Would you grab a 2 year bond @ 6.17%?

adindas

Brie said:

adindas said:

Not for me. 

As long as I could still easily get easy access saving paying 6%+.

For two year I would rather put in into SIIP and get top up 25%. Not to mention the index is yet to reach the ATH.

What's the ATH?

All time high

jaypers

Yes, I think that’s a good 2 year rate and would take that if offered. 

soulsaver

If you have to pay tax on your savings interest, a 2 year fix at, say, 5.5% ISA is worth unwrapped 6.875% at BR tax..

kjs31

I think it’s a good option but you need to consider the tax position as all of the interest will be paid in one go. What will your earnings be like in 2 years? Will you be in a higher tax bracket then or will the interest push you into a higher tax bracket? 

tetrarch

Personally, I'd take the 2-year. In My Very Personal Opinion overnight rates have peaked and this is the highest rates we will see for a long time

Regards

Tet

sparkiemalarkie

adindas said:

Not for me. 

As long as I could still easily get easy access saving paying 6%+.

For two year I would rather put in into SIIP and get top up 25%. Not to mention the index is yet to reach the ATH.

Would you be kind enough to explain your SIIP 'tactics' please ?

Would this be with HL and left in cash?

tia

sx

adindas

sparkiemalarkie said:

adindas said:

Not for me. 

As long as I could still easily get easy access saving paying 6%+.

For two year I would rather put in into SIIP and get top up 25%. Not to mention the index is yet to reach the ATH.

Would you be kind enough to explain your SIIP 'tactics' please ?

Would this be with HL and left in cash?

tia

sx

https://www.moneysavingexpert.com/savings/cheap-sipps/#whatisaSIPP
It is general SIIP rule up to your SIIP allowance, everyone will automatically get to up 25% in the tax years in question. I am not quite sure if this is what you are asking for.

Not all will need to go to Funds, Stocks, Bonds (my least preference). You still earn interest in your cash in SIIP but much less than if you put into high interest saving in some platforms. For that reason it is the best interest to put it into high interest saving account first until the very last day of the new tax year before transferring to SIIP.

I typically put it in the high interest saving account lasting maximum for one year or less and preferably notice and easy access account. But I do not have a lot of free cash each to put into SIIP anyway. I did time the market, most of them are going to Index and well known funds using manual enhanced DCAs in SIIP. 

vic_sf49

Just went to apply for that, but it looks like it's only for customers with maturing bonds.

Ah well. 

caper7

kjs31 said:

I think it’s a good option but you need to consider the tax position as all of the interest will be paid in one go. What will your earnings be like in 2 years? Will you be in a higher tax bracket then or will the interest push you into a higher tax bracket? 

I've seen this mentioned recently in another thread.
I've never had a two year bond that paid out just at the end, I've always picked yearly interest paid back into the bond.
So while I can't touch the interest, it's paid out yearly and I've declared it in my tax return as such.
This bond the choice is yearly or monthly interest paid back in or out to another account.
That said, I appreciate the heads up as it's something I've not considered before and clearly must happen with some products.

caper7

soulsaver said:

If you have to pay tax on your savings interest, a 2 year fix at, say, 5.5% ISA is worth unwrapped 6.875% at BR tax..

I haven't done this year's ISA yet, so that is something to weigh up.
Been wondering whether to take some money out of premium bonds for that so maybe I can do both. So hard to tell what to do with the premium bonds at the moment as I've had a bit of a better run than previously and of course they're tax free and easy access. Thought they were definitely worth it when interest rates on some of my savings were 0.05%, just one £25 win was probably better than anything else. But now.... ?