S&S ISAs or 0.8% Savings Account

EP456

We have just had emails from DF Capital advising that our 90 day notice account interest rate will increase from 0.6 to 0.8% from 01 August.

We currently have £20k each in the accounts.  We now have a further £20k each to put away.  We need to decide whether to pay this into the DF accounts, or to invest in our S&S ISAs. ( We have £20k each in these too).

Any opinions greatly appreciated.

masonic

The answer would depend on your personal circumstances. If you have need of the money within the next few years, then investing it would be unwise. On the other hand, even £40k in cash savings between a couple is probably overkill for those who have stable job(s), and no big expenses on the horizon.

EP456

masonic said:

The answer would depend on your personal circumstances. If you have need of the money within the next few years, then investing it would be unwise. On the other hand, even £40k in cash savings between a couple is probably overkill for those who have stable job(s), and no big expenses on the horizon.

Thanks Masonic - we have both recently taken early retirement, and our pensions cover our outgoings, so this is extra money.  Due to TFLSs, we have approx £60k in Marcus easy access at 0.5%, so I want to divert £40k of this to a higher interest rate or into the ISAs.  

JGB1955

Premium Bonds?

You should be getting 0.5% on Marcus now....but you have to apply for it....

ColdIron

You can add a 0.10% bonus to your Marcus account for 12 months bringing it up to 0.50%

EP456

ColdIron said:

You can add a 0.10% bonus to your Marcus account for 12 months bringing it up to 0.50%

Sorry, I have done that already

MX5huggy

S&S ISA, but when do you foresee that you will spend this money? And then what will the ISA be invested in?  

masonic

EP456 said:

masonic said:

The answer would depend on your personal circumstances. If you have need of the money within the next few years, then investing it would be unwise. On the other hand, even £40k in cash savings between a couple is probably overkill for those who have stable job(s), and no big expenses on the horizon.

Thanks Masonic - we have both recently taken early retirement, and our pensions cover our outgoings, so this is extra money.  Due to TFLSs, we have approx £60k in Marcus easy access at 0.5%, so I want to divert £40k of this to a higher interest rate or into the ISAs.  

It seems like you are in a very good position financially, so investing in the S&S ISAs would make sense. In addition to premium bonds for your cash savings, there are 1 year fixed term accounts creeping above the rate paid by premium bonds for someone with average luck. If you wanted the ability to access some money without having to wait a year, you could divide up the money into 3-4 1 year fixes spaced a few months apart so that you are never more than a few months from one maturing. A combination of PBs, instant access and a ladder of short term fixed rates gives a good balance between flexibility and maximising returns.

EP456

MX5huggy said:

S&S ISA, but when do you foresee that you will spend this money? And then what will the ISA be invested in?  

A good question!!  Once things open up, we hope to be going on holidays and also some home improvements. 

 The S&S ISAs were set up via an IFA, and we each pay £250 per month into them, so may just leave that ticking along with the monthly payments. I thought that the DF Capital interest rate increase was a good sign, and we can access our funds giving 90 days notice.

MX5huggy

EP456 said:

MX5huggy said:

S&S ISA, but when do you foresee that you will spend this money? And then what will the ISA be invested in?  

A good question!!  Once things open up, we hope to be going on holidays and also some home improvements. 

 The S&S ISAs were set up via an IFA, and we each pay £250 per month into them, so may just leave that ticking along with the monthly payments. I thought that the DF Capital interest rate increase was a good sign, and we can access our funds giving 90 days notice.

Short term spends then, that account seems as good as anywhere then. The ISA is probably designed for a 5 plus year hold, and as it’s through an IFA probably expensive. 

bugbyte_2

MX5huggy said:

Short term spends then, that account seems as good as anywhere then. The ISA is probably designed for a 5 plus year hold, and as it’s through an IFA probably expensive. 

I would check the expense of that to see if it is worth it. As a bench mark Fidelity costs 0.35% pa + fund costs and LLoyds costs £40 pa plus fund costs  + £1.50 per fund trade.