Savings advice needed

wottanutta

Hi! 

Looking for advice on what to do with my savings. 

I'm looking to buy a house within next 18 months or so. I currently deposit £200 into the H2B ISA and I've maxed out my S&S ISA (leaving room for £2400 H2B ISA contributions throughout the tax year). 

What I'm asking for advice on is what to do with the rest of my cash? At current rates I'll go beyond by yearly personal savings allowance of £1000 as a basic rate tax payer.

Do I just have to bite the tax on those savings or is there something else I could be doing to avoid it? Other than obviously buying a house earlier or some other asset - which may be sound advice but not something I'm looking to do just yet.

eskbanker

There aren't many opportunities to avoid tax for savings (needed in the short term) once you've used up your annual ISA allowance - premium bonds are a possibility but returns are variable and unlikely to be beneficial unless/until building up a sizable holding.

However, the best approach is generally to maximise net return rather than trying to avoid tax as such, so chances are you'd benefit most from regular savers and other taxable accounts anyway.

Are you using low-risk investments within your S&S ISA, as investing would typically only be recommended for long term money rather than that needed within a year or two?

wottanutta

eskbanker said:

There aren't many opportunities to avoid tax for savings (needed in the short term) once you've used up your annual ISA allowance - premium bonds are a possibility but returns are variable and unlikely to be beneficial unless/until building up a sizable holding.

However, the best approach is generally to maximise net return rather than trying to avoid tax as such, so chances are you'd benefit most from regular savers and other taxable accounts anyway.

Are you using low-risk investments within your S&S ISA, as investing would typically only be recommended for long term money rather than that needed within a year or two?

Thanks. I thought this was the case but thought it'd be worth double checking incase I was missing anything obvious. 

& yeah I'm entirely in index funds, 80/20 split between US & World funds. I shouldn't need the money in there when it comes to buying a house but depending on how it's performing when I do pull the trigger I may end up doing so. 

Thanks again!

eskbanker

wottanutta said:

eskbanker said:

There aren't many opportunities to avoid tax for savings (needed in the short term) once you've used up your annual ISA allowance - premium bonds are a possibility but returns are variable and unlikely to be beneficial unless/until building up a sizable holding.

However, the best approach is generally to maximise net return rather than trying to avoid tax as such, so chances are you'd benefit most from regular savers and other taxable accounts anyway.

Are you using low-risk investments within your S&S ISA, as investing would typically only be recommended for long term money rather than that needed within a year or two?

Thanks. I thought this was the case but thought it'd be worth double checking incase I was missing anything obvious. 

& yeah I'm entirely in index funds, 80/20 split between US & World funds. I shouldn't need the money in there when it comes to buying a house but depending on how it's performing when I do pull the trigger I may end up doing so. 

Thanks again!

Not sure about 'yeah' - index funds don't sound particularly low-risk, but it obviously depends exactly which indexes you're tracking.

If you're committing the bulk of your money to products that you don't anticipate needing to support your house purchase then that does put a rather different perspective on your situation!

Eyeful

Basic Rule of thumb
1. Use tax shelters where you can.
2. Cash ISA's for money needed within 5 years
3. S&S ISA's  into investments you are not going to touch for at least 5 years (longer the better).
4. Pensions for very long term investments.

5. Anything to do with money has risk attached. Example:
Money in savings accounts covered by the FSCS Savings Protection up to £85k is at the risk of inflation, which at times can be high.
RPI 1948-2025: https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/czbh/mm23

6. To better understand the risk you have taken on with your index funds, watch this:

https://www.youtube.com/watch?v=lGQ9KyQq8Jw

wottanutta

Thanks again - I am well versed on everything stocks wise, as I said I don't need the money held there for anything anytime soon. Would only use it depending on performance. 

Was just posting here on the off chance I was missing something for my cash savings, but that doesn't seem to be the case - as expected! 

Appreciate the responses.