lock money away for a year - where?

mrbrown

Hi. I have a 5 figure sum (only just!) that I was saving towards a house deposit. The house market is going to have to come down a lot more before Im able to even consider buying a house. I wont need this sum of money. What would be the best way to lock it away for a year? Icesave? I just want to lock it away for a year or more knowing that its earning good interest (as Im worried about inflation wearing away at my money).
Thankyou

LongTermLurker

Kaupthing Edge - good rates - good service

Baldur

There are a number of 1-year fixed rate offers available with 7.01% to 7.11% interest rates, e.g. Money Facts.

earlgrey_3

When you say "lock it away for a year", do you mean locked into a fixed rate?

The interest rates on offer have been increasing recently so there's some reason to think that might continue. Some are offering far better rates fixed for 2+ years than for one year which suggests they don't expect to be able to get money cheaper in a year's time.

They could be wrong, but consider where you think rates are moving before you lock into a fixed rate.

If your worry is that that inflation is about to kick off then rates would rise and being locked into a fixed rate would be bad news. Building societies rates rose to 16% and more in the '70s. You might want to consider NS&I Index Linked certificates for some of it.

KeithEssex_2

mrbrown wrote: »

Hi. I have a 5 figure sum (only just!) that I was saving towards a house deposit. The house market is going to have to come down a lot more before Im able to even consider buying a house. I wont need this sum of money. What would be the best way to lock it away for a year? Icesave? I just want to lock it away for a year or more knowing that its earning good interest (as Im worried about inflation wearing away at my money).
Thankyou

Personally I would avoid ICESAVE for the simple reason that they use the Passport Scheme for Financial Compensation in the event of their failure. This means that you would be looking to the Icelandic compensation scheme to give you your money back. Iceland is a very small country (population wise) and so may struggle to do this. All the Credit Rating agencies have marked down Icelandic Banks to reflect this risk.

You can get similar returns elsewhere with less risk :-

Nottingham Building Society 7.10% Fixed Rate Issue 53
http://www.moneysupermarket.com/savings/SavingsDetails.asp?SavingsID=24891&Amount=1000&Results=4&Lender=

Hope this helps ...

chrome_dog

This From Daily Mail Money... Makes Icland bank smell fishy!!!!!!!!!!!

Credit insurance for debts at Iceland's biggest bank, Landsbanki, is priced at 610 points while that for Kaupthing is priced at a hair-raising 856. Given that these two have taken billions in UK retail deposits, it may be a sobering thought for savers to consider where they are putting their cash. These banks are now seen as the most unsafe in the developed world.

chrome_dog

THIS FROM MONEY MAIL.. Makes icland bank smell fishy

Credit insurance for debts at Iceland's biggest bank, Landsbanki, is priced at 610 points while that for Kaupthing is priced at a hair-raising 856. Given that these two have taken billions in UK retail deposits, it may be a sobering thought for savers to consider where they are putting their cash. These banks are now seen as the most unsafe in the developed world.

LongTermLurker

chrome_dog wrote: »

THIS FROM MONEY MAIL.. Makes icland bank smell fishy

Credit insurance for debts at Iceland's biggest bank, Landsbanki, is priced at 610 points while that for Kaupthing is priced at a hair-raising 856. Given that these two have taken billions in UK retail deposits, it may be a sobering thought for savers to consider where they are putting their cash. These banks are now seen as the most unsafe in the developed world.

They do seem to be taking a hammering by the press don't they? Still, I don't always believe the press and the rates are still excellent, the customer service still good and the protection still £35000. Although I wouldn't be daft enough to sink all my money into the Icelandic economy, I'm happy to keep at least part of it in the land of dried fish and smoked puffin.

Your only risk is the 3-6 months of interest you would lose if you had to make a claim, compared with what you would have received if you'd deposited with a bank that didn't collapse. I'd be interested if someone could give an indication as to what that "safe" bank is. Shame the Bank of England doesn't have any branches near me.

earlgrey_3

LongTermLurker wrote: »

Shame the Bank of England doesn't have any branches near me.

They do in effect. I think they trade under the name of 'Northern Rock'. Sort of a subsidary company.

LongTermLurker

earlgrey wrote: »

They do in effect. I think they trade under the name of 'Northern Rock'. Sort of a subsidary company.

lol :rotfl:

mrbrown

thanks guys. plenty of food for thought for me there.