Some of the fixes pay monthly interest out to another account. I am also nervous about locking money away - not sure what I think I might need it for, but I can't quite shake the feeling - I've lived a long time hand to mouth without any money, so it's hard to let go of what I now have - it's come at a very high price.
So what I've done is split the difference and taken different term fixes, but which pay interest monthly. You take a slight hit on the interest on what perhaps aren't the highest rate payers in the first place, but by paying the interest monthly into another easy access account, which then compounds a little, the original principle stays locked away, but I get some back in a form that I can get at, should the need arise. On my own savings, the difference worked out at less than £100 per year and that's worth it for me for this particular arrangement. Maybe in time when I get used to this lark, I'll be bolder in my choices, but being a bit of a wuss, this suits me personally.
I also would put 20k in an ISA this year and another 20k into an ISA next year so they are out of HMRC sight and you still earn some interest on it and in an absolute emergency you have access to the funds and "just" have to accept the interest penalty for fixes.
The remaining pot I would split.
- Put some in an easy access for daily availability, maybe 5k or whatever gives you enough comfort - Put some into fixed savers, you can still vary them. E.g. 6, 9 and 12 month fixes or even longer so you know that some cash becomes available every few months, should you need it or for comfort. You can use fixes with monthly interest payment so you spread interest (some falls still in this and some into next financial year). You kind of maximise your PSA with this approach. - Some budget I would put into various regular savers and drip feed them from instant access (5k emergency easy access and maybe 5-8k reg savers, depending how many you are willing to open). They offer on first sight high rates but as you can put only smaller amounts in it, it can take a while to maximise their potential. Many reg savers allow instant access as well.
Some of the budget I would put in what I call a "memory investment". This is basically money you use for holidays as you invest in memories and special moments :-) Best and long lasting ROI in my opinion.
Some of the fixes pay monthly interest out to another account. I am also nervous about locking money away - not sure what I think I might need it for, but I can't quite shake the feeling - I've lived a long time hand to mouth without any money, so it's hard to let go of what I now have - it's come at a very high price.
So what I've done is split the difference and taken different term fixes, but which pay interest monthly. You take a slight hit on the interest on what perhaps aren't the highest rate payers in the first place, but by paying the interest monthly into another easy access account, which then compounds a little, the original principle stays locked away, but I get some back in a form that I can get at, should the need arise. On my own savings, the difference worked out at less than £100 per year and that's worth it for me for this particular arrangement. Maybe in time when I get used to this lark, I'll be bolder in my choices, but being a bit of a wuss, this suits me personally.
Sometimes it’s worth sacrificing a few £s for peace of mind.
Replies
The remaining pot I would split.
- Put some in an easy access for daily availability, maybe 5k or whatever gives you enough comfort
- Put some into fixed savers, you can still vary them. E.g. 6, 9 and 12 month fixes or even longer so you know that some cash becomes available every few months, should you need it or for comfort. You can use fixes with monthly interest payment so you spread interest (some falls still in this and some into next financial year). You kind of maximise your PSA with this approach.
- Some budget I would put into various regular savers and drip feed them from instant access (5k emergency easy access and maybe 5-8k reg savers, depending how many you are willing to open). They offer on first sight high rates but as you can put only smaller amounts in it, it can take a while to maximise their potential. Many reg savers allow instant access as well.
Some of the budget I would put in what I call a "memory investment". This is basically money you use for holidays as you invest in memories and special moments :-) Best and long lasting ROI in my opinion.