Under 20k savings, where to put it?

[Cindy34]

Confused about how taxes work on savings / investments.

Currently I have 20k spread around between ISA, Savings Accounts and an interest paying current account.

ISA has dropped rate yet again, so thinking it is time to move it. As it is a little over 10k, does it matter if it comes out of the ISA wrapper? Personal savings allowance (is it called that) now means that we don't pay tax on first £1000 of interest, so where is best to put money these days - chase the highest rate, or keep in ISA wrapper?

Have you considered a stocks and shares ISA? Savings pay peanuts so with the inflation as it is, you're actually losing money....

I would go for a mixed funds portfolio stocks & shares ISA - I have mine with Hargreaves Lansdown and manage it myself. They make it very easy to invest by suggesting mixed fund portfolios according to the risk level you want to take. You can get the money out again easily, just like a cash ISA.
I would keep a bit of cash in a savings account though, in case you need to replace a boiler or something.

Some posters recently were getting very excited about Premium Bonds, but I think they've just announced they're cutting the number of winners.

Frankly £20k is fuck all. (Sorry but in the grand scheme of things, that's the truth). Keep it in cash ISA's don't try and be clever and lose money.

you can get the cash out easily again just like a cash isa. Yep, you go figure that if 2008 repeats itself. I have NEVER read such utter rubbish.

Depends if you want to access it or not.

TBH there's naff all interest around. Premium bonds are safe, chance of winning gone down though, but maybe worth a go. Maxing them out is usually comparable to ISA interest in terms of regular small wins and hey, you might win big. Probs not but there's worse places to have money.

And dontcallmethat, you're rude. £20k savings to you might be "fuck all" but to many people it's a lot of cash.

Be helpful or shut up.

It IS a lot of cash, but it's not enough to gamble with. If you start 'investing' you need a cushion. 20k won't give you that.

You may not like the reality, but 'oooh get yourself an investment' is not helpful. I spend a day a month at the CAB looking at shite that people have been sold. You might not like it, but £20k isn't enough to start playing the sonic market.

Sonic? Stock!

Thanks for the suggestions. It is a years salary to me, so I don't fancy a gamble with it.

Thanks for the Premium Bonds idea, I've got £8k in an ISA that I might change into them.

To actually answer your question. As a single years ISA allowance will be £20k chasing interest rates is viable for you. You will get interest gross too so the previous detrimental impact will be removed and your savings allowance should cover any income.

Is this long term investment or is this a combination of rainy day money & long term investment? Would you need to raid it if you needed to replace the boiler? How long can you survive without touching it if you lost your job?
The problem with stocks & shares ISA is that, whilst you can access your cash easily, some times will be better to sell than others & you may not be in a position to be able to wait for the better time.

Do you have a pension? Is it final salary? Mine isn't and, at a similar level of savings, I took the view that I was risking the stock market enough with my pension & I wanted a non-fluctuating amount somewhere. Yes, with inflation a cash ISA is always going down but you know how much is in there.
Premium bonds can take up to a month to return your money so I'd stick £10k in there & the rest in a cash ISA.

I have a similar amount in premium bonds and I would say I get 25 quid roughly every other month (50 this month). So not bad compared to most accessible savings accounts, plus there's always the hope of a bigger prize! I have mine set up to automatically reinvest so my capital goes up and it adds more chances of winning.

Current accounts pay the best interest. You would need several different accounts to cover the whole amount, and you would need to do some legwork with setting up a few direct debits and meeting their monthly funding requirements. You need to be organised to make it work, but it's the only way to get decent interest in cash. Have a look at Money Saving Expert for details.

As a starting point, you can get two Tesco Current Accounts - these will each pay 3% on up to £3000 and they don't require any direct debits or minimum monthly funding so they will function just like. Savings account for you.

