In a position to save, what’s best

LibbyL92

currently, I have zero savings.
From next month I will be in a position to start saving between £500-£700 per month.

As a total newbie to saving, what would you say is my best option? Where shall I save it? Looking forward good interest. I’m completely new to this so apologies if this sounds silly.

eskbanker

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/ offer the best interest, even though you may need to open multiple accounts to fit that amount of monthly contribution.

thegreenone

Firstly, an easy access cash ISA and save for six months to act as an emergency fund. ie boiler or car breakdown or other big bill.

clairec666

Depends what your priorities are. Maximum interest? Simplicity / ease of use? Ability to withdraw? Which tax band are you in?

For maximum interest, look at regular saver accounts. Lots available with upwards of 6% interest. Downside is that they usually have a limit (often £200-300) every month, you'll have to keep track of how much you're putting in. Plus they usually mature after a year and you'll have to move your money elsewhere to get a decent interest rate. Check whether they allow withdrawals too, quite a few don't so your money is locked in for a year.

If that sounds like too much admin, look at easy access accounts. ( https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/?sort-filter=standard-order ) Plenty with 4% interest or higher. Usually no restrictions on how much you can save each month, so will be easier for you to put money away whenever you need to, although some have an upper limit on how much you can save.

If you're an additional rate taxpayer you'll be taxed on any interest you earn, so you'll probably benefit from saving into an ISA. If you're a higher rate taxpayer you can earn £500 interest before being taxed, and a basic rate taxpayer can earn £1000 (or up to £5000 if you earn less than £17570) - as you've got no savings so far, this probably won't affect you. However it might still be worth considering an ISA as it may be beneficial if your savings and earnings increase in the future.

friolento

https://forums.moneysavingexpert.com/discussion/comment/82094463#Comment_82094463

with zero existing savings, and a plan to save up to £700 a month (£8,400 in year 1), there is no need really for, or benefit from, an ISA as the expected interest will be below the personal savings allowance, even for a Higher Rate taxpayer.

Regular Savers would be my choice.

https://forums.moneysavingexpert.com/discussion/6652858/the-top-regular-savers-discussion-thread

Albermarle

https://forums.moneysavingexpert.com/discussion/6679000/in-a-position-to-save-what-s-best

Are you contributing to a pension? it is tax effecient way to save for retirement.

LHW99

with zero existing savings, and a plan to save up to £700 a month
(£8,400 in year 1), there is no need really for, or benefit from, an ISA
as the expected interest will be below the personal savings allowance,
even for a Higher Rate taxpayer.

Except that the allowance is "use it or lose it" and any interest / capital gains don't have to be reported to HMRC, which can (eventually) make life easier.

I would second the suggestions of firstly an easy access account (ISA or not) for building up an emergency fund. If you know you can support you normal expenditure for 3 - 6 months, you have reserves either for a big bill, or if a job goes bad for whatever reason and you need to search for another

Beyond that work pension is a good place for at least some of the excess, particularly if you have an employer who will match increases in what you pay up to a certain % (or offers salary sacrifice).