How to move cash around to maximise interest?

daisyfrau

Hi guys,

Hi folks,

Not sure if I should put this here or on savings board? I am after some advice on maximising interest on cash savings. We are in process of building up our emergency fund, and as this is kept in cash, I am trying to work out best way of maximising the interest we can earn on it.

It’s my job to sort all this out for both of us, and we are both happy to switch/add multiple current accounts each if needed to facilitate this, but I must say I am finding it very tricky to work out the logistics of what to do when/how to move money/when to open various accounts!! Is there a thread/page on this somewhere?

We currently have our emerg fund as £6.5k in cash in a lousy-interest current acct @ Nationwide. Our ‘current’ current accounts are With Lloyd’s as is the mortgage. We will be adding £2k a month to this amount barring this month when we will only save £1.5k due to my having taken some unpaid leave to setttle daughter into school. Initial goal is 6 months expenses cash/£24k with a target date of 1/7/2020. I am hoping to pick up some extra shifts and bring that date forward if possible.

Thanks in advance to your help.

colsten

£24K in cash sounds a very healthy emergency fund. Do you actually need that much? Usually 6 months living costs is considered enough. But assuming this is how much you need, the MSE Savings section is a good place to start with. There are still some relatively decent instant access accounts around, albeit not for a total of £24K. If you haven't yet had a FlexDirect, you should each open one of these, plus a joint one. That should take care of £7.5K. Then there's the TSB Plus, which would take another £4.5K between 3 accounts (2 sole, one joint). You could shuttle £1K between Nationwide and TSB to meet the monthly minimum deposit requirements. For the rest, you could consider Regular Savers, or just a plain instant access savings account.

You mention a child - if some of the savings are for her, you should investigate children's savings, as they often have better rates than adult accounts.

Regarding switching: this is for current accounts only, and there is ample information around about the few remaining switch deals.

Please don't expect any ready-made guide on when to open what account and how to move money between accounts - - no two people have the same requirements, and unless you fully understand what you are doing and why, you should probably not get started with anything in the first instance.

Lastly, you might want to pay for professional advice, to review your goals and your overall financial provisions, incl. pensions.

Sea_Shell

My advice would be don't try and do everything at once, it can be overwhelming.

Start by picking 1 or 2 of the best offers, and open them and get them fully up and running and your "money shuffle" set up, if needed, working smoothly and then look to open more accounts.

The downside of this is that offers may not be around by the time you come to want to do them.

daisyfrau

Thanks so much for your reply.

Yes it’s staggering to us both that it’s that amount for just 6 months expenses! It costs us £3.75k for living expenses each month incl saving over the year for some very expensive annual professional indemnities/memberships, etc and then it’s about 250pcm on various activities which in reality we would cut if we did actually have a major emergency eg job loss. And I guess we would hopefully be able to also save the ongoing £250pcm on childcare depending on the emergency scenario. So I guess the real figure would probably end up being £3500 to £3750 pcm actually.

When you add into mix DH is self employed our emergency fund prob needs to be higher than 24k actually, but we will prob save more slowly once we hit 24k.

Lol - oh dear - I had rather hoped someone would do exactly as you’d said no one could, lol! Thank you very much for the advice on the accounts to open, I hadn’t considered opening a joint as well as two separate to get an ‘extra’ top account at each bank so that’s good to know. I will take a look at them and their interest rates.

It’s prob too early in the morning but I know I will need to sit down and write down in excel where I need to move money from and to (wish there was an app for this!) each month (bearing in mind restrictions) to get the bonuses on each account, and when to open and close each account.

I have been looking at the savings board but hadn’t found this, but I will look again to see what else I can glean!

daisyfrau

Sea_Shell wrote: »

My advice would be don't try and do everything at once, it can be overwhelming.

Start by picking 1 or 2 of the best offers, and open them and get them fully up and running and your "money shuffle" set up, if needed, working smoothly and then look to open more accounts.

The downside of this is that offers may not be around by the time you come to want to do them.

Yes I think this is most sensible for me as I’m worried about messing up the terms or not having enough money to spread around and then missing out on the bonuses as a result. Yes I will have to take that risk sadly!

daisyfrau

Re: children’s accounts - my hubby does this. She has a couple of Halifax accounts, one is quite good I think, and the other was good when we opened it at her birth but is not so good now. I think he said something like we need the first acct to get the second but I’m sure we could move most her money out to a better account for her if needed. I will take a look. We save into that separately and again depending on emergency severity we could cut that too so could gain an extra £100pcm

colsten

daisyfrau wrote: »

It’s prob too early in the morning but I know I will need to sit down and write down in excel where I need to move money from and to (wish there was an app for this!) each month

There is an app for this. Lots and lots of personal finance software packages around. Some are more new-fangled apps, some are packages that have been around forever. I use AceMoney, which is similar to the free but unsupported MS Money, which is an all-time favourite with money saving experts. The more recent ones include YNAB, Yolt and Money Dashboard.

Eco_Miser

There is a website which purports to tell you the best combination of accounts for a given amount of money, but I don't think it's been properly updated recently, so triple check the rates and limits before acting on it, and ignore the Peer to Peer Accounts section.

You may have already seen the Regular Saver Thread but not realised that post 9 lists the best homes for lump sums, to be used to feed the Regular Savers (that is, the higher paying current accounts and easy access savings accounts).

A 300-post thread from 4-2 years ago discussing how to get the highest interest using multiple accounts may be worth a skim. The higher rates available then made setting up multiple accounts and running money round them all more worthwhile.

born_again

>> We currently have our emerg fund as £6.5k in cash in a lousy-interest current acct @ Nationwide. <<

Switch that to Santander 123 acc pay your DD's etc out of it. While there is a £5 a month charge & requires £500 a month input. Your £6.5k is giving £4.99 a month interest. So any of the qualifying DD's will bring you over £5
Once you get going the 1.5% interest up to £20K makes a nice bonus. Add in reg saver 2.5% for £200 a month. (not the best out there)

YorkshireBoy

born_again wrote: »

>> We currently have our emerg fund as £6.5k in cash in a lousy-interest current acct @ Nationwide. <<

Switch that to Santander 123 acc pay your DD's etc out of it. While there is a £5 a month charge & requires £500 a month input. Your £6.5k is giving £4.99 a month interest. So any of the qualifying DD's will bring you over £5
Once you get going the 1.5% interest up to £20K makes a nice bonus. Add in reg saver 2.5% for £200 a month. (not the best out there)

I'm struggling with your numbers here.

£6,500 x 0.0149 / 12 = £8.07

Subtract the £5 fee and you have £3.07, not £4.99

Unless I've missed something?

But, and as colsten said above, why would you not recommend the £6.5K (and another £1K if it can be found) be placed in a trio of Nationwide Flex Direct accounts?

The same £6.5K would then make £325 in the first year, some £27/mth...that's a heck of a lot more return! And the icing on the cake?...open a brace of Santander Everyday accounts, bung a couple of DDs on each, and switch them to Nationwide for £400. In year 1 that's £725 vs your £36.84 plus whatever cashback can be earned.

If you want some cashback from Santander, open Lite and pay £1/mth, not £5/mth.

xylophone

Your child is aged 4/5?

Does she have a Junior ISA?

At the moment, the best rate for a cash JISA is offered by Coventry BS.

https://www.gov.uk/junior-individual-savings-accounts

https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html

Or you might wish to consider a stocks and shares JISA.

Example

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa

https://monevator.com/using-vanguard-lifestrategy-funds-life/