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Where to put money for 5 years?

CreditCardChris
CreditCardChris Posts: 344 Forumite
100 Posts Second Anniversary
edited 27 July 2020 pm31 6:55PM in Savings & investments
I'm emigrating from the UK in 5 years and I want to start saving a chunk of money for when I move. 
Currently I invest regularly in index funds but this isn't exactly saving as the money can go up and down. I was thinking to just put it in my H2B isa even though I won't be buying a house (certainly not at these prices) but the 0.95% (pathetic) interest rate is better than nothing I guess. But what other options are there? Would be nice to get 2%+ interest

I know there are some accounts where if you pay in £1500 each month and have 2 direct debits you can get x % on up to £5,000 or whatever but that's super hassle and I don't want lots of accounts all over the place with direct debits coming out of different accounts etc, it's a lot of micro managing. 
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Comments

  • colsten
    colsten Posts: 17,597 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    Those "super hassle" accounts with the nice interest rates have largely vanished. Interest rates are generally terrible, and if you aren't into multiple accounts you will be reduced to things like the 1.15% NS&I Income Bond (provided you can save in £500+ chunks). There is a comprehensive collection of savings accounts on https://moneyfacts.co.uk/

    Depending on how much you want to save each month, Regular Savers might be an option. You'll almost certainly be into multi-account territory then, and you will have to find a new home for your money after 12 months.


  • colsten said:
    Those "super hassle" accounts with the nice interest rates have largely vanished. Interest rates are generally terrible, and if you aren't into multiple accounts you will be reduced to things like the 1.15% NS&I Income Bond (provided you can save in £500+ chunks). There is a comprehensive collection of savings accounts on https://moneyfacts.co.uk/

    Depending on how much you want to save each month, Regular Savers might be an option. You'll almost certainly be into multi-account territory then, and you will have to find a new home for your money after 12 months.


    I just looked on a compound interest calculator and if I deposit £500 a month for 5 years at 1.15% interest compounded daily that would give me £894.06 interest after 5 years. Is that really the best option out there 😕

    Is that £894 also subject to tax?
  • colsten
    colsten Posts: 17,597 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    Interest doesn't compound in the NS&I Income Bond. It pays monthly interest to another account. You can recycle the interest back into the Income Bond, together with your minimum £500 payment.

    Interest counts as taxable income in each tax year. Assuming you are a BR tax payer, you will be way below the annual £1,000 Personal Savings interest allowance.

    If you want to save £500 a month, you can presently do way better than 1.15% in Regular Savers.
  • Neil_Jones
    Neil_Jones Posts: 9,424 Forumite
    Part of the Furniture 1,000 Posts Name Dropper

    I just looked on a compound interest calculator and if I deposit £500 a month for 5 years at 1.15% interest compounded daily that would give me £894.06 interest after 5 years. Is that really the best option out there 😕

    Is that £894 also subject to tax?

    The NS&I Income Bonds do not compound interest:
    https://www.nsandi.com/income-bonds - "A £1,000 deposit would earn £11.50 interest after 12 months, if the current interest rate stayed the same during the 12 months.The interest is paid out monthly so the balance would remain at £1,000

    This is an illustration only, so it doesn’t take into account your individual circumstances. It assumes that you don’t make any withdrawals or additional deposits during the year."



  • Filo25
    Filo25 Posts: 2,139 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Regular savers are pretty much the only option for any kind of vaguely significant return on cash at present that I have seen.

    With my Marcus bonus rate ending I am pretty much reduced to putting my cash in Premium bonds for now.
  • You would be best off with a FTSE100 index tracker given your timeframe and return requirements.
  • A_T
    A_T Posts: 975 Forumite
    Part of the Furniture 500 Posts Name Dropper
    You would be best off with a FTSE100 index tracker given your timeframe and return requirements.
    Terrible suggestion, I'm afraid
  • Swipe
    Swipe Posts: 5,478 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 28 July 2020 am31 6:39AM
    A_T said:
    You would be best off with a FTSE100 index tracker given your timeframe and return requirements.
    Terrible suggestion, I'm afraid
    Indeed, the FTSE100 5 years ago to date was higher than yesterday's close

  • You would be best off with a FTSE100 index tracker given your timeframe and return requirements.
    Why would you want to invest all of your money in the 100 biggest companies in the UK indexes over the  when you could invest in thousands around the world?
  • colsten
    colsten Posts: 17,597 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    For the OP’s requirement, ANY investment suggestions are a terrible idea. 
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