General advice on how to start saving

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posted
19 years ago

Sun, Oct 31, 2004 2:55 PM

Hi. I've recently finished University and have started a job, which means I have money which I would like to save. I'm a little confused about what to do at the moment and would appreciate any advice that anyone would like to offer.

I currently have a mini-ISA at The Royal Bank of Scotland which was setup for me to place my savings into a couple of years ago. Can I invest more than £3000 into this account in total or is it that I can only add £3000 to it each tax year? My understanding is that mini-ISAs are tax-free (which few schemes are), so they are one of the best places to put your initial savings until you exceed the limit. Is this correct?

I've been checking on the moneysupermarket website, and it appears that my bank doesn't pay very good interest rates for their ISAs. I know I'm only allowed to have one open at any on time, so how do I go about changing to a better account? Will the new bank I choose open a new ISA account, transfer the money over for me and inform my old bank to close the ISA there?

Finally, does anyone have any general advice on how to invest about £3000-£6000 a year which I would be happy to tie up for about 2 - 3 years, given that my ISA limit is reached? The Halifax are offering a

7% rate to regular savers at the moment which looks good to me, but that has a £3000 limit. If I filled that up too, is a regular savings account with around 5% interest which isn't tax-free about the best you can do? I'm also aware of premium bonds but they seem more like a bit of fun to me unless you can meet the maximum £30,000 limit.

Sorry about the number of questions, but finance is very confusing to me. There seems to be so many options with so many rates and conditions that it's hard to know what to do.

Thanks.

(Edit: Sorry for the report but I picked a subject name the same as a eight year old thread and goggle was showing it as a reply.)

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- robert
  
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posted
19 years ago

Sun, Oct 31, 2004 6:12 PM

Can I direct you to

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there you will find a comprehensive selection of easily readable articles which will answer all your questions. There are also discussion boards for further help.

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- Ronald Raygun
  
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posted
19 years ago

Sun, Oct 31, 2004 6:18 PM

You can invest as much as you like, so long as you don't add more than £3k in any tax year.

Yes, that's right, the interest they pay is not subject to income tax. But if you look around, you may find that interest rates are often a little lower than with non-ISA savings accounts. Usually still better than non-ISAs after tax, though. You just need to be careful.

That's not correct. You can have as many mini-cash-ISAs as you like, so long as you don't add to more than one in any tax year.

Yes, you need to request a transfer. This is important. You must not take the money out of the old ISA yourself, because then you won't be able to put it into the new one if your yearly £3k limit would be exceeded.

To someone like you, saving from income, that looks ideal. You can put £3k into this Halfix thing, plus £3k into an ISA. But as far as the Halifax Saver is concerned, you'll need to find a new home for your money after a year, because then the competitive interest rate vanishes.

Premium Bonds are pointless unless you're a higher-rate taxpayer. If you have any debt, such as a mortgage loan, diverting savings to pay them down will give you better returns than building up positive savings. You can also get better returns in unit trusts etc, but if the risk puts you off, and it *has* to be cash savings, some of the internet savings accounts are quite respectable. ING, for instance, or Halifax WebSaver. The latter offers a freeze option whereby you lock part of the money away for a year and that beefs the interest rate up.