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Regular savings for a beginner

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I've read tonnes of articles on savings and now my head in spinning. Currently i have very little savings to speak of. I think i can realistically save £700 a month. Already saving into my ISA and plan to for the next couple of months to bring me up to my total for this year. Then do the same for the following 4 months in 2008-2009 so that i have full use of ISA for most amount of time. My question is for after this period when ISA allowance is taken up.

Am i right in thinking a regular savings account would be a good idea like ICICI Hisave at 6.4% AER? I do have a Lloyds current account so should I put all my savings into the ICICI Hisave and then drip feed £250 a month into the Lloyds Monthly saver? Sorry for being a bit thick about this but am not sure if this will give much more interest than if i were to leave it in the ICICI.

Thanks - any light shed on this will be much appreciated.
:confused:

Comments

  • nicko33
    nicko33 Posts: 1,125 Forumite
    Ideally, I think you should try to get as much as possible into a 2007-08 ISA.
    Don't start the Lloyds Monthly Saver (LMS) until the new tax year.

    Then you could feed the LMS direct from your £700/month rather than putting it into ICICI and bringing it back again. (Remember that you can put £750 into the LMS in the first month [the extra £500 might only be within 7 days of opening] )

    The remaining £450/month will fill up a 2008-09 ISA in 8 months
    After that, the £450/month can go somewhere like ICICI

    (Whether to fill the ISA first or start the LMS depends on the interest rates.
    If you're a basic rate taxpayer and your ISA is > 6.4% then the ISA is better than the LMS.)


    next year, you won't have to worry about the ISA, because you will be able to fill it all up at the start of 2009-10 with what you get out of the LMS (£3500+interest)

    then you need to find something else to do with that £700/month.
    Either stick it all in ICICI, or some into Regular Savers and the remainder into ICICI
  • Steve_xx
    Steve_xx Posts: 6,979 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    You're about right. But next year, ie after April 5th, you will be able to add £3600 to your ISA instead of the current £3000.

    Your ICICI Bank suggestion is fine at 6.41%.

    You might consider opening an Alliance & Leicester Premier Current Account. That will give you access to their regular savings product in which you can deposit between £10 - £250 per month for year and get 12% interest. You get free european travel insurance too, but you need to fund the account with £500 per month.

    If you do decide to go with A&L then you ought to do it via Quidco because you can get £50 cashback for doing so.

    Here's a link:
    http://www.alliance-leicester.co.uk/currentaccounts/index.asp?page=prem-credit-interest&ct=curracchome
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