Exhausted all options? Where to save my money?

AnotherJoe

You've talked about not losing out to inflation, and a few have pointed out that inflation is currently  under 1%.
However, you are saving for a house, so what should concern you is not general inflation, but house price inflation.
From what I can see that's running much higher, even in the face of Covid. It may be where you are that house prices are falling, but if they aren't, I suggest you start looking at buying, there are not many places that £60k wouldn't be a sufficient deposit and you are in danger of house prices rising faster than you can save, so effectively by putting off buying you would be getting a negative savings rate. 

burner03

Stop procrastinating and just buy a hoose!

MoneyMan01

d63 said:

there is no need to lose the tax wrapper on the £60k. if the nationwide cash isa is flexible then withdraw £59.9K and buy ns&i income bonds at 1.15% with that, but be sure just before the end of the tax year to put the money back again to maintain the tax status.

So when you say put the money back again, I thought there was a £20k limit per tax year? If I transferred say, £59k, to a bond/saver, and just before the end of the tax year, it was worth, hypothetically £60k, would I be able to "put that £60k back into that ISA"? If so, how? Given I thought there was a £20k cap per year?

d63

TheDarkKnight93 said:

d63 said:

there is no need to lose the tax wrapper on the £60k. if the nationwide cash isa is flexible then withdraw £59.9K and buy ns&i income bonds at 1.15% with that, but be sure just before the end of the tax year to put the money back again to maintain the tax status.

So when you say put the money back again, I thought there was a £20k limit per tax year? If I transferred say, £59k, to a bond/saver, and just before the end of the tax year, it was worth, hypothetically £60k, would I be able to "put that £60k back into that ISA"? If so, how? Given I thought there was a £20k cap per year?

if you take £59k of old money out you can put £59k of old money back, but a penny more put in would count as new money and come out of the current years £20k allowance, provided that is, the cash isa is flexible. you really do need to find out if this nationwide cash isa you already have is flexible or not. or to be on the safe side, start a new isa with another provider at a better rate which is flexible, and do an isa transfer from the nationwide to that with the old £60k (but leave enough in so it doesnt get closed), but if you intend or have already put money into the HTB do not put any new money into that new isa,  but instead wait until near the end of the tax year and then top up the nationwide cash isa with whatever remains of the 20k allowance so that going forward you will have a total of 80k in the tax wrapper for year 20-21. 

MoneyMan01

d63 said:

if you take £59k of old money out you can put £59k of old money back, but a penny more put in would count as new money and come out of the current years £20k allowance, provided that is, the cash isa is flexible. you really do need to find out if this nationwide cash isa you already have is flexible or not. or to be on the safe side, start a new isa with another provider at a better rate which is flexible, and do an isa transfer from the nationwide to that with the old £60k (but leave enough in so it doesnt get closed), but if you intend or have already put money into the HTB do not put any new money into that new isa,  but instead wait until near the end of the tax year and then top up the nationwide cash isa with whatever remains of the 20k allowance so that going forward you will have a total of 80k in the tax wrapper for year 20-21. 

Ah I see. That's interesting and I never knew you could put more than the £20k allowance back in. Never realised it went on how much total you had put in there.

So it would always be worth, year on year, maxing the £20k out if possible (but no more than £85k as it then isn't protected) to maximise your tax saving wrapper.

I couldn't see the info on whether it was Flexible or not (clue might of been in the name of the account as it is called Flexclusive ISA), checked on my account and online, but the info wasn't available so I sent them a message on Twitter (reduced staff for phone calls would mean hours on hold).

They've told me that it is an instant access account and that I can withdraw whatever I need to including transferring money out and back in within the tax year, not effecting my ISA allowance. They have also said no minimum amount is required in the account to keep it open.

Based on that I will potentially look to transfer £50k to Premium Bonds (max you can put in) but I am still unsure on that. Then look to put the remaining 10k into a basic saving account. Again, NS&I looks to be the "best" option there with 1.16% on an account called Income Bonds, presuming that is a savings account at 1.16% and just called Income Bonds?

