ISA, Investments and Pots


(Martin) #1

I’m currently starting out with saving for a mortgage and i wondered would interest ever be applied on pots that are unused (specifically for saving) now that overdrafts are on the table. I mean, to counteract the borrowing side on the scale.

I 100% rather use Monzo than the High Street banks for my cash.

Thanks :blush:


#2

Monzo don’t offer interest on any deposits, and I don’t think they ever will. Even if they do, I’d guess that they’d be pretty low (look at Starling’s 0.5% for example).

The following is my personal opinion. Not investment or other advice!

If you save for a house deposit you’ll likely save for years. With inflation currently around 3% per year your cash will actually loose in value if you earn less than 3% interest. As much as you may find High Street banks antiquated, distasteful, legacy, or whatever, depositing savings there is a much better option, as they will give you up to 5% interest, rather than you loosing around 3% in value each year!

Don’t bother about ISA accounts, though: these currently give terrible returns. LISA, Help To Buy ISA, standard savings account, or standard current accounts are much better options, and you can get up to 5% interest on those (as far as I’m aware), and you can open multiple of them (they often only pay interest up to fairly small balances).

Combine that with current accounts that give cashback on direct debits and/or credit cards that give cashback on purchases (although if those encourage you to spend more, then that’s counterproductive :wink: ), and you can get a pretty decent amount of cash each month - that feels good, and motivates you to save further, and it helps you get your dream home sooner!

Finally, depending on your attitude to risk, consider combining this with investment in the stock market or other assets. Returns can be higher, but you obviously take more of a risk.

Here a few links for further reading:

A recent discussion:

Reasonable savings accounts:

Reasonable current accounts with cashback, cash for switching to them and/or interest:


(Dan) #3

Use Nationwide’s 5% interest accounts :slight_smile: that’s where all my savings are now…


#4

or put your money into WiseAlpha and lend money to major UK firms and get returns closer to 8%!


(Kevyn) #5

I’m saving up for a house and am saving in this way.

34% into a Lifetime ISA, pretty much locked away without a 25% penalty (after April), but you gain 25% bonus (up to £1,000) on up to £4,000 saved per tax year.
33% into a 5% Regular saver (can’t access for a year without losing % benefits).
33% into Premium Bonds (for ‘the chance’ to win, as well as a slight delay of 3-days (payment is by BACs) to really think if I needed to use the money).

I have also been putting further savings into nutmeg.com share investments but I don’t class this as housing money because any investments could fall and generally investments are a long term project (that said, after 6 months I am up 7.12%).


(Martin) #6

Thank you all for the financial insights out there. Totally blown my mind. I’m deffo looking into some of your suggestions. Definitely some money out there to be gained!


#7

Yep, I do that too. But as far as I know it’s only the regular savings accounts that give 5% and only for a one year term. And as the interest is calculated monthly it’s more like 2.5% of the sum invested.


#8

I think he means this one: https://www.nationwide.co.uk/products/current-accounts/flexdirect/features-and-benefits 5% on the first 2.5k for the first 12 months.


(Dan) #9

What @nanos said :wink: I also have the savings account too :stuck_out_tongue: so 5% on £5500


#10

Ooh, thanks for the idea!
Just wondering now if NWide would allow a second interest bearing current account to be opened 12 months later when the rate on the first one drops to 1%? (Allowed for regular savings accounts, I know).
Think I’ll ask 'em.