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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 11:08 - Jul 22 with 2809 views
I am kinda in the same position, have a decent bit of money available to invest after a house move and a work bonus so do not want it just sitting around in my current account.
Have looked around a bit lately and think I am going to go for a Stocks and Shares ISA. You can pick the level of risk you are comfortable with as well so depends on what you are looking for.
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Savings Accounts on 11:11 - Jul 22 with 2796 views
I am kinda in the same position, have a decent bit of money available to invest after a house move and a work bonus so do not want it just sitting around in my current account.
Have looked around a bit lately and think I am going to go for a Stocks and Shares ISA. You can pick the level of risk you are comfortable with as well so depends on what you are looking for.
Three questions to both go you (feel free to PM the answers to me)
1, How much are you looking at putting away - anything under £5k I would tend to say keep in cash
2, are you likely to need it in the next 2 years - if so keep it cash, its safer
3, how p1ssed off will you be if if a years time its fallen in value by 10%? - if the answer is is anything stronger than "meh' keep it in cash
I would thoroughly recommend checking out Money Saving expert. The website always gives pretty good advice on savings and is nice and clear on what is involved in each account.
Note at the minute savings accounts/ISA's interest rates are pretty rubbish because of the historically low BOE interest rates. Your best bet is probably a savings account tied to card. Most of these have a fixed monthly amount you put in which you can then access at the end of the year and give ok interest. If you want easier access you will probably have to accept lower interest unfortunately.
Happy to give more info if you want to PM.
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Savings Accounts on 11:41 - Jul 22 with 2702 views
The monthly saver things are normally ok where you pay £250 pcm and get a half decent rate - contextually.
Otherwise treasury conditions are pretty awful and I'd expect materially no interest.
Yep. Regular monthly savers locked in for at least a year are the only ones on the high street worth worrying about as far as regular savings accounts go. The rates for anything else are rubbish (~1% at best).
ISAs are pretty pointless now for most people since the tax rules changed on savings.
Cash ISA's are a bit of a waste of space unless you are a 40% tax payer and/or have a lot of savings (say over £50K).
You can often get a better interest rate in non ISA accounts and - dependent on the above - you may not have any tax to pay on the interest.
That said, interest rates are generally shockingly low, less than inflation, which means you are losing money in real terms. But, if you stick with one of the big boys, you can be fairly certain that your money is safe and easy to access.
It really depends on what you want to do with the money and if you need quick access to it.
Under the current interest rate, you might benefit from say paying off some of your mortgage (if you have one) which can lower your term or your monthly payments. Some mortgage accounts also let you re-access over payments if you need to as well.
The above assumes you have a mortgage and that said account allows over payments.
If you can do the above and the interest rate on your mortgage is relatively high, your money will work far better than placing in any ISA or savings accounts - as the amount of interest you save by clearing your mortgage will considerably outweigh any earnt in a savings account or ISA.
Ade Akinbiyi couldn't hit a cows arse with a banjo...
It really depends on what you want to do with the money and if you need quick access to it.
Under the current interest rate, you might benefit from say paying off some of your mortgage (if you have one) which can lower your term or your monthly payments. Some mortgage accounts also let you re-access over payments if you need to as well.
The above assumes you have a mortgage and that said account allows over payments.
If you can do the above and the interest rate on your mortgage is relatively high, your money will work far better than placing in any ISA or savings accounts - as the amount of interest you save by clearing your mortgage will considerably outweigh any earnt in a savings account or ISA.
I’m not an IFA by any means but whenever I have had conversations with anyone in this field (including very recently) the advice has always been that unless the mortgage interest rate is high not to pay this off. Simple rationale being that a better return can be achieved from savings accounts - even with the low rates currently
Obviously this depends on specific circumstances, and some people may simply feel more comfortable paying off their mortgage where they can. But generally that approach will maximise earnings on it plus if you decide further down the line to pay the mortgage after all you still have the option
That said I think the OP would do well to drop Keno a PM as difficult to give any suggestions without really knowing the amounts in question or when they may use it longer term
[Post edited 22 Jul 2020 13:01]
Highlighting crass stupidity since sometime around 2010
I’m not an IFA by any means but whenever I have had conversations with anyone in this field (including very recently) the advice has always been that unless the mortgage interest rate is high not to pay this off. Simple rationale being that a better return can be achieved from savings accounts - even with the low rates currently
Obviously this depends on specific circumstances, and some people may simply feel more comfortable paying off their mortgage where they can. But generally that approach will maximise earnings on it plus if you decide further down the line to pay the mortgage after all you still have the option
That said I think the OP would do well to drop Keno a PM as difficult to give any suggestions without really knowing the amounts in question or when they may use it longer term
[Post edited 22 Jul 2020 13:01]
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]
Ade Akinbiyi couldn't hit a cows arse with a banjo...
