Could do with some advice ;)

steveh2001

Hi Guys,

Just had a few questions - basically am a student just finished uni and job hunting. Also for the last 3 yrs i have had a halifax websaver account, and just noticed that they've sneakily dropped the interest rate to 4.65%.

I also noticed the halifax regular saver was at 7%!

But basically as im getting a job soonish - ill be paying tax on the interest, so is there any advice where to go next in the way of savings? The websaver (net) will be at 3.85 ish. Or should i get an ISA?

Any help would be appreciated!!

Thanks

steveh2001

Forgot to say the amount of cash were lookign at now (before job) is 5K ish, so no good with accounts needing 10K+!

cookie9

If you currently have £5k to invest then I would look to invest £3,000 into a Cash ISA. This offers a good deal as it is tax free.

The Halifax 7% is a good acount to set up when you start work which you can pay a perentage of your salary into each month. Remember you will be taxed on the interest. Check with them but I think the maximum you can pay in per month is £250.

Remember to check your tax code when you start work. As a student you may not have earned enough to use up your peronal allowance for the year and will be entitled to a rebate. Write to your tax office to sort this out.

With the remaining £2k I would look for a decent paying interest access account to put the money into. This account can be used as your emergency fund.

Don't invest in stocks and shares until you are in the position where you could afford to lose the money.

isasmurf

Wow, a student with 10k in savings! I didn't think they still existed.

steveh2001 wrote:

But basically as im getting a job soonish - ill be paying tax on the interest, so is there any advice where to go next in the way of savings? The websaver (net) will be at 3.85 ish. Or should i get an ISA?

Well, and this is directed more at any other students reading this then yourself, if you have any savings you should have an ISA. As steveh2001 has proved here just because you are a student now and most likely not be earning enough to pay tax, one day you will be. Most of your savings could already be in an ISA earning tax free interest.

cookie9 wrote:

Remember to check your tax code when you start work. As a student you may not have earned enough to use up your peronal allowance for the year and will be entitled to a rebate. Write to your tax office to sort this out.

The tax code should take this into account without any need to apply for a rebate. If you don't have a tax code make sure that you fill in a P46, and that your tax code on your final pay slip before 6 April next year does not end with wk1 or mth1 - these indicate emergency tax code and you will not be paying the right tax.

steveh2001

cookie9 wrote:

If you currently have £5k to invest then I would look to invest £3,000 into a Cash ISA. This offers a good deal as it is tax free.

The Halifax 7% is a good acount to set up when you start work which you can pay a perentage of your salary into each month. Remember you will be taxed on the interest. Check with them but I think the maximum you can pay in per month is £250.

Remember to check your tax code when you start work. As a student you may not have earned enough to use up your peronal allowance for the year and will be entitled to a rebate. Write to your tax office to sort this out.

With the remaining £2k I would look for a decent paying interest access account to put the money into. This account can be used as your emergency fund.

Don't invest in stocks and shares until you are in the position where you could afford to lose the money.

Hi Cookie,

Thanks for the advice! Id been looking around the ISAS available - and found 5% at halifax, but ill read around a bit. My basic problem with not knowing what to do was whether or not its better to have £5K in a websaver at 3.72% (net) or have 3K in a 4.5-5% isa and 2K in a 3.72% websaver, i.e. put all my money in bulk, so id have more cash at less interest. But i guess a cash isa is definetly the answer. I read you can only have 1 cash isa with 3K in per year, but is that per bank or in total? Also i read on martins site that its a good idea to shift from isa to isa.

Also ill look into the halifax 7% regular saver when i start work then - it is £250 a month, and even with tax thats around 7% interest, which has got to be good. Better interest then an isa i guess!

And the last 2K ill move to a better websaver/e-savings account i guess, and get my salary paid into that

steveh2001

isasmurf wrote:

Wow, a student with 10k in savings! I didn't think they still existed.

Well, and this is directed more at any other students reading this then yourself, if you have any savings you should have an ISA. As steveh2001 has proved here just because you are a student now and most likely not be earning enough to pay tax, one day you will be. Most of your savings could already be in an ISA earning tax free interest.
The tax code should take this into account without any need to apply for a rebate. If you don't have a tax code make sure that you fill in a P46, and that your tax code on your final pay slip before 6 April next year does not end with wk1 or mth1 - these indicate emergency tax code and you will not be paying the right tax.

5K not 10k! And 3 of that is money direct from my overdrafts stuck into a savings account straight away!! Well most of the people at uni didnt know what a savings account was.... Luckily i knew about this site and savings way before going to uni

Definetly think ill sign up for an ISA then, i was only concerned that having bulk savings even on taxed interest might make more then the £135 gained from £3k in a tax free isa.

The only reason i dont have an isa already is i had all my cash in a websaver at 4.75% ish - so that made more sense, i could invest more then £3k and you got more interest, its only now im going to loose the tax free status im wondering about what to do next!

Thanks for the info on tax codes - i didnt work the bulk of the last year of uni (due to exams) so nto sure what ill need to do :S

Thanks for all the advice guys