| Savings Accounts 11:04 - Jul 22 with 7096 views | Swailsey |
Hi TWTD think-tank,
I hope you've all been keeping ok.
Does anyone have any advice on savings accounts, in particular for someone who hasn't ever really saved before? I've got a minor sum I want to build on, but have only ever had it in a bog-standard Savings account, with barely any interest etc. That's mainly because I'm worried about somehow losing money, or tying it up in something that gives me less control.
I've looked in ISAs, Monthly-Savers etc, but I'm not clued up enough to make the right call. Or perhaps I'm too cautious. Or an idiot.
Any advice would be appreciated, either on here or PM.
Thankies. |  |
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| Savings Accounts on 15:08 - Jul 22 with 3856 views | Keno |
yay!!
I knew I find a use for my rusty old hand drill
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| Savings Accounts on 16:22 - Jul 22 with 3843 views | WeWereZombies |
| Savings Accounts on 13:33 - Jul 22 by bluelagos |
Moneysavingexpert or buy a copy of the Sunday Times.
If you have upto £20k and pay some dd's Santander current account is about as good as you'll get atm.
You won't get rich on interest atm. |
Although you should be aware that Santander recently dropped their rates and are due to drop them again next month so will be no great shakes at all then. I am going to switch from the bell and whistles 1-2-3 with its £5 a month account charge to 1-2-3 lite (despite the gruesome Americanised spelling) with no account charge. So I won't get any cashback - who is able to spend much at the moment to get cashback anyway? |  |
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| Savings Accounts on 17:45 - Jul 22 with 3808 views | mikeybloo88 |
| Savings Accounts on 16:22 - Jul 22 by WeWereZombies |
Although you should be aware that Santander recently dropped their rates and are due to drop them again next month so will be no great shakes at all then. I am going to switch from the bell and whistles 1-2-3 with its £5 a month account charge to 1-2-3 lite (despite the gruesome Americanised spelling) with no account charge. So I won't get any cashback - who is able to spend much at the moment to get cashback anyway? |
The Santander rate is 1% which is as good as it gets for current accounts. Cash back is still good as I get it on all my household bills which come out via dd, and that more than covers the £5 monthly fee.
The OP hasn't said how much he has or how long he wants to save for, but assuming its a decent amount and he could afford to not have access to it if the markets went a bit wobbly again, then I'd pop it in a few tracker funds. L&G global tech index is a corker and I think tech will do very well next few years,m and HSBC World Index tracker is good and gives global exposure. |  | | |
| Savings Accounts on 18:00 - Jul 22 with 3804 views | WeWereZombies |
| Savings Accounts on 17:45 - Jul 22 by mikeybloo88 |
The Santander rate is 1% which is as good as it gets for current accounts. Cash back is still good as I get it on all my household bills which come out via dd, and that more than covers the £5 monthly fee.
The OP hasn't said how much he has or how long he wants to save for, but assuming its a decent amount and he could afford to not have access to it if the markets went a bit wobbly again, then I'd pop it in a few tracker funds. L&G global tech index is a corker and I think tech will do very well next few years,m and HSBC World Index tracker is good and gives global exposure. |
Cut and pasted from an email from Santander on 6th May:
'Account Feature
Before 3 August 2020 Interest rate paid on credit balances 1.00% AER(edit).995% gross (variable) on balances up to £20,000
From 3 August 2020 0.60% AER2 (edit) 0.598% gross (variable) on balances up to £20,000'
The cashback you can earn is capped at £5 a month , it's getting to the point now where I am lucky if it exceeds £1,50 so the account fee is not covered by that. True the interest does still exceed the £5 fee if you have the full £20,000 in the account but it is possible to earn more elsewhere. My Stocks and shares ISA is currently returning at least fifteen times better than my cash ISAs, and it is pretty much back to the pre-Covid19 crash value; I wish I had had the confidence to put more into it or buy another Stocks and Shares ISA just after the Covid-19 price fall in March/April so that I got in at the ground floor before the recovery. [Post edited 22 Jul 2020 18:46]
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| Savings Accounts on 18:21 - Jul 22 with 3794 views | hampstead_blue |
| Savings Accounts on 13:31 - Jul 22 by homer_123 |
That advice will have been right and sensible with decent interest rates:
Let me illustrate:
If you've £10,000 mortgage debt at 2.99%,
Annual interest cost is: £299
If you have £10,000 savings at 1%,
Annual interest earned is: £100
Pay off the debt with the savings and you are £199 a year better off.
