Best saving/investment account

paulbarette

Hi All

I'm after some advice on what would be best for my savings each month to increase my deposit for a house when I want to upsize from a flat in 3 or so years. Currently I am in a 2 bed flat with 3 kids who share a room, and by this time the eldest will need to be having her own room, hence the need to upsize. It's going to be difficult with the affordability limit so we really need to be saving and making our money work for us as well as we can with low risk.

Currently I own shares in very good Diabetes pharma companies which have made a profit of 250% in the few years that I have had them and are valued at £7600. 

I dabbled with crypto but have learnt of the volatile nature of those and wouldn't want to risk anything more on those. Currently I have about £1000 with those and will await the next 3 years to see if those come back up after the last year or two of lows. 

I bank with First Direct and see that they have a regular saver account which gives 7% AER and can save between £25-£300 per month.

I am aware of ETFs which sounds intriguing but obviously there is some risk to those and would saving for only 3 years in one be too short-a-time?

I have just downloaded the plum app to automatically put some money away but thinking I should be transferring some of this into one of the above or similar - does anyone have any suggestions or advice, or other accounts that would be more beneficial?

I wouldn't be using this money for anything other than the house deposit so it can be locked away for 3 years.

Really looking forward to the replies!

Many thanks

Paul Barette

artyboy

3 year timeframe = savings, not investments, unless you are really prepared to gamble that you'll end up with less than you have now. In which case you are trading/speculating and NOT investing.

So - 2/3 year fixed rate savings bond is your most likely appropriate option.

Middle_of_the_Road

You don't say if your present flat is rented or owned. If this will be your first property purchase, you would benefit from opening a Lisa (Lifetime ISA) You can save up to £4,000 a year in it, and the gov't will top that up to £5K.

The FD regular saver would be a good place to put any surplus savings, and also fixed bonds, as mentioned above.

Albermarle

Currently I own shares in very good Diabetes pharma companies which have made a profit of 250% in the few years that I have had them and are valued at £7600. 
Holding individual company shares is seen as at the pretty high end of the risk spectrum, along with crypto. In both cases you can make a big profit or a big ( even total ) loss. 
You should consider selling them, taking the profit ,  and adding the money/profit to your house upsizing fund.
I am aware of ETFs which sounds intriguing but obviously there is some risk to those and would saving for only 3 years in one be too short-a-time?

ETF's are just one way of investing in collective investments ( means not just one or two shares but hundreds). I would say they are a bit boring rather than intriguing. The main point is that the key to successful investing is that it has to be for the long term. Means 5 years minimum, ideally more than 10 years
Usually the best way to invest long term is via a pension due to the tax advantages.

Band7

If your major goal is to have more cash for upsizing in 3 years time, you are best advised to stay clear of any further investments and any crypto gambling. Stick with savings accounts, and make sure you avoid paying tax on the interest (ISAs, savings in partner‘s name)

Regular Savers like the FD one you mention are ideal for ongoing savings. There are also First Home savers though you might not qualify if you aren‘t a First Time Buyer.  Any larger amounts you have already should go into fixed term or notice accounts. You can find a plethora of accounts on https://moneyfacts.co.uk/savings-accounts/fixed-rate-bonds/

I noticed you don‘t mention an emergency cash fund - if you don‘t have one, now might be a good time to set one up. Worth having a read of the MSE Savings blogs, too. https://www.moneysavingexpert.com/savings/

paulbarette

Hi Guys

Thanks for the replies. 

A 2-3 year fixed rate savings bond - how does this differ to the FD regular saver? I understand the money would be locked for the 2-3 years which is fine - but is the FD regular saver at 7% going to get me more interest or is it likely that the rate will drop below the fixed rate bond within the 3 years?

The flat I am in is my first owned property. So I used my LISA for the deposit. My partner who is not on the mortgage though has opened one and is saving in that as I believe she will be able to use it for a joint mortgage when we upsize?

The shares I have are in 2 companies that I have good knowledge in. Whilst I am no expert and understand the risk that shares pose, I am happy to hold these for another 3 years before selling and adding to the deposit. For info the shares are in Dexcom and Insulet.

The crypto I am certainly more up for selling, but as they have gone down from when I purchased, again I am willing to risk the next year or two and sell when they are nearing towards what I paid (fully understand that might not happen).

Band7

The FD RS matures after 12 months, and the max you can put in is £300/mth. At maturity, you need to find a new home for your balance incl. interest earned. There might be another FD RS available at the time, but you'd start again with max £300 a month.

A fix term account matures after 6, 9, 12, 18, 24, 36, 48, 60 or more months, and you can deposit as much as £1m or more in some of them (though obvs you’d not want to go above the £85k FSCS limit per person). You usually have a short deposit window only, say 14 days from opening.

Great news that your partner is FTB and can benefit from a LISA, and possibly also FTB Regular Savers, like the Principality one. Though none of them currently beat the FD or Natwest/RBS or Club Lloyds RS.

Another option for making some extra money is current account switching (using donor/burner accounts, not your main accounts). Between you and your partner, you could potentially make £2k over the next 12 - 18 months - easily beating interest you can earn, though requires a bit of work and being organised. Also requires decent credit files but I assume you have these. Hop over to the Banking board for more info.

Understand you don‘t want to sell your crypto whilst they are down. Just expect they‘ll go down further. And really do consider liquidising your shares whilst you are ahead

Middle_of_the_Road

Band7 said:
 And really do consider liquidising your shares whilst you are ahead

Good advice, if not all of them, maybe enough to cover your initial investment.

paulbarette

Another option for making some extra money is current account switching (using donor/burner accounts, not your main accounts). Between you and your partner, you could potentially make £2k over the next 12 - 18 months - easily beating interest you can earn, though requires a bit of work and being organised. Also requires decent credit files but I assume you have these. Hop over to the Banking board for more info.

This is very interesting! Would this not have an effect on mortgage applications? I'll check over on the banking boards but if you could link me any particular threads that you would recommend it would be greatly appreciated!

Middle_of_the_Road

Four banks for you, with offers on now..

Best bank accounts: Up to £200 to switch or up to 7% interest - MSE (moneysavingexpert.com)

Any record of hard searches on your credit file will have cleared by the time you apply for a mortgage.

jimjames

paulbarette said:

I have just downloaded the plum app to automatically put some money away but thinking I should be transferring some of this into one of the above or similar - does anyone have any suggestions or advice, or other accounts that would be more beneficial?

I wouldn't bother with things like Plum, just use the highest paying ISAs and savings accounts that you can find and switch them if the rates drop. Plum seems a bit of a gimmick when you can use proper savings and regular savers instead. Setup a standing order on payday to move money into a savings account that's automatically put money away without the need for something like plum.