On improving notice-based (and fixed-term) savings accounts

sgog

Suppose that we have access to a X-days notice savings account.

I will describe a method for improving the flexibility of our savings and ask for comments.

The first observation is that, usually, there's no benefit from having a single investment.
If the minimum to open is £Y and we have £(Y*Z), we can open Z pots with £Y each. This allows us to pull out the money for just part of our savings when needed.
In many cases, Y=1, so if you have £10k for example, you can have 10k puts of 1£ each. It's often not necessary, but having X pots is beneficial, as I explain below.

Next, we observe that there is, usually, no penalty for giving our notice, getting the money, and re-investing it.
While rates can change, they can also change on notice accounts (usually with ~X days notice from the bank), so you don't actually lose much by opening the saving and restarting it. If anything, this lowers the risk of the rate going up just after you depositing the money and yields some average over the offered rates.
This allows us to give a notice for (1/X) of the saved sum each day. This means that if at some day we need the money, we can simply not re-deposit it that day (and we can re-balance the pots later.)

Togeter, this gives a saving strategy that allow you to pull 1/X of the money at each day, while still earning the notice-rate (which is often higher than easy access accounts).

Now some questions:

• Does anyone see any drawbacks with this strategy, compared with standard notice-based accounts?
• Are there any tools that allow one to automate such strategy?

Finally, I'll note that this is also somewhat applicable to fixed-term accounts. You can invest some money each day for, e.g., a year, into a 1-year saving account pots, and have some money accessible every day after the first year.

EthicsGradient

I think you're overcomplicating it. Most notice accounts (those that I have used) allow you to give notice on partial amounts in it, and also to have different notice periods running concurrently. So for a 90 day notice account, you can give notice on Jan 1st to withdraw, say, 30% of it, which will happen around April 1st (roughly), and give notice on Feb 1st for, say, another 25%, which will happen on May 1st, another notice on Mar 1st which will happen on June 1st, and so on. And some, at least, allow you to cancel a notice to withdraw, which means you don't have to do your redepositing thing.

You can't, of course, give notices to withdraw a combined amount more than is currently in an account.

But I think this all give you the flexibility you want, but in one account. Perhaps they might look askance at 90 daily notices to withdraw, but I have used 3 concurrent monthly ones.

sgog

EthicsGradient said:

I think you're overcomplicating it. Most notice accounts (those that I have used) allow you to give notice on partial amounts in it, and also to have different notice periods running concurrently. So for a 90 day notice account, you can give notice on Jan 1st to withdraw, say, 30% of it, which will happen around April 1st (roughly), and give notice on Feb 1st for, say, another 25%, which will happen on May 1st, another notice on Mar 1st which will happen on June 1st, and so on. And some, at least, allow you to cancel a notice to withdraw, which means you don't have to do your redepositing thing.

You can't, of course, give notices to withdraw a combined amount more than is currently in an account.

But I think this all give you the flexibility you want, but in one account. Perhaps they might look askance at 90 daily notices to withdraw, but I have used 3 concurrent monthly ones.

Why do it monthly? What if you don't want to wait until the 1st to access (part of) the money?
What's the drawback of doing it daily? (And if possible, automatically).

AmityNeon

You're free to give notice every day for {1/X} of your savings for your X-notice accounts, but you won't find an automated solution for this. It's also not a suitable replacement for Easy Access savings; giving notice every 5 days on Zopa Boosted pots is better as you can access the entire balance every 5 days whilst still earning the 95-day notice rate.

sgog

AmityNeon said:

You're free to give notice every day for {1/X} of your savings for your X-notice accounts, but you won't find an automated solution for this. It's also not a suitable replacement for Easy Access savings; giving notice every 5 days on Zopa Boosted pots is better as you can access the entire balance every 5 days whilst still earning the 95-day notice rate.

Thanks for the comment.
I agree that this is not a replacement for easy access solutions; I just wonder if that's not a solution that's strictly better than "standard" notice accounts.

Given that some accounts, e.g., like Zopa, allow you to do this, why can't it be automated?
Is there something in their terms that prevents one from writing such automation?

AmityNeon

sgog said:

AmityNeon said:

You're free to give notice every day for {1/X} of your savings for your X-notice accounts, but you won't find an automated solution for this. It's also not a suitable replacement for Easy Access savings; giving notice every 5 days on Zopa Boosted pots is better as you can access the entire balance every 5 days whilst still earning the 95-day notice rate.

Thanks for the comment.
I agree that this is not a replacement for easy access solutions; I just wonder if that's not a solution that's strictly better than "standard" notice accounts.

Given that some accounts, e.g., like Zopa, allow you to do this, why can't it be automated?
Is there something in their terms that prevents one from writing such automation?

You won’t find an automated solution because it’s a very niche practice; feel free to write one for yourself.

refluxer

sgog said:

Thanks for the comment.
I agree that this is not a replacement for easy access solutions; I just wonder if that's not a solution that's strictly better than "standard" notice accounts.

But your proposal doesn't really involve anything new as such, unless I'm missing something ? You're just having to open a huge number of notice accounts, rather than just opening the one and giving notice on individual amounts. 
 
Your approach is only really do-able with providers like Zopa, due to their 'pot' system meaning that you don't have the hassle of creating multiple different accounts (each with their own account details) - if using a notice account provider other than Zopa, the drawback to your strategy would be the unbelievable amount of time, admin and hassle it would take to open individual accounts at the rate you're talking about. I doubt even the most committed MSE forumite would ever contemplate opening any savings account on a daily basis for a whole year

sgog said:

Given that some accounts, e.g., like Zopa, allow you to do this, why can't it be automated?
Is there something in their terms that prevents one from writing such automation?

As the only way you'd be able to do this would be to hack Zopa's banking app, then yes - I would imagine that's against their T&Cs !