I'm no IFA but currently, unless you are going to 'invest' money (which can bring good returns even in the current climate but obviously carries greater risk), it's far better to clear debt than have a basic savings account or even a cash ISA. [Post edited 22 Jul 2020 13:34]
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I'd avoid paying down debt which is cheap.
Credit cards, yes.
Mortgage? No.
Reason;
Liquidity. If you pay it off your mortgage that money is locked away in your house. To get it back is a ball ache.
Risk; Paying off your mortgage puts all of your cash into an illiquid asset. In a down turn you won't get real value for the property.
Lack of diversification; All your eggs are in one basket. Not a good idea.
ROI - Return on Investment. You can, within a strong probability, get a much higher return if you use one of the funds and products I mentioned earlier. You also get liquidity as you can sell them for cash in a heart beat.
I was an IFA after I left the Army. Managed around £50m in my client bank which I sold to Towry Law in 2003. I also qualified as a fund manager and have an MSc in Banking and Finance.
Just saying this to show I can support my opinions.
This is a hierarchy;
High interest debt
Cash for emergencies - car, gas boiler, new guitar, that type of thing.
Medium term (5 yr)
Long term (over 5 yrs).
Any questions let me know. I still manage my own portfolio and SIPP (pension). |  |
| Assumption is to make an ass out of you and me.
Those who assume they know you, when they don't are just guessing.
Those who assume and insist they know are daft and in denial.
Those who assume, insist, and deny the truth are plain stupid.
Those who assume, insist, deny the truth and tell YOU they know you (when they don't) have an IQ in the range of 35-49.
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| Savings Accounts on 07:54 - Jul 23 with 3714 views | Kropotkin123 |
If you haven't saved before then I'd recommend starting simple. I have been saving a fair amount so I can perminently leave this country.
Some are assuming you own a house. If you do, paying down the mortgage might be better. Neither know your situation, so best to use a mortgage overpayment calculator - https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/ - and do the maths yourself.
@Darkblue gave a good link - https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/ - for easy savers. I think the first or second would be best, given your saying you are new to it.
If you have a lump sum, there are also fixed rates out there for 3m, 6m, 1y, etc. I wouldn't recommend getting tied into a long-term fixed rate unless the interest you receive will increase if the BoE interest rates increase.
Interest rates are low at the moment because the economic outlook isn't great. They want you to spend or they want you to secure assets. A consideration at the moment should be 'What if I lose my job'. If you own a house, do you have enough savings to pay off the monthly installments out of your savings?
You say you are new to savings, so I personally assume you don't have a house. So I refer back to Darkblue.
If you want to try the stock market, practice with the Trading212 app. You can practice with fake money. There is certainly the scope to make bigger returns, but this will really test whether you know what you are doing and whether you enjoy that type of savings where the risk is all on you.
Another option is taking 5% gold for diversity. Gold will probably still rise. we are likely to see more businesses go under, more people unable to afford their mortgages and a further dip in currencies Vs commodities. That said, gold price is already high, so it is still a risk. This is a moment to be selling gold, rather than building up to 5% imo.
*I am not a financial advisor, this is just my personal opinion. I do not accept liability for any money won or lost on stocks and shares, precious metals, mortgage overpayments or savings accounts.
