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    • brokeinbristol
    • By brokeinbristol 17th Apr 17, 6:48 AM
    • 136Posts
    • 44Thanks
    Savings habit
    • #1
    • 17th Apr 17, 6:48 AM
    Savings habit 17th Apr 17 at 6:48 AM

    My wife and I would like to start a long term savings account or two and are interested in saving 50pcm each in a premium bond account and then 50-100pcm each in an ISA. As cash ISAs offer such low rates I'd like to invest in a FTSE100 or FTSE350 ISA as these saving are going to be long term (30years plus).I don't want a high risk account but would invest in a low to medium risk. Would this be the best way to save? Which ISA providers are best? Should we also have a cash ISA for emergencies.
    We currently use instant access savings pots for things like car, holiday, Xmas and birthdays, emergencies. we would keep the savings pots for car (150pcm), holiday(200 pcm), Xmas and birthdays (100 pcm), emergencies (100pcm - looking to change this to something else)
    Is there a better way of doing this..

    Thanks for your help in advance
Page 1
    • masonic
    • By masonic 17th Apr 17, 7:26 AM
    • 9,208 Posts
    • 6,345 Thanks
    • #2
    • 17th Apr 17, 7:26 AM
    • #2
    • 17th Apr 17, 7:26 AM
    Investing in the FTSE100 or FTSE250/All share would be considered high risk. Also, not very diversified. You should think about how much you would be prepared to see the value of your investments fall and not panic/sell. That would give us some idea of how much risk you can really take.

    If you did go ahead and invest some of the money, then you would need a separate emergency fund in cash and that almost certainly should not be in cash ISAs. You should make use of accounts paying 5% (Nationwide FlexDirect, Flexclusive regular saver, and the regular savers from First Direct, HSBC and M&S). This will allow you to maintain about 8k of savings at 5% with one of the regular savers maturing every few months in case you need access to the money within it. There are also several accounts paying 2-3%.
    • isasmurf
    • By isasmurf 17th Apr 17, 7:32 AM
    • 1,719 Posts
    • 739 Thanks
    • #3
    • 17th Apr 17, 7:32 AM
    • #3
    • 17th Apr 17, 7:32 AM
    With regards to cash savings are you making use of Regular Savings accounts?
    Some current accounts have a linked regular saver paying a high rate of interest, although you will need to check whether you can still access the money as it varies between banks. There is also Virgin Money. They offer 4 different regular savers all at 2.25%. There is no requirement to fund every month and you have instant access. To date, Virgin have allowed savers to open 1 of each type of each issue.
    • bobobski
    • By bobobski 17th Apr 17, 8:15 AM
    • 705 Posts
    • 1,620 Thanks
    • #4
    • 17th Apr 17, 8:15 AM
    • #4
    • 17th Apr 17, 8:15 AM
    I strongly recommend you read this:

    Key points from your post:
    • Saving and investing are very different concepts.
    • Premium bonds are rarely any good - I suggest you play around with Martin's calculator on this:
    • To me it's obvious that you should open a regular savings bank account, e.g. with First Direct (5% p/a) or Nationwide Flexclusive (5% p/a) unless there are good reasons not to, e.g. you cannot satisfy the criteria.
    • Where are the other savings you mention? The above goes for them as well as the 50 p/m long term savings.
    • The rule of thumb is to have a 6-ish month emergency fund in cash before investing or locking away any money. It sounds like you don't have this yet?

    Although savings rates are pretty dire, I've calculated that last year, on my savings pot that grew from 3,000 in January to 11,000 in December, I earned around 500 interest. You just have to be willing to put the work in at the beginning to find the right place(s) for your money and set up standing orders etc to meet minimum pay in criteria.
    #8: Save 12k in 2018: 2,758.01 / 14,000 (19.70%) | #18: Save 12k in 2017: 12,078.82 / 12,000 (100.65%) | #86: Save 12k in 2016: 8,476.09 / 10,000 (84.76%)
    House deposit by 31/12/2020: 24,349.25
    / 60,000 (40.58%) | Emergency fund by 31/12/2020: 2,230 / 5,000 (44.60%)
    • Eco Miser
    • By Eco Miser 17th Apr 17, 9:58 AM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    • #5
    • 17th Apr 17, 9:58 AM
    • #5
    • 17th Apr 17, 9:58 AM
    There's no such thing as 'a FTSE100 or FTSE350 ISA'. There are Stocks & Shares (S&S) ISAs, which are tax-privileged investment accounts, which can contain any of tens of thousands of possible investments, some few of which track the FTSE100 or 350. As stated above, those two are not at all low risk investments on their own. Do lots more reading on investments, here and elsewhere on the internet, Monevator for instance, remembering that everyone has biases.

