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Saving in Lifetime ISA and Help to Buy
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So after all your help here, I've gone away and done some more research on how best to save, and this is what I've come up with...
1) Open First Direct 1st Account - in order to get their 5% Regular Savers Account.
2) Open Nationwide Flex Direct 5% interest - use this for wages to be paid into and to store existing £1500 savings (of which I need possible access to).
3) Pay maximum £300pm deposit from Nationwide into 1st Account, then onto the Regular Savers Account (as required by First Direct), for 12 months.
4) At the end of 12 months, move £3600 + 5% interest (approx. £97) earned from Regular Savers Account into a LISA in one lump sum, and top it up to £4000 to maximise government contribution.
As Nationwide requires you to pay in £1000pm, as does First Direct 1st Account (after 6 months, to avoid a £10pm fee), I'll be bouncing money around to cover this...assuming both accounts allow for you to do this.
Hoping this makes sense, not just in my head!
If anyone sees a major flaw in my method, or knows of a better way that I'm totally missing, please do let me know.
I'm a complete novice, and so I welcome all your excellent advice...you've all been so helpful already, so thank you!!!0 -
But don't you want to get the first £4k contributed before the end of this tax year on 5th April 2019 to benefit from this year's £1k bonus?
If you put the money into 12 month regular savers and wait until maturity (although the Nationwide one does allow penalty free early access) you will waste a year of bonus.
Alex0 -
I wouldn't have £4000 by April.
So I'm assuming, by your question, that the LISA is April to April, so regardless of when I open it, I only have until the following April to put into it to get that years bonus?
If that's the case, maybe for the remainder of this tax year, it makes more sense for me to put the money straight into a LISA. But then from April 2019, start my method above??0 -
Yes, you can contribute to the LISA at any point during the tax year, and given the low rate of interest, it would be best to do so late in the tax year.NurseMoneySaver1122 wrote: »I wouldn't have £4000 by April.
So I'm assuming, by your question, that the LISA is April to April, so regardless of when I open it, I only have until the following April to put into it to get that years bonus?
If that's the case, maybe for the remainder of this tax year, it makes more sense for me to put the money straight into a LISA. But then from April 2019, start my method above??
It would be best to start the regular saver in March 2019, so that it can mature before the end of the next tax year and leave you time to transfer money into your LISA. Up to that point you could keep your money in the Nationwide Flex Direct and fill the LISA in late March/early April.0 -
You can contribute up to £4k per tax year which starts 6th April each year. If going down the LISA strategy it is worth trying to hit this target each tax year for maximum bonus.
Appreciate it's going to be hard to find £4k with circa 5 months left this tax year but thinking creatively and reducing your costs it may be possible?
I take calculated risks to fill our ISAs each year which have included Zopa flexible loans and 0% credit cards although that is a bit risky and each year it gets harder...
Alex0 -
UPDATE & FURTHER SAVING QUESTION
So we're still saving away (savings breakdown at end of this post below).
We have some savings in my Nationwide Flex Direct Account but the interest rate is due to reduce from 5% to 1% in November. So I'm wondering what we are best to do next.....
Either my partner could now get the Nationwide Account so we continue to get 5% (he currently has TSB account receiving 3% on up to £1500 but wages go into there, and savings alone currently exceed £1500).
Or I read about Barclays Blue Rewards Scheme, which gives £10/mth (after £4/mth fee).
Without knowing how to do the maths, I'm pretty sure the most I ever received in interest from Nationwide was around the £10 mark, so if I'm right, and considering we don't have the maximum amount Nationwide provide interest on so it's a little bit of a waste, then maybe we'd earn more by the Barclays option??
I hope I've made sense. Hoping some of you could critique my saving plan with the extensive knowledge you guys have (I am slowly getting there lol).
Thanks in advance
- £5000 in Lifetime ISA (includes £1000/25% bonus)
- £1800 in First Direct Regular Savers (due to mature Mar 2020 with £3600 balance + £97ish interest)
- £1735 in Nationwide Flex Account, but interest rate due to reduce from 5% to 1% from Nov 2019 (this amount estimated to grow to £2800 by end of Mar 2020)
PLAN: Continue saving £300/mth in FD Regular Savers until maturity. Then combine the total balance of £3700ish with £300 from my savings currently in Nationwide, and transfer into Lifetime ISA end of Mar 2020.0 -
Yes 5% on a £2.5k balance in a Nationwide Flex Direct is just over £10 a month interest. With the Barclays Blue Rewards the cashback increases with complementary products. You might have a better response posting the question as a new thread in Budgeting & Bank Account forum.
https://forums.moneysavingexpert.com/forumdisplay.php?f=200
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