite a bit of effort....

danlightbulb

eskbanker wrote: »

The point is that when people indignantly claim that you only get half the advertised rate, it's a false assertion because of course the closing balance has only been in a regular saver for a very short period of time, so it would be unreasonable to expect interest on money that wasn't in the account!

So, a more accurate way to look at it is that you do get the published rate according to the balance in the account at each stage during the year. The average balance will be roughly half of the closing balance, so it's more realistic to see the interest as full published AER times half closing balance, rather than half published AER times full closing balance. Ultimately it's the same answer but you wouldn't believe how often people come on here moaning that they only got half the interest they were expecting and how they've been ripped off, etc....

Well ok, its the same thing whichever way round its expressed. I'm not expecting 5% on the whole amount, I'm expecting 2.5% on the whole amount on average, or if you prefer me to say 5% on half the amount then fine.


The point is that I can't get 5% return on the whole amount, which is what is needed to make the whole thing worth making the effort for.


The problem is that I'm going to struggle getting 3x direct debits set up on various current accounts now that Tesco stopped their easy DD's. I don't mind meeting the min pay in thresholds as that's just 5 minutes making transfers once a month. DD's are much more of a hassle.


Then as far as I can see there is a big problem after one year with these regular savers because all of a sudden you have a lot of balance at 0.3% and have to drip feed it somewhere else again - yet this time you've already taken the market leading accounts so have to drop to worse ones. So instead of 2.5% on average its now 2% or 1.5% on average.