Cash ladder

20122013

I am planning my 5 year cash ladder and can lock this money in, from Year 2 to 5. As I have some emergency fund and investment if need be.

Atom Bank currently have some fixed rates (1 year is 4.4% AER) https://www.atombank.co.uk/savings/fixed-saver/

I was thinking of STMMS and gilts but have read some posts and it seems that the return or rates are about the same as fixed rate savings account. 

If that is the case I will opt opt for savings accounts and make all the deposit now before the next cut. 

I wonder how others have done their cash ladder or would like to share? 

GenX0212

Impossible to know unless you state approximately how much and what other income you have as savings interest is taxable 

DRS1

Yes think about tax.  Gilt ladders are preferred (outside a tax wrapper) because of the tax treatment (especially if you are a higher rate taxpayer).  And some people go for index linked gilts to maintain the value of money.

The problem with gilts is that you may find some gaps in your 5 years when there is no suitable gilt.

20122013

GenX0212 said:

Impossible to know unless you state approximately how much and what other income you have as savings interest is taxable 

- £125,000 for 5 year cash ladder

 - income (not in paid work but will have some saving interests - Looking to invest this money for minimum 10 years so hope to not incur any tax or CGT)

- I have sold my property (and that is not count as an income but have to pay CGT and also on a higher tax band)

GenX0212

20122013 said:

GenX0212 said:

Impossible to know unless you state approximately how much and what other income you have as savings interest is taxable 

- £125,000 for 5 year cash ladder

 - income (not in paid work but will have some saving interests - Looking to invest this money for minimum 10 years so hope to not incur any tax or CGT)

- I have sold my property (and that is not count as an income but have to pay CGT and also on a higher tax band)

If you do not have any income then you will be able to take advantage of the starter rate for savings giving you a personal tax allowance of £18570 before you start paying any tax on the interest. https://www.moneysavingexpert.com/savings/tax-free-savings/ anything above this you will pay 20% tax on.

£125000 4.4% aer will pay £5500 in interest in year 1

20122013

For 20% cash and 80% equity split, although it is my money, may I ask whether the '20% cash' includes my 5 year cash ladder? as I will also have one year emergency funds?