Sumselkb

What about putting your money in a Fixed-rate account?
You could look at the moneysavingexpert website and follow:
Banking & Savings>Savings Accounts>Top savings accounts>Fixed-rate accounts>Five-year fixed rates>RCI Bank 1.4%

As the moneysavingexpert website says: "Longer fixes – are they worth it?
Below we've included the top three-year and five-year fixes. You can get a better rate if you lock in for five years, but you'll need to weigh up whether it's worth it. With rates so low, there’s a risk they’ll rise during the term – and the longer the fix, the bigger the risk. What's more, you're generally not able to access your money at all for the full term."

But if you're willing to put the money away for five years and not touch it, and hope that rates don't rise in the meantime, then this is an option?

I haven't used RCI Bank so don't know what their customer service is like or what it's like to have an account with them but according to their website calculator you could make interest of 1.4% if you choose five years.

d63

TheDarkKnight93 said:

d63 said:

if you take £59k of old money out you can put £59k of old money back, but a penny more put in would count as new money and come out of the current years £20k allowance, provided that is, the cash isa is flexible. you really do need to find out if this nationwide cash isa you already have is flexible or not. or to be on the safe side, start a new isa with another provider at a better rate which is flexible, and do an isa transfer from the nationwide to that with the old £60k (but leave enough in so it doesnt get closed), but if you intend or have already put money into the HTB do not put any new money into that new isa,  but instead wait until near the end of the tax year and then top up the nationwide cash isa with whatever remains of the 20k allowance so that going forward you will have a total of 80k in the tax wrapper for year 20-21. 

Ah I see. That's interesting and I never knew you could put more than the £20k allowance back in. Never realised it went on how much total you had put in there.

So it would always be worth, year on year, maxing the £20k out if possible (but no more than £85k as it then isn't protected) to maximise your tax saving wrapper.

I couldn't see the info on whether it was Flexible or not (clue might of been in the name of the account as it is called Flexclusive ISA), checked on my account and online, but the info wasn't available so I sent them a message on Twitter (reduced staff for phone calls would mean hours on hold).

They've told me that it is an instant access account and that I can withdraw whatever I need to including transferring money out and back in within the tax year, not effecting my ISA allowance. They have also said no minimum amount is required in the account to keep it open.

Based on that I will potentially look to transfer £50k to Premium Bonds (max you can put in) but I am still unsure on that. Then look to put the remaining 10k into a basic saving account. Again, NS&I looks to be the "best" option there with 1.16% on an account called Income Bonds, presuming that is a savings account at 1.16% and just called Income Bonds?

well good to hear that cash isa is flexible as that simplifies matters a bit.
with regard to the premium bonds idea, i perceive a potential small problem in that because the winning numbers are chosen at the start of the month if you were to leave the bonds in for the april 2021 draw there might not be enough time to cash them in and restore the money to the nationwide isa in time to beat the april 5th deadline after which you would lose their tax exempt status.
the income bonds are a bit unusual in that the monthly income has to be paid away into a nominated account, it is not like an ordinary savings account in that the interest can be paid back into the same account and the interest compounded. ( i have some of these myself and have the monthly interest paid into an ns&i direct saver account which currently pays 1% interest, but there was some discussion here recently whether one can still do this or not and the nominated account must be elsewhere, but either way it is no great problem.)

MoneyMan01

Sumselkb said:

What about putting your money in a Fixed-rate account?
You could look at the moneysavingexpert website and follow:
Banking & Savings>Savings Accounts>Top savings accounts>Fixed-rate accounts>Five-year fixed rates>RCI Bank 1.4%

As the moneysavingexpert website says: "Longer fixes – are they worth it?
Below we've included the top three-year and five-year fixes. You can get a better rate if you lock in for five years, but you'll need to weigh up whether it's worth it. With rates so low, there’s a risk they’ll rise during the term – and the longer the fix, the bigger the risk. What's more, you're generally not able to access your money at all for the full term."

But if you're willing to put the money away for five years and not touch it, and hope that rates don't rise in the meantime, then this is an option?

I haven't used RCI Bank so don't know what their customer service is like or what it's like to have an account with them but according to their website calculator you could make interest of 1.4% if you choose five years.

