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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To ask how you would split £27k? …

91 replies

bankingpanda · 27/01/2024 10:23

… into two savings account?

  1. ISA - max. I can put in there is £20k. It’s tax free. Interest rate 2.85% AER
  2. Savings account. I believe no limit on what to put in there. I get taxed on this. Interest rate 4% AER

currently I have no money in either of these accounts (apart from the £1 I needed to put in there to open them)

I’m struggling to know what to do. Really want to put the money into savings account as so far it was just sitting in my bank account 🫣

I’ve instant access to both accounts if I need to, but I also I’m thinking of leaving about £3k in my standard bank account so I don’t need to touch savings at all.

thoughts?

OP posts:
mrsbyers · 27/01/2024 11:04

If you’re set on owning property then consider a LISA lifetime ISA , you could put some of the funds in there and use as a regular savings account and the rest keep in a higher rate easy access for other day to day expenses

BarbieDangerous · 27/01/2024 11:04

worriedandannoyed · 27/01/2024 10:25

Very tone deaf right now

Stupid comment. So because the rest of us are poor, no one should get advice on a discussion forum to see what they should do with money they’ve saved?

Don’t have a look at the private school thread. You’ll be raging to see that the OP is able to save £1K a month and put towards a private school.

OP I have no advice because I’m a poor sod. I put £300 in my savings three days ago and I wonder how long that’ll last😂 maybe Premium bonds?

TorroFerney · 27/01/2024 11:06

worriedandannoyed · 27/01/2024 10:25

Very tone deaf right now

Could you share the rules about what is a suitable post? Lest we make a mistake.

Calmdown14 · 27/01/2024 11:07

Oh and get a better ISA. There are plenty higher than that.

As for the 'tone deaf' comments, I also have some savings. But I live in a small house, we have one old car, haven't been abroad in a decade and I am very careful with day to day spending. I also decided to pay a bit more for a 10 tear fix on my mortgage rather than chase the very lowest deal.

Some of those struggling around me have spent on meals out every week, more expensive holidays, etc etc.

Our household income is only £45k so I am hardly rich, I just don't ever want to be in a position I can't pay my bills as I've lived through that and I'll trade a week in Spain for a week in the Highlands, or taking my own lunch versus buying out for financial security.

drowninginsick · 27/01/2024 11:08

worriedandannoyed · 27/01/2024 10:25

Very tone deaf right now

It's not a bloody race to the bottom!

Op I have similar and have it in premium bonds. I've had a good rate of return but honestly I'm happy to sacrifice a bit of return for the thrill of waiting every month to see if I'm a millionaire Grin

NextPrimeMinister · 27/01/2024 11:11

You need to work out the actual interest rate of 4% after tax, which is different if you are either a basic or higher tax payer.

As you dont get 4%, only the first £1k or £500 is tax free (on all savings held).

I've seen on another thread actual calculations. I think it could be the premium bond one.

Chances are a better ISA is better than not quite 4%. I think it comes out approx 3% for nasic tax payers and the ballache of self assessment to pay the tax.

GeneCity · 27/01/2024 11:13

worriedandannoyed · 27/01/2024 10:25

Very tone deaf right now

This is a silly comment - it's an open posting forum, and different people will be in all kinds of situations. It's also good to discuss all aspects of money, including salaries, savings, and investing etc.

bankingpanda · 27/01/2024 11:13

hah, sorry @PamelaParis and thanks for spelling it out. I didn’t think anyone would get upset about me having some savings and others don’t… I know it’s shite out there, it really is. No wise words, I am just trying to make the best with what I saved though over a decade 😅

thabks all for the advice. I will look around at other ISAs. I just went with my bank ones after the meeting as I can close it anytime. I will look around though…

OP posts:
allthemiddlechildrenoftheworld · 27/01/2024 11:17

PamelaParis · 27/01/2024 10:44

Sorry don't get the tone deaf comment 🫣😅

Let me spell it out for you. There's people out there who are struggling to make ends meet, and you're like "Oh noooooo, what shall I dooooo with my £27k?".

@PamelaParis you are absolutely ridiculous and very jealous!! green eyed monster. the OP might have been left some money or it might even have been compensation, but whatever, she is trying to make the money work!

AffableApple · 27/01/2024 11:18

worriedandannoyed · 27/01/2024 10:25

Very tone deaf right now

There are starving children in the world. You've eaten many times this week and are wasting your energy on Mumsnet. Disgraceful.

allthemiddlechildrenoftheworld · 27/01/2024 11:22

PamelaParis · 27/01/2024 10:44

Sorry don't get the tone deaf comment 🫣😅

Let me spell it out for you. There's people out there who are struggling to make ends meet, and you're like "Oh noooooo, what shall I dooooo with my £27k?".

@PamelaParis you are absolutely ridiculous and very jealous!! green eyed monster. the OP might have been left some money or it might even have been compensation, but whatever, she is trying to make the money work!

DietrichandDiMaggio · 27/01/2024 11:23

PamelaParis · 27/01/2024 10:44

Sorry don't get the tone deaf comment 🫣😅

Let me spell it out for you. There's people out there who are struggling to make ends meet, and you're like "Oh noooooo, what shall I dooooo with my £27k?".

And there are people with hundreds of thousands of pounds in savings and there has always been people living on the breadline; the OP is hardly complaining that her diamond shoes are too tight.

Maybe don't click on threads that are clearly about money from the title, if you are that sensitive to the idea that some people are not struggling as much as others.