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]
Well yes in your example it would be better to pay the mortgage but it depends on the actual numbers
Yours do seem particularly skewed - the average short term fixed mortgage rate is much closer to the 2% mark and tracker rates much lower, whilst some savings accounts will still pay nearer the 3% mark. So only really if someone cannot get that savings rates and/or has a longer term or bad fixed mortgage rate that the mortgage would be preferable
I probably should add that my most recent advice received related to investing rather than a savings account however I’d still be able to get a better rate than my mortgage from a regular savings account, for a chunk of savings at least
Highlighting crass stupidity since sometime around 2010
Well yes in your example it would be better to pay the mortgage but it depends on the actual numbers
Yours do seem particularly skewed - the average short term fixed mortgage rate is much closer to the 2% mark and tracker rates much lower, whilst some savings accounts will still pay nearer the 3% mark. So only really if someone cannot get that savings rates and/or has a longer term or bad fixed mortgage rate that the mortgage would be preferable
I probably should add that my most recent advice received related to investing rather than a savings account however I’d still be able to get a better rate than my mortgage from a regular savings account, for a chunk of savings at least
The example was lifted directly from MoneySavingExperts website:
As of May this year (source: MoneyFacts):
The current average two year fixed mortgage rate stands at just 2.09% while the average rate for a five year fixed mortgage is 2.35%.
MoneySavingExpert currently have 1.16% for Easy Access savings NS&I and u[p to 1.5% on longer fixed.
You can get close to 3% on regular/ monthly saver but there are limits to how much you can put in and take out. And therefore, in comparison to mortgages aren't really any better.
In short: if the mortgage rate is higher than the savings rate and you can spare the cash, overpaying is a solid financial decision.
Ade Akinbiyi couldn't hit a cows arse with a banjo...
Well yes in your example it would be better to pay the mortgage but it depends on the actual numbers
Yours do seem particularly skewed - the average short term fixed mortgage rate is much closer to the 2% mark and tracker rates much lower, whilst some savings accounts will still pay nearer the 3% mark. So only really if someone cannot get that savings rates and/or has a longer term or bad fixed mortgage rate that the mortgage would be preferable
I probably should add that my most recent advice received related to investing rather than a savings account however I’d still be able to get a better rate than my mortgage from a regular savings account, for a chunk of savings at least
Not a very big chunk though Only on first £1500 - £2000 kept in a bank account.
When you look at the extra cost of paying off a mortgage for those who took a Covid-19 mortgage break it is easy to see why it is good advice to pay down if you can.
The example was lifted directly from MoneySavingExperts website:
As of May this year (source: MoneyFacts):
The current average two year fixed mortgage rate stands at just 2.09% while the average rate for a five year fixed mortgage is 2.35%.
MoneySavingExpert currently have 1.16% for Easy Access savings NS&I and u[p to 1.5% on longer fixed.
You can get close to 3% on regular/ monthly saver but there are limits to how much you can put in and take out. And therefore, in comparison to mortgages aren't really any better.
In short: if the mortgage rate is higher than the savings rate and you can spare the cash, overpaying is a solid financial decision.
If you’re not looking to spend the cash, and your mortgage rate is at one of the averages quoted, then you would be better off putting it in the savings accounts at 2.75% that they feature...
Agree fully with the final summary, but the opposite is also true, and in most cases achievable
I’m fairly sure this irrelevant to the OP anyway as don’t believe he’s mentioned a mortgage!
Highlighting crass stupidity since sometime around 2010
I’m not an IFA by any means but whenever I have had conversations with anyone in this field (including very recently) the advice has always been that unless the mortgage interest rate is high not to pay this off. Simple rationale being that a better return can be achieved from savings accounts - even with the low rates currently
Obviously this depends on specific circumstances, and some people may simply feel more comfortable paying off their mortgage where they can. But generally that approach will maximise earnings on it plus if you decide further down the line to pay the mortgage after all you still have the option
That said I think the OP would do well to drop Keno a PM as difficult to give any suggestions without really knowing the amounts in question or when they may use it longer term
[Post edited 22 Jul 2020 13:01]
Interesting (no pun intended) the FCA guidance and training id all very much geared around clearing short term debts and mortgages with any spare money
That said individual circumstances play a large part in any any actual advice
If you’re not looking to spend the cash, and your mortgage rate is at one of the averages quoted, then you would be better off putting it in the savings accounts at 2.75% that they feature...