    It's good to have savings pots for known and unknown future expenditure, but it's not necessary to have these pots in physically separate bank accounts.
    As said make use of the current accounts and regular savers that pay most (5% at present), then the next highest rates. Note that where a current account needs a minimum monthly payment in, it is not necessary to leave that money in the account if it would be better elsewhere; and also note that it is quite possible to fund Regular Savers with more than your spare monthly income, if you have money in savings or current accounts earning less or the same rate.
    Eco Miser
    Saving money for well over half a century
    • Stubod
    • By Stubod 17th Apr 17, 10:28 AM
    • 478 Posts
    • 328 Thanks
    • #6
    • 17th Apr 17, 10:28 AM
    • #6
    • 17th Apr 17, 10:28 AM
    ..I would forget Premium bonds for small amounts....very little chance of winning. (See calculator on this site). Initially for lower amounts its probably better to go for one of the standard higher interest monthly savings accounts. The when you have built up some savings start looking at investments, then when you have a "pile" consider putting into PBs if you still feel you want to....
    • teddysmum
    • By teddysmum 17th Apr 17, 12:22 PM
    • 9,037 Posts
    • 5,387 Thanks
    • #7
    • 17th Apr 17, 12:22 PM
    • #7
    • 17th Apr 17, 12:22 PM
    Go for current accounts that pay interest and have linked regular savers (Nationwide in particular, whose saver account lets you pay in by any means, at any time and any amount up to the limit, while others need a fixed sum via SO). Tesco's current account gives 3% with a long term guarantee, if you can spare some DDs.

    We have a number of current accounts, regular savers and Premium Bonds, the latter paying out quite well.

    ISAs pay so little that locking away money for the rates is pointless, unless you are a high rate tax payer(in which case you are likely to look elsewhere anyway) and the easy access ones pay even less.

    Sadly, it isn't the best of times for savers.
    Last edited by teddysmum; 17-04-2017 at 12:24 PM.
    • brokeinbristol
    • By brokeinbristol 18th Apr 17, 9:37 PM
    • 136 Posts
    • 44 Thanks
    • #8
    • 18th Apr 17, 9:37 PM
    • #8
    • 18th Apr 17, 9:37 PM
    Thank you for your advice, it's a great starting point. I have a nationwide flex plus account and have a flex lysine saver which I currently use for holiday savings. I also have a regular nationwide instant access savings account, as well as a couple of instant access savings accounts with YBS. I will have a further read and will look at establishing a 6mnth buffer in instant access savings before considering long term investment.
    • jimjames
    • By jimjames 18th Apr 17, 9:44 PM
    • 12,584 Posts
    • 11,230 Thanks
    • #9
    • 18th Apr 17, 9:44 PM
    • #9
    • 18th Apr 17, 9:44 PM
    ISAs pay so little that locking away money for the rates is pointless, unless you are a high rate tax payer(in which case you are likely to look elsewhere anyway) and the easy access ones pay even less.

    Sadly, it isn't the best of times for savers.
    Originally posted by teddysmum
    I agree that cash ISAs are pointless but when the OP talks about sums of money for 30 years time then cash savings are not a great idea. S&S ISAs are ideal for that sort of timescale.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • pjcox2005
    • By pjcox2005 19th Apr 17, 8:16 PM
    • 522 Posts
    • 579 Thanks
    A S&S isa may be a good move at medium risk, may be one of the vanguard lifestrategy funds. I find it more interesting that the high interest savers so whilst the is risk it may increase enthusiasm for saving/investing as you track it.

    Appreciate that's slightly outside your initial thoughts and views on risk though
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