Where to put regular savings account money at the end of the 12 months

Starmummy

Hi

I've recently opened up a First Direct Regular savings account (5% AER) paying in the maximum £300 pcm.
What should I do with the balance at the end of the 12 months?
Should I move it to an ISA or a regular savings account (with the best rate I can find)
I already have an emergency fund of £1000 in an instant access account and I will be paying the maximum I can into my LISA each tax year (£4000)

My 'goals' are to save a 'deposit' so that next time me and my partner move it is a joint purchase rather than solely his mortgage. (hoping to save enough to only need a small mortgage as he has a lot of equity)Then once on the property ladder ramp up my retirement savings

xylophone

At the end of the twelve months you can move it into the best paying instant access account you can find (this may be a current account...) and drip feed (if required) into the best regular saver you can find.

For example, if the FD saver were maturing today and I had never had a Nationwide Flex current account, I would open one and deposit £2500 for a year at 5%.

I would then open a TSB classic plus current account and deposit the remaining £1100 plus interest.

I would set up matching mid month same day SOs for £1000 from NW to TSB and from TSB to NW.

I would transfer the monthly interest from NW to TSB.

At the end of the year I would move the NW deposit to an account with the best rate I could find but keep the account open to benefit from the regular monthly saver.

EachPenny

Starmummy wrote: »

I've recently opened up a First Direct Regular savings account (5% AER) paying in the maximum £300 pcm.
What should I do with the balance at the end of the 12 months?

The most efficient approach is to have more than one regular savings account with the maturity dates spread evenly as possible throughout the year. That way you don't end up with such a large lump-sum at the end of the 12 months going into an instant access account at a much lower rate and for the money to be hanging around for up to 11 months before earning the higher rate again.

For example, once the First Direct account has been running for 4 months, start paying into an M&S Regular Saver as well. Then 4 months later add a Nationwide one to the list. Maximise the deposits you make to the newest accounts and only fund the older ones as you can afford to (observing any minimum monthly deposit amounts).

Then when the First Direct account matures, open a new one and get the matured funds redeposited across all your regular savers as quickly as possible. (always maximising the deposits into the newest account(s))

The catch is that to get the best regular savers you need to meet eligibility criteria, you might want to compromise and accept a lower interest rate for some of the easier to apply for RS accounts (e.g. Virgin Money and some of the Building Societies).

Also bear in mind that some RS accounts allow withdrawals, so you could pay money in to some of the lower interest paying ones in the early months, and take it back out to fund the better paying ones if you run out of spare cash to save some months.

And finally, remember that some regular savers don't allow withdrawals until maturity, so plan ahead to have the money accessible when you need it for the deposit.