What to save, how to save it?

Sweeney1

I have a small private pension and later this year will start to receive state pension. This will make my income before tax around £16,400. I have savings earning almost nothing in Natwest of 150k  I think I'd be ok locking away 50k for 5 yrs in a high-risk account and potentially other, smaller amounts for shorter periods, leaving myself accessible, just in case money.  I'd be interested in knowing if this is a reasonable plan? Is there any advice about how often to draw down interest in order to minimise tax?

Bigwheels1111

First hit your self in the head with a hammer as a wake up call.

£2170 of interes should be tax free with your figures next year.

As you state pension goes un you will get less tax free income each year.

So 20K in an ISA now. 20K in an ISA 6/4/24 will help a lot.

Long term fixed is the way I went with annual pay out to my bank.

You will pay tax either way.

Chip easy acces is great at 4.21%, near instant deposits and withdrawls. App only.

80k Chip, 20 ISA, 50k fixed for 5 years.

But paying tax means you have earned interets unlike the last few years.

Somthing is better than nothing.

Easy access, click on rate order.

https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?quick-links-first=false

Fixed, make sure interest is paid away.

https://moneyfactscompare.co.uk/savings-accounts/fixed-rate-bonds/?quick-links-first=false

ISA

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false

These are the best rates so far today.

80k Chip = £3368 if rates stay the same for a year

50k United trust bank = £2810 per year.

20K Furness ISA 3 year = £1030 per year

Tax on the interest of £6178 = £1235.60

Plus what you owe on your pension.

Richard1212

Sweeney1 said:

I have a small private pension and later this year will start to receive state pension. This will make my income before tax around £16,400. I have savings earning almost nothing in Natwest of 150k  I think I'd be ok locking away 50k for 5 yrs in a high-risk account and potentially other, smaller amounts for shorter periods, leaving myself accessible, just in case money.  I'd be interested in knowing if this is a reasonable plan? Is there any advice about how often to draw down interest in order to minimise tax?

Your £150k is the foundation of your financial status but you are wasting its potential. You need to get it all out of NatWest straightaway. Given that it's all you have in savings, I'd stay away from a "high risk account". Assuming you have no foreseeable major expenditure on the horizon ( new car, new extension, new house etc etc), I'd keep £30k in an online easy savings account ( any specialist bank such as Shawbrook, Paragon, etc, ---not a Bldg Soc) currently offering interest rate around the 4% mark. Then £20,000 in an ISA for 2023/24. Add the additional £100,000 to ISAs in £20k increments each financial year for 5 years commencing April 2024----and , in the meantime, keep half of remainder in fixed term bonds as close to 6% as possible and the other half in any fixed rate savings accounts that are above 5%. You'll notice a big difference when your State Pension arrives and you'll no doubt have a lot more money to spend or save each month. Best of luck.

Sweeney1

Thanks do far! I didn't mean high risk!!!! Definitely low risk!

Sweeney1

Richard1212 said:

Sweeney1 said:

I have a small private pension and later this year will start to receive state pension. This will make my income before tax around £16,400. I have savings earning almost nothing in Natwest of 150k  I think I'd be ok locking away 50k for 5 yrs in a high-risk account and potentially other, smaller amounts for shorter periods, leaving myself accessible, just in case money.  I'd be interested in knowing if this is a reasonable plan? Is there any advice about how often to draw down interest in order to minimise tax?

Your £150k is the foundation of your financial status but you are wasting its potential. You need to get it all out of NatWest straightaway. Given that it's all you have in savings, I'd stay away from a "high risk account". Assuming you have no foreseeable major expenditure on the horizon ( new car, new extension, new house etc etc), I'd keep £30k in an online easy savings account ( any specialist bank such as Shawbrook, Paragon, etc, ---not a Bldg Soc) currently offering interest rate around the 4% mark. Then £20,000 in an ISA for 2023/24. Add the additional £100,000 to ISAs in £20k increments each financial year for 5 years commencing April 2024----and , in the meantime, keep half of remainder in fixed term bonds as close to 6% as possible and the other half in any fixed rate savings accounts that are above 5%. You'll notice a big difference when your State Pension arrives and you'll no doubt have a lot more money to spend or save each month. Best of luck.

Thank you!  I don't know anything about bonds so will look into this. If I can find good rate, fixed term Is a I'm going to do this asap!

Beddie

Sweeney1 said:

Richard1212 said:

Sweeney1 said:

I have a small private pension and later this year will start to receive state pension. This will make my income before tax around £16,400. I have savings earning almost nothing in Natwest of 150k  I think I'd be ok locking away 50k for 5 yrs in a high-risk account and potentially other, smaller amounts for shorter periods, leaving myself accessible, just in case money.  I'd be interested in knowing if this is a reasonable plan? Is there any advice about how often to draw down interest in order to minimise tax?

Your £150k is the foundation of your financial status but you are wasting its potential. You need to get it all out of NatWest straightaway. Given that it's all you have in savings, I'd stay away from a "high risk account". Assuming you have no foreseeable major expenditure on the horizon ( new car, new extension, new house etc etc), I'd keep £30k in an online easy savings account ( any specialist bank such as Shawbrook, Paragon, etc, ---not a Bldg Soc) currently offering interest rate around the 4% mark. Then £20,000 in an ISA for 2023/24. Add the additional £100,000 to ISAs in £20k increments each financial year for 5 years commencing April 2024----and , in the meantime, keep half of remainder in fixed term bonds as close to 6% as possible and the other half in any fixed rate savings accounts that are above 5%. You'll notice a big difference when your State Pension arrives and you'll no doubt have a lot more money to spend or save each month. Best of luck.

Thank you!  I don't know anything about bonds so will look into this. If I can find good rate, fixed term Is a I'm going to do this asap!

Bigwheels above posted some good links to Moneyfacts, where you can check out the best rates. You'll feel much better once you've sorted all of this out.