Putting some money away as emergency fund

jamels2

Is there any point in cash ISA anymore as rates do not seem any better than other savings accounts ?

lassfarfromhome

The point of cash ISAs is the tax advantages- i.e. no tax on the gain. This is academic for most people because of the personal savings allowance which allows basic rate tax payers to get interest of £1,000 each tax year tax free.

I second Marcus as a good place for an emergency fund- 1.5% interest.

If it's for emergencies then you need instant access. If you can't trust yourself not to spend the money, then you need to do some work on yourself. Work out what your priorities are. Shift more into protecting your future self from your current self. That's not something a bank account can do.

TCA

jamels2 wrote: »

Is there any point in cash ISA anymore as rates do not seem any better than other savings accounts ?

That depends on your current and future tax-paying status and investments. Depending on your current and future earnings and the amount of interest earned, that interest might always be tax-free outside of an ISA.

You may however in future wish you had used your ISA allowance, either because cash ISA rates again became better than savings rates (so had more in the pot) or in the instance when you have no ISA allowance left in future years and want to transfer the cash ISA to a stocks and shares ISA to buy and shelter some investments from tax.

Terry_Towelling

annabanana82 wrote: »

We are looking at putting what will be our mortgage overpayment and emergency fund into a co-op saver account, 1.4% interest if you make no more than 4 withdrawals a year.
We are also going to put some money into premium bonds, we may need access this in 3.5 years time. I think there is probably better places to put this money but my Husband's health has taken a bit of a hammering this year so has trouble concentrating so it's likely to be a temporary measure until he's feeling more himself.

Probably better to go for the Marcus account paying 1.5% although I accept there isn't much between 1.4% and 1.5% (£1 for every £1000 saved).

As for the premium bonds, I'm not so sure. Some advocate them, others don't and some of us are a bit in the middle. Statistically, and with average luck, your return is expected to be around the 1.2% mark over the longer term. Some people expect to get nearer to 1.4% but that figure is (or was) the size of the prize pot and not an indication of the return you might get.

Of course, premium bonds are all about 'chance', so you could get a huge return or nothing at all. Good luck but don't expect too much from what is, after all, a lottery.

jamels2

Doesn't have to be an isa , I like the idea of maxing one out each year as 20k a year would add up over a few years.
My other thought was to put money via freetrade into vanguard funds as it's meant to be a above inflation return and can also be withdrawn if necessary.

jamels2

I think I need a mixture of two maybe 2000 emergency and then ongoing savings each month to build up in the background.

TCA

jamels2 wrote: »

My other thought was to put money via freetrade into vanguard funds as it's meant to be a above inflation return and can also be withdrawn if necessary.

You're now talking about investment, which is a different ballgame to saving (not risk free) and generally not advisable for emergency funds, as you might need to access them when they're losing money

badger09

If you're saving up an emergency fund, look for the highest rate instant, or near instant access account you can find and forget a cash ISA.

strawb_shortcake

Terry_Towelling wrote: »

Probably better to go for the Marcus account paying 1.5% although I accept there isn't much between 1.4% and 1.5% (£1 for every £1000 saved).

Thank you, this would have been my choice but the OH is a bit anti online banking so rules that one out.

As for the premium bonds, I'm not so sure. Some advocate them, others don't and some of us are a bit in the middle. Statistically, and with average luck, your return is expected to be around the 1.2% mark over the longer term. Some people expect to get nearer to 1.4% but that figure is (or was) the size of the prize pot and not an indication of the return you might get.

Of course, premium bonds are all about 'chance', so you could get a huge return or nothing at all. Good luck but don't expect too much from what is, after all, a lottery.

We have held 300 premium bonds for 10 years and only recieved £75 so I don't hold out much hope. As we may need this money to pay off the mortgage in Jan 23 if Brexit goes belly up I'd like to put it in a fixed bond for 2 years. At the moment my Husband needs to feel some control over what we do with the money (he knows he can't make a fully informed decision at the moment so happy to go with this for the time being

Apodemus

annabanana82 wrote: »

We have held 300 premium bonds for 10 years and only recieved £75 so I don't hold out much hope. As we may need this money to pay off the mortgage in Jan 23 if Brexit goes belly up I'd like to put it in a fixed bond for 2 years. At the moment my Husband needs to feel some control over what we do with the money (he knows he can't make a fully informed decision at the moment so happy to go with this for the time being

If you have had £300 in Premium Bonds for 10 years, an average return of 1.5% per annum would suggest that you should expect to have had about two £25 prizes. If you have had £75, then you are exceeding your “average luck” expectation and exceeding what the same £300 would have returned if it was sitting on deposit at the 1.5% suggested above.