Best of luck |  |
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| Savings Accounts on 08:34 - Jul 23 with 3677 views | mikeybloo88 |
| Savings Accounts on 18:00 - Jul 22 by WeWereZombies |
Cut and pasted from an email from Santander on 6th May:
'Account Feature
Before 3 August 2020 Interest rate paid on credit balances 1.00% AER(edit).995% gross (variable) on balances up to £20,000
From 3 August 2020 0.60% AER2 (edit) 0.598% gross (variable) on balances up to £20,000'
The cashback you can earn is capped at £5 a month , it's getting to the point now where I am lucky if it exceeds £1,50 so the account fee is not covered by that. True the interest does still exceed the £5 fee if you have the full £20,000 in the account but it is possible to earn more elsewhere. My Stocks and shares ISA is currently returning at least fifteen times better than my cash ISAs, and it is pretty much back to the pre-Covid19 crash value; I wish I had had the confidence to put more into it or buy another Stocks and Shares ISA just after the Covid-19 price fall in March/April so that I got in at the ground floor before the recovery. [Post edited 22 Jul 2020 18:46]
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I don't recall getting that notification so thanks...I'll check and if that is the case I'll certainly move my £20k into my Marcus account which still pays 1% for now. I agree that stocks and shares are the best way to get any decent return and I put some cash back in to them back in April but I too wasnt brave enough to lump on in a big way. My Virgin 5 year fixed rate cash isa matured in April having paid 2.75% but there is nowhere to get that rate now and I'm just going to keep it in easily accessible low return accounts for a year to see how things develop. Got plenty of stocks exposure already... | | | |
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| Savings Accounts on 07:19 - Jul 24 with 3626 views | WeWereZombies |
| Savings Accounts on 08:34 - Jul 23 by mikeybloo88 |
I don't recall getting that notification so thanks...I'll check and if that is the case I'll certainly move my £20k into my Marcus account which still pays 1% for now. I agree that stocks and shares are the best way to get any decent return and I put some cash back in to them back in April but I too wasnt brave enough to lump on in a big way. My Virgin 5 year fixed rate cash isa matured in April having paid 2.75% but there is nowhere to get that rate now and I'm just going to keep it in easily accessible low return accounts for a year to see how things develop. Got plenty of stocks exposure already... |
And I am starting to wonder if Santander read the TWTD forum because I had another email yesterday that included:
'From 27 October 2020, there will be changes to the cashback categories as shown below. You’ll see that the cashback on mobile and home phone bills, broadband and paid-for TV packages is reducing to 1%, and cashback for water bills is increasing to 3%.'
Which is just great as I have two direct debits for mobile and phone bills but, having a private water supply, none for water... | |
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| Savings Accounts on 07:56 - Jul 24 with 3608 views | bracknell_blue |
Thanks to advice from MArtin Lewis I have just opened a savings account with National Savings & Investments. 1.15% interest paid to your nominated bank account. Unlimited investment (well, a few million) all guaranteed by HM Treasury. Easy access withdrawal (£500 min). Savings will be moved across from other accounts shortly. |  |
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| Savings Accounts on 08:28 - Jul 24 with 3579 views | mikeybloo88 |
| Savings Accounts on 07:19 - Jul 24 by WeWereZombies |
And I am starting to wonder if Santander read the TWTD forum because I had another email yesterday that included:
'From 27 October 2020, there will be changes to the cashback categories as shown below. You’ll see that the cashback on mobile and home phone bills, broadband and paid-for TV packages is reducing to 1%, and cashback for water bills is increasing to 3%.'
Which is just great as I have two direct debits for mobile and phone bills but, having a private water supply, none for water... |
Indeed...I checked back and I definitely didn't get an email regarding the interest rate cut to 0.6% but I did get one in May about the cash back changes. Bummer about the tv, phone and bb but with electric and water at 2% and 3% I'll still cover the account fee and make a few quid, but I am moving most of my money out to Marcus and will keep a float in Santander to just pay the bills.