Thanks for your response.

I had a look at those but personally didn't see the value in tying my money up for 5 years to get 1.4% when you can easy access it for around 1.16%.

MoneyMan01

d63 said:

with regard to the premium bonds idea, i perceive a potential small problem in that because the winning numbers are chosen at the start of the month if you were to leave the bonds in for the april 2021 draw there might not be enough time to cash them in and restore the money to the nationwide isa in time to beat the april 5th deadline after which you would lose their tax exempt status.

From my understanding I thought they were monthly draws?

So I thought I could put them in there up until March 2021, then move that money back across into the ISA then? It isn't "fixed" for a year is it?

On that note, do I have to "transfer" my £60k ISA to the Bonds. If not and I just withdraw, do I have to "transfer" the £60k back in before April 2021 or is it a case of the account will just allow me to put £60k back in as a deposit?

d63 said:

the income bonds are a bit unusual in that the monthly income has to be paid away into a nominated account, it is not like an ordinary savings account in that the interest can be paid back into the same account and the interest compounded. ( i have some of these myself and have the monthly interest paid into an ns&i direct saver account which currently pays 1% interest, but there was some discussion here recently whether one can still do this or not and the nominated account must be elsewhere, but either way it is no great problem.)

So theoretically, I could open an Income Bonds saver, and choose my bank current account as to where the interest should be paid?

I guess alternatively I can open the Direct Saver with NS&I and put the £10k in there, but then that would mean only 1% as opposed to the 1.16% so wouldn't make much sense. Unless earning "interest" on the money + interest earned, at 1% would be more than just 1.16% of what is put in the Income Bonds would be greater, but I wouldn't of thought that would be the case?

d63

TheDarkKnight93 said:

d63 said:

with regard to the premium bonds idea, i perceive a potential small problem in that because the winning numbers are chosen at the start of the month if you were to leave the bonds in for the april 2021 draw there might not be enough time to cash them in and restore the money to the nationwide isa in time to beat the april 5th deadline after which you would lose their tax exempt status.

From my understanding I thought they were monthly draws?

So I thought I could put them in there up until March 2021, then move that money back across into the ISA then? It isn't "fixed" for a year is it?

On that note, do I have to "transfer" my £60k ISA to the Bonds. If not and I just withdraw, do I have to "transfer" the £60k back in before April 2021 or is it a case of the account will just allow me to put £60k back in as a deposit?

d63 said:

the income bonds are a bit unusual in that the monthly income has to be paid away into a nominated account, it is not like an ordinary savings account in that the interest can be paid back into the same account and the interest compounded. ( i have some of these myself and have the monthly interest paid into an ns&i direct saver account which currently pays 1% interest, but there was some discussion here recently whether one can still do this or not and the nominated account must be elsewhere, but either way it is no great problem.)

So theoretically, I could open an Income Bonds saver, and choose my bank current account as to where the interest should be paid?

I guess alternatively I can open the Direct Saver with NS&I and put the £10k in there, but then that would mean only 1% as opposed to the 1.16% so wouldn't make much sense. Unless earning "interest" on the money + interest earned, at 1% would be more than just 1.16% of what is put in the Income Bonds would be greater, but I wouldn't of thought that would be the case?

my only small concern regarding the premium bonds option was that assuming you buy them before the end of this month because the first draw you will be eligible for is september and the last in march next year that is only a total of 7 draws available over an 8 month period so that headline rate of 1.4% they quote on the website would be reduced by 7/8 to around 1.23% and in practice most likely lower than that because of the peculiar way the prizes are distributed, but that is not something i feel at all comfortable explaining!  anyway the upshot being that despite any prizes are free of tax unless you feel lucky the monthly income bond route at 1.16%AER is probably the best option and certainly better than the 1% AER of the direct saver account which only pays out the interest once a year.

but as to how precisely one makes a withdrawal from the nationwide cash isa and subsequent paying back in, is not something i have personal experience of and prior to you raising the question i simply assumed you do an ordinary withdrawal and then a standard deposit again. but in view of the potentially large sums involved maybe its best you ask the nationwide people to be certain, or maybe someone else here can advise.