Need advice re: savings accounts

nina_c

Hi all,

I’m 23 and work full-time and I’m looking to save about £1,000 a month for the next 3 months and thereafter it will probably go up to about £2,000 a month until September 2004. I would try and save more but have already taken out £750 for rent and £450 for monthly travel card and put aside £200 for food/bills etc.

What I need to know is what is the best savings account for me to put my money into? I have heard of ISA’s but know very little info about them. How much interest on the money would I be looking at per annum? I don't want to get involved in stocks/shares as I just don't trust them. Also what would be best if I wanted an account where I could withdraw if and when necessary as opposed to an account where I don’t touch the money at all? I am going to uni next year and am saving this money to cover my expenses. Do you think it is enough? ???

dunstonh

you have a cash isa available which allows £3000 a year so that wouldnt last you long.

You also have equity maxi isas available as an alternative to the above which allow £7000 a year. Just because it says equity, it doesnt mean you have to invest in stockmarkets. You also have gilts, fixed interest, index linked and corporate bond funds available for those that dont want stockmarket risk.

Rafter

I'd use an ISA for the first £3000 and then just a normal savings account. If you want access to your money within 12 months there aren't really any other tax efficient things you can use. National Savings do 3 year tax free certificates but you wouldn't be able to access the funds for 3 years.

Only other trick might be if your parents or other family have a flexible mortgage. You offset your savings against their mortgage and they gift you the interest they save, which might be more than you could get elsewhere. A bit complicated though.

I think the Woolwich offer such a 'family' offset arrangement on their Openplan products.

As to whether this in enough to cover your expense consider a few things:

Can you realistically save that much per month? £200 isn't a lot to cover bills, entertainment, clothes etc.

Do you want to do part time work while at university? If you have been working and it is a low intensity course (ie not science or engineering) you will probably only have 10-15 hours of lectures a week.

How comfortable are you with debt? Student loans are very good value (inflation only) although not sure what the rules are for 'mature students' (apologies but that is the correct term - just doesn't seem very polite when you are only 23!)

If you save what you say and manage to earn 4% after tax you would save £19,000 and earn £350 in interest by september next year (although you would earn a further £1000 in interest as you draw down your savings while at uni)

If you are on a 3 year course (33 months) that would give you an income per month of £600 which is pretty good for a student.

If you realistically can only save £1000 a month you would then need to make up the difference through a part time job or through a student loan to be repaid after graduation.

Hope that all helps.

R

nina_c

Thank you both for your replies

Rafter I am not in contact with any of my so-called family so that off-setting the mortgage is not an option unfortunately. As to whether I can save that much, the answer is yes because my partner is supporting me/us and the £200 really is only as a back-up for spare cash. I will be working part-time whilst studying so I'm not totally relying on my savings. I am not very comfortable with debt, my first time round at uni I got into about £5 grand’s worth of debt and hated it. I’m going back to continue with post-grad studies.

Thanks for your help once again