Where to Save Money

[jacks09]

we're in a position where we are some way to saving money for a deposit on a house, a fortunate position I know. I'm an avid follower of Money Saving Expert and currently have the Santander 123 Accounts. After reading the blog about it on MSE it still seems the best option, when considering bank/savings accounts.

It now seems that the stock market is more lucrative, but I can't quite make my peace with the risk.

Is anyone else in this boat? Where are you putting your money?

[TheCat]

I gave some to a Nigerian prince who needed it to regain his fortune.

I should be getting my payment any day now.

[aerie]

under the mattress, it feels as though we are floating .....

[????]

As you're saving for something specific (deposit) you would be mad to put it in shares, so I think you're stuck with low rates.

Investments & Savings are different things, really.

I thinks savings accounts if you have spare cash are crap and then you should be thinking about investment BUT you are not you are saving for a deposit...stay with poor returns in a savings account

[nxjen]

Have you investigated the Help to Buys ISAs?

[????]

or Premium bonds as 'you never know' but safe

[jacks09]

Help to buy Isa's are good. BUT, very limited amounts you can put in, and limits the value of the house you can buy. We're in a fortunate position where we will likely exceed those limits.

[Robert Poste's Child]

You could try peer lending websites if you're comfortable with an element of risk.

[womanofdulwich]

Santander 123 accounts will go down to 1.5% later this year :( But its hard to find anything better.........

[tomskip]

I would say premium bonds. The amount you "lose" in interest is so tiny compared to the amount you could win. My husband is self employed and saves a large amount every year to pay his tax. But the interest is miniscule, whatever account we put it in, and we only have the money for a maximum of 12 months. So premium bonds it is for us from now on.

[KidKruger]

I'll give 3%pa on anyone who deposits ?10k with me, straight-up.

[jacks09]

are premium bonds instantly access?

[tomskip]

More or less. I think its 30 days or something, can't remember, but we wouldn't have bought them if it was longer than that.

[Loz]

First Direct regular saver. Up to ?300 per month for 12 months. 6% interest.

[Salsaboy]

Premium Bonds. Dull but safe.

[DovertheRoad]

I've had ?1000 of premium bonds since birth in 1975...quite a lot of money back then....but not won any return on that in 41 years. However if id invested that in a bog standard low fee FTSE tracker....

[rendelharris]

DovertheRoad Wrote:

-------------------------------------------------------

> I've had ?1000 of premium bonds since birth in

> 1975...quite a lot of money back then....but not

> won any return on that in 41 years. However if id

> invested that in a bog standard low fee FTSE

> tracker....

That's extraordinarily unlucky, with normal luck you should have won between one and two grand by now - I've had ?50 worth since birth in 1968 and won ?300 with them (two separate prizes). Might be worth going on the Premium Bond website and checking your numbers against the unclaimed prizes, if at some point a change of address hasn't been notified then they'll still be holding your prize for you.

[DovertheRoad]

Sadly I've done just that rendel. I just checked them for the first time in 20 years. Still perhaps ?1m is due my way next month. At least it's a fun form of saving.

Back to the OP and I genuinely think keeping cash in a regular savings acct is a bad idea unless you are massively risk averse. You'll need to make 3% annually just to beat inflation and keep level. We have a real risk of negative interest rates (your bank charges you to hold yor savings) and house prices are still likely to rise by say 3% pa with continued cheap mortgages.

Equally there are no easy, fast gains in equities unless you have some kind of edge over the markets or are basically gambling.

So what to do? If you can loosen your risk profile slightly I would utilise ISAs to the full and perhaps get an online stocks and shares isa with someone like Hargreaves Landsdowne. Then spread your savings across a mix of low cost tracker funds, perhaps some guilts and keep some in cash (plenty cash only ISAs available). And I would take a long term view of min 5 years. Historically this strategy will beat savings accounts per that timeframe by some margin.

[????]

DTR -OP is saving for a deposit, so needs relative liquidity (and security) not 5 year periods - the difference between savings and investments is the key issue here.

[DovertheRoad]

Yes I understand that. If they want a safe place to chuck in a few hundred quid a month they save them a savings account is the only option. But don't expect them to grow on deposit...they'll shrink in real terms and it's important the OP is aware of that.

I was assuming they'd want a modicum of growth....which involves taking some risk.

[DovertheRoad]

And my suggestion whilst not as liquid as cash is not far off (30 days notice to withdraw usually)

[LondonMix]

The Lloyd's monthly saver, is still decent. The rate recently dropped from 4% to 3% gross but in the current environment that's still decent. The max you can keep in there is 5k I think but between you and your partner that's an additional 10k and a decent gross interest rate. Also, for basic rate tax payers, the rules on tax of interest are changing (favorably) so might be better than many saving ISA's out there if either of you pay the basic rate of tax.

Trying to find a sensible place for savings in the current economic environment is a challenge even for professional investors so I'd say stick to what you are doing until you buy a place and then move towards longer term investing strategy incorporating more risk.

[jacks09]

Appreciate all of the replies, thanks. i think it is just suck it up and get almost no growth. We hope to move in, within a year so will look at more investement type strategies after that.

[DovertheRoad]

All of the above...and remember to divide your saving between banks if it is over ?75,000. As that is the max amount protected by UK government.

As we now know, banks can go bust (and still might).

[Henry_17]

Jacks,

Cash.