Savings Fountain?

Gymbabe68

Hello

I am fortunate to have £85,000 to save, I have no mortgage or debts.

I have been agonising over The Savings Fountain on MSE website and have opened a fair few accounts. Is this fountain still viable as the article was written last April?

I'm just confused as to what best to do?

Any advice would be greatly received

Thanks

Mr.Saver

When do you need to access the money? If you don't need to access a portion of the money for 10 years or longer, you should think about invest the portion rather than put them into savings accounts. Remember always keep accessible emergency fund.

Do you have good sized pension pots? If you don't have a decent sized pension previsioning, you should prioritise it.

Are you planning to buy your first home? HTB ISA and LISA could be good choices.

Bank account savings aren't as attractive as they use to be. TESCO reduced the interest from 3% to 1% for new customers starting from 1st March 2019 (yesterday), and the only remaining competitive ones (comparing to 1.5% easy access savings accounts) are Nationwide 5% on £2,500 fixed for 1 year, and TSB 5% variable on £1,500.

Also, don't forget to use your remaining ISA allowance for this tax year before 5th April. Everyone will soon have £20k allowance starting from 6th April, so make sure you use that too.

alanq

For the benefit of those unaware of the Savings Fountain here's a link.


https://www.moneysavingexpert.com/savings/which-saving-account/

masonic

I don't think the cash ISAs are worth including for most people as the rates are lower and non-ISAs accounts tend to win out even after basic rate tax.

As mentioned above, there are only two viable options for current accounts and one is time-limited.

You might want to consider investing some of the money, rather than keeping it all in cash.

Gymbabe68

Hi

Thanks for the replies.

Could you suggest where to start to invest?

I was considering doing the bank accounts with interest and the linked regular savings.

Would it viable to put £20,000 in ISA this tax year and then £20,000 in next years or are you saying just to keep money in easy access account at say 1.5%?

I think I would have to put some in ISA as I think the interest would be over Personal Allowance of £1,000.

Thanks

Zero_Sum

Gymbabe68 wrote: »

Hi

Thanks for the replies.

Could you suggest where to start to invest?

I was considering doing the bank accounts with interest and the linked regular savings.

Would it viable to put £20,000 in ISA this tax year and then £20,000 in next years or are you saying just to keep money in easy access account at say 1.5%?

I think I would have to put some in ISA as I think the interest would be over Personal Allowance of £1,000.

Thanks

Cash ISA rates are about 80% that of normal savings accounts so as long as youre not a higher rate tax payer its a bit 6 & two 3's

You could look as P2P IFISA's

Mr.Saver

Gymbabe68 wrote: »

Hi

Thanks for the replies.

Could you suggest where to start to invest?

I was considering doing the bank accounts with interest and the linked regular savings.

Would it viable to put £20,000 in ISA this tax year and then £20,000 in next years or are you saying just to keep money in easy access account at say 1.5%?

I think I would have to put some in ISA as I think the interest would be over Personal Allowance of £1,000.

Thanks

Personal Allowance is for income, it's £11,850 for the 2018-2019 tax year, and will be £12,500 for the 2019-2020 tax year. This is not the allowance for your tax free savings interest.
Personal Savings Allowance (PSA) is for savings interest, basic rate tax payers get £1,000 per tax year, and higher rate tax payers get £500 per tax year, additional rate tax payers get £0. Savings interests above the PSA will be taxed at your income tax rate.

With £85k, even with the easy access 1.5% rate, that is £1,275 interest in a year, above the PSA for sure.

If I was in your position, I'd definitively put £20k in an ISA right now, and then another £20 on 6th April. If (a part of) the £85k was from taxable income in this tax year, I will try to put as much as possible into a pension before the 5th April deadline to reduce my tax liabilities. Miss the deadline or not doing so could end up with a £20k+ tax bill if the money was from taxable income.

Based on the size of the lump sum, if you don't know what you are doing, it's worth to get professional advises. If you do it yourself and get it wrong, it could cost you a lot more than the cost of an IFA.

Mr.Saver

Zero_Sum wrote: »

Cash ISA rates are about 80% that of normal savings accounts so as long as youre not a higher rate tax payer its a bit 6 & two 3's

Not really true at the moment. TESCO cash ISA pays 1.44%, while the best easy access savings account pays 1.5%, that is 96%, not 80%.

MisterMotivated

If you're looking mainly at bank accounts for interest rather than investing, I don't think an IFA is necessary; there are plenty of resources on here to help find the best paying accounts. Of course, it depends on your long term plans for the money.

darkidoe

The fountain is drying up with Tesco current account lowering their interest rate and not much else other than TSB and Nationwide (1st 12 months) offering decent rates. Other than that, regular savings accounts, HSBC, M&S, First Direct, Lloyds, Nationwide are the next step.

We are scrapping the barrel here.

masonic

A cash ISA is certainly worth considering before easy access savings, but there are plenty of accounts offering 2.2% or greater to exhaust before that. The savings accounts of 'last resort' for me would be a ladder of one or two year fixed rate accounts from the Sharia compliant banks - opened at a frequency that would drip feed your capital back to you at a suitable rate should you need it - and only after setting aside a suitable emergency fund distributed between current account and regular savers that permit access in an emergency.

If investments are being considered, then the benefits of a S&S ISA would generally trump the benefits of a cash ISA, thinking longer term.