Agree fully with the final summary, but the opposite is also true, and in most cases achievable
I’m fairly sure this irrelevant to the OP anyway as don’t believe he’s mentioned a mortgage!
Not necessarily - say you have £5k spare cash - you can't put that £5k in a regular saver at 2.75% because they only allow an investment of £300 per month.
So you do not get 2.75% on the £5k....so the real interest rate earnt is much much lower than the headline 2.75%.
Whereas you can put the whole £5k into your mortgage and save interest immediately.
Ade Akinbiyi couldn't hit a cows arse with a banjo...
Their funds are low cost (critical as high charges destroy growth), and track an index. Effectively they follow whatever you ask them to.
The FTSE 100 is a good example. The biggest 100 companies listed in the UK. Much of the income is from overseas so you are diversified from a number of risks.
Some will say that you COULD lose all your money but......has that happened in the past 20/30/40/50 years? No.
A Tracker over 5 years would be a good start. Speak to someone at the company about risk. Those who typically don't invest in stocks and shares don't fully understand the risk and just how it's minimised.
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.
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]
Absolutely this. It's worth having a nest egg of a few months salary if you can manage it, but after that and in the current climate overpaying on mortgage, paying off credit cards or loans is by far the best option.
Not necessarily - say you have £5k spare cash - you can't put that £5k in a regular saver at 2.75% because they only allow an investment of £300 per month.
So you do not get 2.75% on the £5k....so the real interest rate earnt is much much lower than the headline 2.75%.
Whereas you can put the whole £5k into your mortgage and save interest immediately.
That’s why I added ‘for a chunk of savings at least’ onto my previous post - obviously that only applies for amounts that the interest rate is higher
Also worth noting that some people may be able to have more than one account - albeit more faff involved
But again - it depends on the specific rates involved, and it’s pretty clear we are actually in agreement that it depends on which has the higher rate
Only point I’d add is that if it’s close I’d personally still lean towards the savings account, as you’d still be able to subsequently pay the mortgage if you choose whereas getting it back out from the latter could be trickier!
Highlighting crass stupidity since sometime around 2010
Interesting (no pun intended) the FCA guidance and training id all very much geared around clearing short term debts and mortgages with any spare money
That said individual circumstances play a large part in any any actual advice
This is probably where I should repeat my initial gambit that I’m not a qualified IFA by any means, and just going on what I’ve been advised previously!
Is that the FCA guidance for what IFA’s should advise? In my case it is close family member, a friend and a senior mortgage broker at a large local agent that have all basically given the same advice - but again is probably specific to our actual circumstances and may not be typical
Probably also why asking for financial advice from strangers on the internet isn’t always the best idea!
Highlighting crass stupidity since sometime around 2010
Thank you all - a lot of good info to digest here.
I'm late to the party, but here's what a financial thicko like me does.
We have a savings account with both our names on it, our habit is to dump as much into it as possible every pay day then take it back out if we have to. Generally we don't need to but last couple of months has been Birthday heavy so have taken back £100/£200 a month out of the £900 we collectively put in there at the start of the month.
Anyway, we've got a modest little sum now of six thousand atm, quite proud of that tbh as although the wife earns well she only works 3 days a week and I'm not on great money in the role I'm in.
I was informed that we made £16 in interest over the last year, what a time to be alive.
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Savings Accounts on 14:52 - Jul 22 with 2361 views
This is probably where I should repeat my initial gambit that I’m not a qualified IFA by any means, and just going on what I’ve been advised previously!
Is that the FCA guidance for what IFA’s should advise? In my case it is close family member, a friend and a senior mortgage broker at a large local agent that have all basically given the same advice - but again is probably specific to our actual circumstances and may not be typical
Probably also why asking for financial advice from strangers on the internet isn’t always the best idea!
pah!!
advice from complete strangers on the internet is always the best advice you can get!!
Now has anyone here everyone had a go at brain surgery?
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