Edit...forgot council tax also at 1% cashback which for me paying £200 a month is what pushes my cashback total to £8 [Post edited 24 Jul 2020 9:10]
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| Savings Accounts on 08:30 - Jul 24 with 3581 views | BryanPlug |
[content removed at owner's request] |  |
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| Savings Accounts on 09:13 - Jul 24 with 3556 views | mikeybloo88 |
| Savings Accounts on 08:30 - Jul 24 by BryanPlug |
[content removed at owner's request] |
I agree...the S&P 500 tracker is good, or a Life Strategy fund where you can weight your exposure to stocks depending on risk and timeframe. | | | |
| Savings Accounts on 09:31 - Jul 24 with 3540 views | WeWereZombies |
| Savings Accounts on 08:28 - Jul 24 by mikeybloo88 |
Indeed...I checked back and I definitely didn't get an email regarding the interest rate cut to 0.6% but I did get one in May about the cash back changes. Bummer about the tv, phone and bb but with electric and water at 2% and 3% I'll still cover the account fee and make a few quid, but I am moving most of my money out to Marcus and will keep a float in Santander to just pay the bills.
Edit...forgot council tax also at 1% cashback which for me paying £200 a month is what pushes my cashback total to £8 [Post edited 24 Jul 2020 9:10]
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As I pointed out yesterday, Santander are now limiting cashback to £5 a month so, whilst you may cover the monthly charge with cashback, you are not going to exceed the charge with cashback. | |
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| Savings Accounts on 09:42 - Jul 24 with 3523 views | hampstead_blue |
| Savings Accounts on 08:30 - Jul 24 by BryanPlug |
[content removed at owner's request] |
I've forgotten the academic paper reference but......
Charges utterly destroy value.
St James Place have possibly the highest charges around, between 1.5 and 2.5%
A Vanguard fund is 0.5% maybe lower.
If you add that back into your fund each year, and then sprinkle the magic of COMPOUNDING, over years you will have a decent stack of cash.
In fact, I think Warren Buffet stated that compound interest is one of the most powerful forces known to man.....that and the lure of an ITFC match! (the second part is my own opinion).....
There is another cracking paper which shows that Strategic asset allocation provides more growth that Tactical Asset Allocation.
Basically, it's a way of showing that stock picking is more about luck and you are better off investing in macro funds - Index Trackers, Country funds, Region Funds, than you are just a single firm.
Charges. Keep them low and watch the fund grow - I made that up as well. It's true.
Just had a lovely large latte...can't you tell!....  | |
| Assumption is to make an ass out of you and me.
Those who assume they know you, when they don't are just guessing.
Those who assume and insist they know are daft and in denial.
Those who assume, insist, and deny the truth are plain stupid.
Those who assume, insist, deny the truth and tell YOU they know you (when they don't) have an IQ in the range of 35-49.
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| Savings Accounts on 13:02 - Jul 24 with 3468 views | BryanPlug |
| Savings Accounts on 09:42 - Jul 24 by hampstead_blue |
I've forgotten the academic paper reference but......
Charges utterly destroy value.
St James Place have possibly the highest charges around, between 1.5 and 2.5%
A Vanguard fund is 0.5% maybe lower.
If you add that back into your fund each year, and then sprinkle the magic of COMPOUNDING, over years you will have a decent stack of cash.
In fact, I think Warren Buffet stated that compound interest is one of the most powerful forces known to man.....that and the lure of an ITFC match! (the second part is my own opinion).....
There is another cracking paper which shows that Strategic asset allocation provides more growth that Tactical Asset Allocation.
Basically, it's a way of showing that stock picking is more about luck and you are better off investing in macro funds - Index Trackers, Country funds, Region Funds, than you are just a single firm.
Charges. Keep them low and watch the fund grow - I made that up as well. It's true.