If you want it all in one place then a Santander 123 account is best. 1.5% on up to £20000. But you will need to set up 2 direct debits in the account, pay in £500 per month and pay a £5 per month fee. If you put all on your household bills direct debits onto this account then that you meet the direct debit requirements and also earn you cash back which would cover some/all of the £5 per month fee.

Money saving expert is a really good place to start - he gives breakdowns of all the different high interest current accounts.

Interest rates have generally gone a bit crap recently though, so this question is a bit harder to answer than it would have been a few months back. The Santander 123 has dropped to 1.5% interest but that's on up to £20k. It has a £5 a month fee though, so you'd need to work out whether it's worth it for you (there's also cash back on direct debits). There's a minimum requirement on number of direct debits and amount going in each month. They also have a savings account with 3% interest but you can only pay in £200 a month and that interest rate is only for a year, so it's worth about £30 which isn't much but better than nothing. TSB had an account that used to be 5% interest, no direct debits, but that's dropped as well now, possibly 3% though so one of the better ones out there. £2000 limit, no direct debits, minimum payment in required each month (we just swap money between two accounts to fulfill this).

That's the route I've gone down anyway, wouldn't want to take the risk of shares personally. Although I admit I don't have much of an understanding of them!

Snap Spam!

I have mine in a Santander account. With the cash back on bills etc it more than covers the fee as well as the 1.5% interest. I don't think it's enough to start tying up in investments, and is instantly accessible should disaster strike.

I think that's plenty of money to invest - there are funds that can be invested in with a tenner... although obviously the accessibility of money is an important consideration so if any of this pot is for emergencies ( boiler or car repairs etc) then it'd be better to keep that bit in an accessible saving account.

Thanks all.
It is not emergency fund (6 months) but it is the next bit so I could put it somewhere where it took a while to get out but not lock it away for a year or more.
Cash ISA rate it was in has dropped so much I can't see the point in having the ISA wrapper now there is the personal savings allowance.

Already have two current accounts, not sure I cope with more. Already have some premium bonds and they do ok but some months get nothing.
So for now it looks like an interest paying instant access account will be ok, though probably still bellow inflation rate, thus time to start looking at stocks/shares ISA... not good at taking risks.
Pension is an option after 6th April as have currently maxed out what I can pay into NEST (they have a limit this year but no limit next financial year). Problem though is once in the pension pot, can't get it out again. Job is fairly insecure, so feel I need to have the money sitting somewhere it can be got hold from, with 30-90 days notice.

Thanks for the suggestions, lots to look in to and consider.

jojo, do you have any funds to suggest, like a low cost index tracker. Not sure what to make of the depreciation and currency fluctuation of the pound against the dollar.

I wouldn't want to suggest specific products. Personally, I use youinvest.co.uk and spread money across different funds to spread the risk and make sure that if I need to pay out, I do it from sth that had gone up. The website provides a choice of over 4000 different funds to suit anyone's preferences. There are many similar websites too. I thing a few people use Nutmeg or Hargreaves L.

Vanguard are a good company for tracking. Mutual ownership and the cheapest you'll find.
L&G offer trackers with an active overlay
blackRock Concensus is an average of managers in a passive form.

Depends what you're looking for.

All low cost.

Unless you do some proper research about why we invest, the benefits of asset allocation, the use of a benchmark and the reality of business cycles, it'll be a punt.

We have/had a mortgage where I can over pay with no penalties, but also take the overpayment back out if I want. We put our spare cash in there as the savings in mortgage interest was more than the any bank would give.

In the end we left it in, built up other savings and will pay our mortgage off early in a couple of months. Paying off early means we will also be able to stop paying mortgage protection insurance too which is another saving.

Thanks, dontcall and Jojo.

cash ISAs are all below inflation (as are savings accounts) so are definitely losing money. Stock market is high so investing now will possibly lose money.

premium bond prize numbers and prize fund both dropping 1st march.

seven weeks to the ISA deadline - if Brexit is triggered before then it might crash the market, or it might just crash the pound which puts the stock market higher...

Mark Carney hates savers and holds all the strings.