Investment & Bank Account Advice

TurnerUKTA

Hi,

At the moment i have roughly £7k in a Halifax current account.

My wages are paid into this account and all of my bills come out of this account.

On the £7k, all i receive in interest is between £6-£7 a month.

I am willing to invest £5k or maybe a little more, on what people could recommend.

Also, if i was to change my current account could i possibly make more interest, or the figure i am receving at the moment seem reasonable for whats on offer at the moment?

Any help / advice will be appreciated.

Thanks - Chris

nrsql

Have a look for an internet saver account. The web saver looks like the one.
You can probably transfer money between the current account and saver account on-line instantly (check if this is the case). Then you just keep a minimum amount in the curent account depending on how often you check the balance.

dunstonh

I am willing to invest £5k or maybe a little more, on what people could recommend.

Investment options are probably somewhere in the tens of thousands of things available. you are going to have to narrow down what you are looking for. Things like timescale, risk profile, tax situation (now and future), accessibility etc.

Typically, with 7k you would utilise a MAXI ISA before anything else and then pick the investments you want to put inside of it.

TurnerUKTA

Well if i was wanting to access it, i would say 2 to 3 years wouldn't be a problem.

I was thinking maybe £3k in an ISA and the other £2k on what ever, maybe shares or something which there is a risk.

Ideally i would be looking to put maybe atleast £300 a month into something aswell.

Aegis

TurnerUKTA wrote: »

Well if i was wanting to access it, i would say 2 to 3 years wouldn't be a problem.

I was thinking maybe £3k in an ISA and the other £2k on what ever, maybe shares or something which there is a risk.

Ideally i would be looking to put maybe atleast £300 a month into something aswell.

Realistically you want to be looking at a minimum timescale of 5 years for investing. If you're comfortable with that then shares might be ok, otherwise you run the risk of market downturn at a time when you need the money, which would be a rather big problem all in all.

With a decent portfolio, the usual rule of thumb is that for 5 years and over it should outperform cash savings, but at any time during that first 5 years a significant correction can result in you effectively losing out to deposit accounts.

Obviously this isn't a guarantee or anything, but it seems to be why the recommendation is for a minimum of 5 years.

The other thing to consider is that with only £2000 going into the stockmarket you might be better off going for some unit trusts to diversify your portfolio better than you could effectively manage with shares. Each unit trust typically holds shares in 30-150 companies, so investing in four of those instead of four companies (the maximum you could realistically afford to directly invest in) could see you in at least 120, diversifying your portfolio significantly and therefore protecting you from the effects of a single company going bust and taking a quarter of your investment with it.

TurnerUKTA

The main reason why i was looking at a couple of years, was ideally thats when i would probably be looking to move out and buy my own house.

So everything which i save from now on, would be going towards a deposit.

nrsql

I think you should still open the web saver as the first priority. Move the money there then you can think about longer term savings. This gives 5.1% which is nearly £30 per month on 7k. Don't go for the extra account which restricts withdrawals.
You'll need to ask if you can link to the current a/c and test whether transfers are instant.

They also do a couple of high interest current accounts which will give 6.17% on balances up to £2,500 (nearly £13 per month). It's probably more effort to move your current account and you might not think it's worth it.

Check the t's & c's but it looks like you should have the high interest current account and web savings rather than the current account you have at the moment. With this current account (if viable) the web saver becomes less important but I would still open it because it might be useful if you have temporarily more than £2500 in the accounts or drop below the £1000 credits per month.

Have a look at
http://forums.moneysavingexpert.com/showthread.html?t=645221
on the same subject.

heppy23

I would set up online banking, open a web saver account. Move money back and forth between the bank account to keep the bank account balance at a level you are comfortable with (you want as low as possible so most of your money is in the higher rate account but you need to make sure any direct debits etc are covered.

I check my balances every day, I always make sure the available balance is £200. This ensures all my outgoings are covered and my money is in the web saver as much as possible.

You can transfer out of the web saver too using bill payments so I would perhaps cascade money out of the web saver to somewhere else (i.e. when your websaver hits X amount then skim the extra off to somewhere else).

The other thing to consider is using your ISA allowances. It's easy enough to transfer into a halifax ISA but I'm not sure about transferring out, you may not be able to do it online.

heppy23

nrsql wrote: »

They also do a couple of high interest current accounts which will give 6.17% on balances up to £2,500 (nearly £13 per month). It's probably more effort to move your current account and you might not think it's worth it.

As far as I know it's just a case of asking them to convert the account to the higher interest one (as long as you qualify with putting £1000 per month in). The account number stays the same.

TurnerUKTA

I take it that all the types of accounts you are reffering to are Halifax accounts?

Thanks

TurnerUKTA

If i am going for an Online Halifax Saver account, what would people recommend. Variable rate or a fixed rate account?