5 Year Savings - Opinions?

Ratewatcher

Hi Rheumatoid - can I ask when the accounts were approved e.g what date did you receive your account details? 

Rheumatoid

Ratewatcher said:

Hi Rheumatoid - can I ask when the accounts were approved e.g what date did you receive your account details? 

within minutes of opening

Dave_5150

ChilliBob said:

If my maths is correct, with yearly interest, and compounding, a full 85k in a 5% account would net you:

23,483.93

You haven't factored in for tax, which may be correct depending on your circumstances. As a basic rate taxpayer I calculate that my interest on £85,000 would be £18,987.15 after PSA and tax. 

I'd also split the £85k to avoid having more than the protected amount in any one account.

ChilliBob

Albermarle said:

Perhaps I should do something along the lines of 20% of savings in 5 years, 40% in 1 years and 40% in easy access.

As RobM99 suggested , some in the middle with a 3 year fix as well ?

Yeah perhaps, was just an idea at this stage as opposed to concrete allocations but makes sense

Don't want to lock away too much in case of some sort of very good index buying opportunities crop up! 

ChilliBob

janusdesign said:

ChilliBob said:

If my maths is correct, with yearly interest, and compounding, a full 85k in a 5% account would net you:

23,483.93  Over the whole period (which you could spread out over tax years as it's paid yearly in most cases).

if you had £85k in just one 5-year fixed account, you might want to think about having the interest paid away to keep you within the FSCS limit - otherwise you could end up, if the bank went bust in year 4 or 5, of losing £20k+ in interest... not a pleasant thought!

no compounding would bring in £4,250 per year (£21,250 for 5 years) in interest - so £2k less over the 5-year period... then it's just a case of working out if the extra £2k is worth the risk of letting it compound in the one account.

the safer way, if you were going to put £85k away for 5 years, would be to split it between banks (with separate FSCS) - I know Secure Trust & Tandem are offering 5% to new customers, so £42.5k in each, compounded over 5 years, should net you around £12k in each account and keep you well within FSCS limits if you needed to open other accounts with them.

there's nothing to stop you opening, but not yet funding, these accounts today - you would have plenty of time to fund the accounts (30 and 14 days respectively)... then perhaps wait until after the Budget on Thursday morning, see if you think that's going to have any impact on your cash needs for the forthcoming period, and then decide whether to fund the accounts accordingly... same would apply for other year fixes too.

Thank you, that's a very useful response. I tend to not worry too much if I were to go a smidgen over the 85k limit, but yeah, 20+k isn't a smidgen! 

Band7

ChilliBob said:

janusdesign said:

ChilliBob said:

If my maths is correct, with yearly interest, and compounding, a full 85k in a 5% account would net you:

23,483.93  Over the whole period (which you could spread out over tax years as it's paid yearly in most cases).

if you had £85k in just one 5-year fixed account, you might want to think about having the interest paid away to keep you within the FSCS limit - otherwise you could end up, if the bank went bust in year 4 or 5, of losing £20k+ in interest... not a pleasant thought!

no compounding would bring in £4,250 per year (£21,250 for 5 years) in interest - so £2k less over the 5-year period... then it's just a case of working out if the extra £2k is worth the risk of letting it compound in the one account.

the safer way, if you were going to put £85k away for 5 years, would be to split it between banks (with separate FSCS) - I know Secure Trust & Tandem are offering 5% to new customers, so £42.5k in each, compounded over 5 years, should net you around £12k in each account and keep you well within FSCS limits if you needed to open other accounts with them.

there's nothing to stop you opening, but not yet funding, these accounts today - you would have plenty of time to fund the accounts (30 and 14 days respectively)... then perhaps wait until after the Budget on Thursday morning, see if you think that's going to have any impact on your cash needs for the forthcoming period, and then decide whether to fund the accounts accordingly... same would apply for other year fixes too.

Thank you, that's a very useful response. I tend to not worry too much if I were to go a smidgen over the 85k limit, but yeah, 20+k isn't a smidgen! 

Have you factored in that you could put £80k - £100k into ISAs over the next 5 years? Assuming the Chancellor doesn't trash the £20k allowance.

ChilliBob

Band7 said:

ChilliBob said:

janusdesign said:

ChilliBob said:

If my maths is correct, with yearly interest, and compounding, a full 85k in a 5% account would net you:

23,483.93  Over the whole period (which you could spread out over tax years as it's paid yearly in most cases).

if you had £85k in just one 5-year fixed account, you might want to think about having the interest paid away to keep you within the FSCS limit - otherwise you could end up, if the bank went bust in year 4 or 5, of losing £20k+ in interest... not a pleasant thought!

no compounding would bring in £4,250 per year (£21,250 for 5 years) in interest - so £2k less over the 5-year period... then it's just a case of working out if the extra £2k is worth the risk of letting it compound in the one account.

the safer way, if you were going to put £85k away for 5 years, would be to split it between banks (with separate FSCS) - I know Secure Trust & Tandem are offering 5% to new customers, so £42.5k in each, compounded over 5 years, should net you around £12k in each account and keep you well within FSCS limits if you needed to open other accounts with them.

there's nothing to stop you opening, but not yet funding, these accounts today - you would have plenty of time to fund the accounts (30 and 14 days respectively)... then perhaps wait until after the Budget on Thursday morning, see if you think that's going to have any impact on your cash needs for the forthcoming period, and then decide whether to fund the accounts accordingly... same would apply for other year fixes too.

Thank you, that's a very useful response. I tend to not worry too much if I were to go a smidgen over the 85k limit, but yeah, 20+k isn't a smidgen! 

Have you factored in that you could put £80k - £100k into ISAs over the next 5 years? Assuming the Chancellor doesn't trash the £20k allowance.

Thanks, for this, no I hadn't 100% factored it in. I was more thinking of using the easy access cash for that, but thanks for mentioning -

I need to factor in 20 for me, 20 for wife, and (all being well, 9 twice for each child). Some may come from cash, and I guess some may come from selling out of the GIA and going back into the ISA. 

Certainly something to ponder and throw some different scenarios into another spreadsheet