Best paying ISA advice needed

Jess_hughes

Hi all,


I would like to know which is the best paying ISA I can make interest on my money, I have a lump sum of money in my bank of £40,000..I’m 22 and I would like to know what would be best especially for in the long run, so that I am set up for life I no that may sound stupid but there are things to look forward to in the future if I would like to purchase my own house etc etc

SonOf

What type of ISA?

rjmachin

How far in the future do you think you will look to buy your own home?

If you saving for your own house in the future, and will be a first time buyer, you could get a LISA and deposit £4000 per year, and get £1000 from the government each year, so you would get £5000 per year in the account (plus interest).

Put the rest in to a savings account like Marcus at 1.35%, then drip feed £4000 each year to the LISA.

With the LISA, you can only use for a first time home or once you are 60 years old. If you withdraw for another reason, you would lose the bonus and a bit extra as well.

oli356

I'd probably open up a lifetime ISA and put the £4k in there every tax year. Open up a Marcus instant access account to keep most of the money in. Then put what you can into regular savers (https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/) < requires a bit of setting up as you can only put £200-500/month in depending on the account, if you have multiple of these it requires a bit of admin time to start.

Could also put the majority into a fixed account (https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/) for 1/2 years at a time. The interest on £30k would make it worthwhile in my opinion to open up a fixed account rather than just keeping it in the Marcus instant account. (1.35% vs 1.8% for a 2 year fixed). But have the Marcus anyway to keep some money accessible.


Depends if and how long for you want to keep the money locked away for. But investing is the way to go if you want to earn more than the poor interest rates, but you will be in it for the long term, depending when you want to buy a house, possibly not the best idea.

NHW00

Jess_hughes said:

Hi all,


I would like to know which is the best paying ISA I can make interest on my money, I have a lump sum of money in my bank of £40,000..I’m 22 and I would like to know what would be best especially for in the long run, so that I am set up for life I no that may sound stupid but there are things to look forward to in the future if I would like to purchase my own house etc etc

Slightly in a similar position so instead of making a new thread I thought I would jump in here. 

I am about to become a high tax rate payer and so my PSA is about to drop to £500.

I currently have around 30k saved in cash (plus tiny bit in S&S ISA - my first forray into investing). This is split across nationwide ca +2x reg saver but majority is in Prem Bonds, which i have been lucky enough to get an above average return. 

Im not eligible to get a LISA but wanting to keep saving for a would be deposit for maybe 2-3 years down the line. 

As we are about to end the tax year would it be better for me to max out this years ISA by transfering as much as i can into an easy access cash ISA, essentially keeping it as a tax free reserve fund. Then any future savings throughout the next year (which i plan to do so at an aggressive rate) can go into a normal savings account (aka marcus).  

My rational being that in the long run, making the most of the tax free isa pot for this year may make me more flexible next year just in case interest rates go up / i suddenly inherit money that i need to save / ect. 

eskbanker

NHW00 said

I am about to become a high tax rate payer and so my PSA is about to drop to £500.

Have you considered sacrificing some salary into a pension to drop you back below the HRT threshold?

NHW00 said:

I currently have around 30k saved in cash (plus tiny bit in S&S ISA - my first forray into investing). This is split across nationwide ca +2x reg saver but majority is in Prem Bonds, which i have been lucky enough to get an above average return. 

Im not eligible to get a LISA but wanting to keep saving for a would be deposit for maybe 2-3 years down the line. 

As we are about to end the tax year would it be better for me to max out this years ISA by transfering as much as i can into an easy access cash ISA, essentially keeping it as a tax free reserve fund. Then any future savings throughout the next year (which i plan to do so at an aggressive rate) can go into a normal savings account (aka marcus).  

My rational being that in the long run, making the most of the tax free isa pot for this year may make me more flexible next year just in case interest rates go up / i suddenly inherit money that i need to save / ect. 

If it's money for 2-3 years down the line, why would you use an easy-access cash ISA, rather than a fixed term one?

NHW00

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