Just had a lovely large latte...can't you tell!.... |
[content removed at owner's request] | |
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| Savings Accounts on 13:10 - Jul 24 with 3453 views | mikeybloo88 |
| Savings Accounts on 09:31 - Jul 24 by WeWereZombies |
As I pointed out yesterday, Santander are now limiting cashback to £5 a month so, whilst you may cover the monthly charge with cashback, you are not going to exceed the charge with cashback. |
That's not correct as I understand it...they are limiting cash back to £5 within each band. So you can only get a max of £5 back on the 1% band, £5 max on 2% electricity, and £5 max on 3% water. So £15 max in total. | | | |
| Savings Accounts on 13:30 - Jul 24 with 3433 views | WeWereZombies |
| Savings Accounts on 13:10 - Jul 24 by mikeybloo88 |
That's not correct as I understand it...they are limiting cash back to £5 within each band. So you can only get a max of £5 back on the 1% band, £5 max on 2% electricity, and £5 max on 3% water. So £15 max in total. |
You are right, I stopped reading after the £5...
'Up to 3% cashback on selected household bills, capped at £5 for each cashback tier each month' | |
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| Savings Accounts on 14:04 - Jul 24 with 3405 views | hampstead_blue |
| Savings Accounts on 13:02 - Jul 24 by BryanPlug |
[content removed at owner's request] |
Nice post and delighted to see someone else having my thoughts about SJP.
Charges are a con. It's smoke and mirrors.
Their so called 'investment monitoring' can be done at a fraction of the price. It's just numbers after all!
I've got a chunk in Alliance Trust in my SIPP. They hold a lot of tech. Facebook, Apple, Google. It's a decent fund and has a healthy dividend as well.
I ought to start picking stocks but not well enough yet.
I've not had deposit investments since I was a kid. Can't stand the thought of idle cash.
There was an interesting piece on Tesla this morning. They held back stock from the last period to book it delivered in this, thus boosting certain ratios.
However, everyone does it!
Tesla. Margins are very good, second to Ferrari and the same as BMW. They are a client and our chap there is awesome so I do like them.
Would I invest directly? No. I'd diversify the sector. Toyota are a fave as well. | |
| Assumption is to make an ass out of you and me.
Those who assume they know you, when they don't are just guessing.
Those who assume and insist they know are daft and in denial.
Those who assume, insist, and deny the truth are plain stupid.
Those who assume, insist, deny the truth and tell YOU they know you (when they don't) have an IQ in the range of 35-49.
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| Savings Accounts on 14:55 - Jul 24 with 3387 views | BryanPlug |
| Savings Accounts on 14:04 - Jul 24 by hampstead_blue |
Nice post and delighted to see someone else having my thoughts about SJP.
Charges are a con. It's smoke and mirrors.
Their so called 'investment monitoring' can be done at a fraction of the price. It's just numbers after all!
I've got a chunk in Alliance Trust in my SIPP. They hold a lot of tech. Facebook, Apple, Google. It's a decent fund and has a healthy dividend as well.
I ought to start picking stocks but not well enough yet.
I've not had deposit investments since I was a kid. Can't stand the thought of idle cash.
There was an interesting piece on Tesla this morning. They held back stock from the last period to book it delivered in this, thus boosting certain ratios.
However, everyone does it!
Tesla. Margins are very good, second to Ferrari and the same as BMW. They are a client and our chap there is awesome so I do like them.
Would I invest directly? No. I'd diversify the sector. Toyota are a fave as well. |
[content removed at owner's request] | |
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| Savings Accounts on 15:33 - Jul 24 with 3371 views | flimflam |
Stick it in a stocks and shares isa and invest in a managed hedge fund.
You should do 10% a year at least all tax free.
Some funds are hitting upwards of 50% at the moment as there are ripe pickings to be had on the markets. |  |
| All men and women are created, by the, you know the, you know the thing. |
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| Savings Accounts on 18:07 - Jul 24 with 3342 views | hampstead_blue |
| Savings Accounts on 15:33 - Jul 24 by flimflam |
Stick it in a stocks and shares isa and invest in a managed hedge fund.