Lucanus · 27/01/2024 11:34

When did you open your ISA? You can only pay into one cash ISA each tax year. If you already opened one this year you won't be able to open a better one until 6th April. You could possibly transfer, but probably not really worth doing.

I have a Tandem Bank instant access account paying 5% which I like a lot. Very easy to move money in and out so you can keep most of your current spending money in there and move to your current account as required. I'd put everything in there until you decide what to do in terms of an ISA or maybe a fixed term savings with a better interest rate.

£27k at 5% would be £1,350 in interest annually. So you'd need to pay tax on £350 unless it was in an ISA, assuming your total income is above the personal allowance. Only 2 months left in the current tax year though so not an issue immediately, but you'd want most of the money in an ISA soonish.

TriaIs · 27/01/2024 11:40

Brits are uniquely bad for saving their money in cash - especially if you were consider an ISA at such a low rate! Those saving this way are currently being hammered by inflation.

You’d be much better off investing in a stocks and shares ISA with a diversified portfolio. Just one in five Brits do this compared to around 85% of Spaniards…

PennyPugwash · 27/01/2024 11:43

worriedandannoyed · 27/01/2024 10:25

Very tone deaf right now

Get a grip!

Minikievs · 27/01/2024 11:45

Your ISA rate is awful. Stick £20k in a higher ISA (before 5 April) then stick the rest in premium bonds

Overthebow · 27/01/2024 11:47

PamelaParis · 27/01/2024 10:44

Sorry don't get the tone deaf comment 🫣😅

Let me spell it out for you. There's people out there who are struggling to make ends meet, and you're like "Oh noooooo, what shall I dooooo with my £27k?".

It’s not tone deaf, OP is allowed to ask a sensible question about the money she has worked hard for and saved. Good on OP for being able to do this.

OwlsDance · 27/01/2024 11:47

Go on money saving expert website, find a highest paying savings account. Fixed term accounts will always pay higher rate, so if you know you won't need all that money for a year or two, I'd look at those first.

Depending if you're basic rate tax payer, or a a higher one, divide 1000 (if you're basic rate) or 500 (if you're higher rate) by interest rate in decimal points (so 5% will become 0.05) - this will give you an amount you can save next tax year without going over the tax threshold.

Say the best rate today is 5.5%, and you're basic rate. You divide 1000 by 0.055, that gives you £18181.81 - this is the amount you can safely save without going over tax threshold. Personally, I'd round it down a bit, so put £18k into fixed savings. Then put the rest into ISA, but again, check the same website for best rates.

One thing to be aware of - if you go for 2/3/5 year fix, you have to divide that number by number of years, so in my example above, if it's 2 year fixed account, you can only save £9k before you pay tax in 2 years time. It's because you can't carry over unused savings allowance, it's applicable in the year you've received your interest payment.

Another option would be to stagger 1 Yr and 2 Yr fixes, so say put £18k into 1 Yr, and further £9k into 2 Yr, but you have to be very good with understanding/knowing how much interest you're earning each tax year to jot go over threshold.

If you don't want the faff of moving things around too much, then do the calculation, stick whatever you come up with in 1 Yr fix, and the rest into ISA.

Apologies if this is too confusing! Happy to work with actual numbers if you found the accounts you wanted to go for.

Jollyoldfruit · 27/01/2024 11:50

PamelaParis · 27/01/2024 10:44

Sorry don't get the tone deaf comment 🫣😅

Let me spell it out for you. There's people out there who are struggling to make ends meet, and you're like "Oh noooooo, what shall I dooooo with my £27k?".

OP has saved roughly £230 a month for ten years, she doesn’t own her own place and is now thinking about investing her money wisely.

Tone deaf would be someone saying they earned lots of money, owned their home outright and had a £100000 lying around with no need to spend it.

Overthebow · 27/01/2024 11:51

bankingpanda · 27/01/2024 11:13

hah, sorry @PamelaParis and thanks for spelling it out. I didn’t think anyone would get upset about me having some savings and others don’t… I know it’s shite out there, it really is. No wise words, I am just trying to make the best with what I saved though over a decade 😅

thabks all for the advice. I will look around at other ISAs. I just went with my bank ones after the meeting as I can close it anytime. I will look around though…

Don’t worry, you’ve done nothing wrong asking for advice on here. Some people seem to think that you’re not allowed to even mention money if you have any kind of savings or aren’t struggling to feed yourself.

gotmychristmasmiracle · 27/01/2024 11:52

I am just doing this with 30k

  • £20k isa virgin 1 year fixed 5.25%
  • Santander do a 7% saver for one year only £4k allowed though - believe there is top cash back for opening this account as it cost £36 to open.
  • the rest will be going into atom savings 4.75% fixed for one year.
gotmychristmasmiracle · 27/01/2024 11:55

At the moment I am happy just doing 1 year fixed as never know if need money for other investments and who knows what the rate will be in 12 months.

LandofMerchants591 · 27/01/2024 11:57

You can have cash ISAs that you can add & withdraw money that tax year & pay 5%, look at Zopa. ISAs are tax free too

You can have 50K per person in Premium Bonds & all winnings are tax free

Look at Martin Lewus Money Saving Expert website

OwlsDance · 27/01/2024 11:59

gotmychristmasmiracle · 27/01/2024 11:55

At the moment I am happy just doing 1 year fixed as never know if need money for other investments and who knows what the rate will be in 12 months.

Interest rates most likely will go down, savings rates have peaked last summer and have been going down since.

LandofMerchants591 · 27/01/2024 12:00

If you are under 40 look at LISAs