Cash Ladder which bank

20122013

I have read as much as I can about savings accounts  and I would like to know whether my  plan for my 5 year cash ladder will work:

I have worked out the figures and the rest of my money will go into investment and that will be my next plan.  

I am expecting some income during the 5 year period so I can be flexible with 1 – 2 months longer fixed account

My 5 year cash ladder will start on 6 April each year

- Year 1 in a  easy access account ( I am thinking CHASE, ZOPA, SPRING etc)

- Year 2 in a 1 year fixed Savings account

- Year 3 in a 2 year fixed Savings account

- Year  4 in a 3 year fixed Savings account

- Year 5 in a 4 year fixed or another easy access and see this pot as an emergency although I have already budgets for repairs and maintenance in the cash ladder) or a P Bond?

 Also, If I can get the same saving rates would it make sense to split each year’s money into two different bank? Due to withdraw limit or cannot access account when I unexpectedly have to go abroad and unsure of the duration As I was not able to access my online Principality account whileI was outside the UK. I will still get the same interest but double the number of accounts I hold.

These are the accounts I have shortlisted, may I asked whether I have missed anything, I have chosen these as I have heard / have used them before:

- 1 year fixed 4.20% AER

Ends 03.12.26 NatWest 1 Year Fixed Term Savings Account Issue 264   (paid monthly)

Ends 03.12.26 Royal Bank of Scotland 1 Year Fixed Term Savings Account Issue 264  (paid monthly)

 - 2 year fixed 4.00% AER (paid annually)

NatWest 2 Year Fixed Term Savings Account Issue 265 (paid monthly)

Cambridge BS 2 Year Fixed Rate Bond (Issue 25)  (paid annually)

 - 26 month Fixed term 4.00% AER

Ends 31.08.27 Coventry BS HL Active Savings - 26 Month Fixed Term Deposit  (paid annually)

 - 3 year bond 4.25% AER

Close Brothers Savings Fixed Rate Bond (paid  yearly)

 - 3 year bond 3 year bond

National Savings & Investments NS&I Guaranteed Growth Bonds Issue 77  4.16%AER

(paid Anniversary)

 - 38 month Fixed term 4.00% AER (paid yearly) 

Term  31.08.28  Coventry BS HL Active Savings - 38 Month Fixed Term Deposit

Tempted to put year 1 - 3 in NS&I for peace of mind but all in one place?

NS&I British Saving Bond Rates
1yr 4.2%
2 yr 4.1%
3 yr 4.16%

  

masonic

With all interest taxable at maturity, NS&I might not be the way to go.

20122013

masonic said:

With all interest taxable at maturity, NS&I might not be the way to go.

Good thinking,

As 5 years is not long enough for investments, the other alternative is Premium Bond?

masonic

There are alternative fixes where interest is paid away to an external account annually. NS&I has a Guaranteed Income Bond variant where interest would be taxable annually.

20122013

masonic said:

There are alternative fixes where interest is paid away to an external account annually. NS&I has a Guaranteed Income Bond variant where interest would be taxable annually.

maybe better to use accounts that pays monthly interest which pays into an external account?  may be one of the above accounts that are not a NS&I?

DRS1

You might want to look at @silvermum's post near the end of this thread
The Top Fixed Interest Savings Discussion Area - Page 401 — MoneySavingExpert Forum

20122013

DRS1 said:

You might want to look at @silvermum's post near the end of this thread
The Top Fixed Interest Savings Discussion Area - Page 401 — MoneySavingExpert Forum

I am not getting what  masonic is trying to say : ' There are alternative fixes where interest is paid away to an external account annually. NS&I has a Guaranteed Income Bond variant where interest would be taxable annually.'

As I do not mind when and which of my bank account my interest is paid to.  Is it because NS&I will automatically deduct the tax on interest and I will have to claim it back?

DRS1

20122013 said:

DRS1 said:

You might want to look at @silvermum's post near the end of this thread
The Top Fixed Interest Savings Discussion Area - Page 401 — MoneySavingExpert Forum

re :Small prints ! appreciate the link and  I hope to not get caught out. 

I am not getting what  masonic is trying to say : ' There are alternative fixes where interest is paid away to an external account annually. NS&I has a Guaranteed Income Bond variant where interest would be taxable annually.'

As I do not mind when and which of my bank account my interest is paid to.  Is it because NS&I will automatically deduct the tax on interest and I will have to claim it back?

I think he is saying if you go for a 3 year Guaranteed Growth Bond where the interest is not available until the end of the three years then you will be taxed on all that interest in that third year (not one year's interest in year one the second year's in year two etc).  Unlike other institutions NS&I will report the interest to HMRC as all falling into the third year.

If you want to avoid that you could go for the Guaranteed Income Bond where you get the interest monthly and you get taxed on the interest for each tax year as it is paid out not all in one lump at the end. 

I hope that makes sense.

20122013

DRS1 said:

20122013 said:

DRS1 said:

You might want to look at @silvermum's post near the end of this thread
The Top Fixed Interest Savings Discussion Area - Page 401 — MoneySavingExpert Forum

re :Small prints ! appreciate the link and  I hope to not get caught out. 

I am not getting what  masonic is trying to say : ' There are alternative fixes where interest is paid away to an external account annually. NS&I has a Guaranteed Income Bond variant where interest would be taxable annually.'

As I do not mind when and which of my bank account my interest is paid to.  Is it because NS&I will automatically deduct the tax on interest and I will have to claim it back?

I think he is saying if you go for a 3 year Guaranteed Growth Bond where the interest is not available until the end of the three years then you will be taxed on all that interest in that third year (not one year's interest in year one the second year's in year two etc).  Unlike other institutions NS&I will report the interest to HMRC as all falling into the third year.

If you want to avoid that you could go for the Guaranteed Income Bond where you get the interest monthly and you get taxed on the interest for each tax year as it is paid out not all in one lump at the end. 

I hope that makes sense.

Appreciate your post. It makes sense now I do aim to minimise tax etc. - I will do some more reading.. as it helps. 

masonic

Yes, for multi-year fixes, choose an account that has interest paid to an external account if you want to make use of your Personal Savings Allowance across each year of the fix. Or choose an account that permits access during the term. Interest is only considered taxable by HMRC once it reaches an account upon which you are able to make withdrawals.

Ocelot

masonic said:

Yes, for multi-year fixes, choose an account that has interest paid to an external account if you want to make use of your Personal Savings Allowance across each year of the fix. Or choose an account that permits access during the term. Interest is only considered taxable by HMRC once it reaches an account upon which you are able to make withdrawals.

If only that were true in practice. I get taxed every year for multi-year fixed rate accounts, despite letters telling them so.