You should do 10% a year at least all tax free.
Some funds are hitting upwards of 50% at the moment as there are ripe pickings to be had on the markets. |
Normally Hedge Funds have investment high limits and the best are closed.
Are you talking about openly traded funds?
Be delighted to see your recommendation?
What is the risk profile? | |
| Assumption is to make an ass out of you and me.
Those who assume they know you, when they don't are just guessing.
Those who assume and insist they know are daft and in denial.
Those who assume, insist, and deny the truth are plain stupid.
Those who assume, insist, deny the truth and tell YOU they know you (when they don't) have an IQ in the range of 35-49.
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| Savings Accounts on 19:32 - Jul 24 with 3324 views | Durovigutum |
| Savings Accounts on 13:31 - Jul 22 by homer_123 |
That advice will have been right and sensible with decent interest rates:
Let me illustrate:
If you've £10,000 mortgage debt at 2.99%,
Annual interest cost is: £299
If you have £10,000 savings at 1%,
Annual interest earned is: £100
Pay off the debt with the savings and you are £199 a year better off.
I'm no IFA but currently, unless you are going to 'invest' money (which can bring good returns even in the current climate but obviously carries greater risk), it's far better to clear debt than have a basic savings account or even a cash ISA. [Post edited 22 Jul 2020 13:34]
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I've looked at this in depth recently.
My conclusion is that if you are more than 20 years from retirement then the best savings account is your pension as you get up to 40% "free money" from tax relief as you pay in and when you withdraw it you get 25% out tax free and then probably pay 20% at most in the rest. This will make up for any poor choices in investment vehicle compared to non-pension saving.
The demographics of the future world population suggest the far East (Asia Pacific less Japan) will see the most growth in the next 20-25 years as they are younger than the West and generally suffer less corruption than Africa, meaning stronger companies with decent growth opportunities. The currency strength of the GBP is the joker here however, Brexit will cause a drop but if we return over time to the $1.65=£1 average then any funds bought at £1=$1.27 will need to grow nicely to counter this. That said, if these same Far East economies grow nicely the currencies will hold up against the pound regardless, while with oil dropping away in importance may cause the USD may slip too.
Anyway, in summary it's really very complicated and the IFAs aren't much better placed to help you on any basis other than perceived risk based on previous performance (it is said that past performance is no indication of future performance - it's the only indicator). |  | | |
| Savings Accounts on 19:54 - Jul 24 with 3314 views | longtimefan |
| Savings Accounts on 18:00 - Jul 22 by WeWereZombies |
Cut and pasted from an email from Santander on 6th May:
'Account Feature
Before 3 August 2020 Interest rate paid on credit balances 1.00% AER(edit).995% gross (variable) on balances up to £20,000
From 3 August 2020 0.60% AER2 (edit) 0.598% gross (variable) on balances up to £20,000'
The cashback you can earn is capped at £5 a month , it's getting to the point now where I am lucky if it exceeds £1,50 so the account fee is not covered by that. True the interest does still exceed the £5 fee if you have the full £20,000 in the account but it is possible to earn more elsewhere. My Stocks and shares ISA is currently returning at least fifteen times better than my cash ISAs, and it is pretty much back to the pre-Covid19 crash value; I wish I had had the confidence to put more into it or buy another Stocks and Shares ISA just after the Covid-19 price fall in March/April so that I got in at the ground floor before the recovery. [Post edited 22 Jul 2020 18:46]
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The cash back is limited to £5 in each of the three 1%, 2% and 3% bands, not £5 in total.
Edit: Sorry, missed the previous post that had already pointed this out and your acknowledgment. [Post edited 24 Jul 2020 20:06]
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| Savings Accounts on 19:59 - Jul 24 with 3311 views | Meadowlark |
Premium Bonds |  | | |
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