Best savings account?

Raymond Lin said:
Anyone else got the Natwest 8% savings account? I opened it a few months ago and thought you get interests monthly but was I wrong? I haven't received a single penny thus far.
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Do you mean Nationwide? (They are the only ones I've seen with an 8% regular saver)

If so then it's annual interest

When your savings account interest is paid | Nationwide

Find out the date your interest is paid, depending on the Nationwide savings account, ISA or bond you have
www.nationwide.co.uk www.nationwide.co.uk
 
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Continuing thread from the mortgage thread:

danlightbulb said:
If ISA rates are 5% off the bat, why are you bothering drip feeding a regular saver and earning an average of only 3.5%?
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At least two possible reasons:
1) If you don't have the full amount available up front then drip feeding is the only option
2) Even if you do, you might get more interest by drip feeding if the net interest is higher and you aren't just leaving the wedge of cash sat somewhere earning rubbish interest. I mean, it's not like you have £Xk and choose between either putting it in an ISA or keeping it under the mattress and then every month removing a wedge to put in a regular saver. It really depends what the difference in net interest is between the ISA and you "holding pattern' savings account used to drip feed the regular savers and whether that is outweighed by the benefit from the regular savers.

Essentially this average 3.5% is misleading as s it assumes you are earning 0% on the money waiting to be drip fed, which you wouldn't be unless were lazy / didn't care / stupid / all of the above.
 
HangTime said:
Continuing thread from the mortgage thread:


At least two possible reasons:
1) If you don't have the full amount available up front then drip feeding is the only option
2) Even if you do, you might get more interest by drip feeding if the net interest is higher and you aren't just leaving the wedge of cash sat somewhere earning rubbish interest. I mean, it's not like you have £Xk and choose between either putting it in an ISA or keeping it under the mattress and then every month removing a wedge to put in a regular saver. It really depends what the difference in net interest is between the ISA and you "holding pattern' savings account used to drip feed the regular savers and whether that is outweighed by the benefit from the regular savers.

Essentially this average 3.5% is misleading as s it assumes you are earning 0% on the money waiting to be drip fed, which you wouldn't be unless were lazy / didn't care / stupid / all of the above.
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It's not misleading it's absolutely stupid.
 
So when I suggested bonds at 5% last night, I didn't think that easy access savings or ISA's had rates as high as 5%, I thought they were a lot lower than this as historically those types of accounts have been crap, and locking your money away has been better.

Id also seen some YouTube videos from the Pensioncraft guy who has been talking a lot about bonds lately and how the short term rate is a lot higher than the long term rates, which is historically the wrong way around.

So given that a regular saver earns only half the interest that the headline rate implies across a full year, I suggested instead buying fixed bonds at 5% instead.

In some scenarios in would work out better, just not in the OPs scenario and not with easy access rates or ISAs so close in rate.

Like I said in the other thread, consider if you had a 7% reg saver youre already part way through the promotional term of, but the next best easy access was 3%. Or you could buy a 5% bond now (you don't know what bond rates would be available in a month or two time, those rates might be gone by then), then you could make more interest off the bond.

Or, if you had say £12k upfront, you could buy a 5% bond off the bat but you can only drip feed a regular saver ending up with half the headline interest. If the account you're drip feeding from has a poor rate you might be better off with the bond then as well.

I was surprised to see easy access savings and ISAs at around 5%, didn't think they'd be anywhere near that level. So in that case yeah I don't know why bonds would be worth it nor why the Pensioncraft guy seemed to be so keen on them.

Also I didn't mention this last night but those reg savers are normally tied into having a new current account or something from what I've seen, so those can be exhausted quite quickly.
 
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danlightbulb said:
So when I suggested bonds at 5% last night, I didn't think that easy access savings or ISA's had rates as high as 5%, I thought they were a lot lower than this as historically those types of accounts have been crap, and locking your money away has been better.

Id also seen some YouTube videos from the Pensioncraft guy who has been talking a lot about bonds lately and how the short term rate is a lot higher than the long term rates, which is historically the wrong way around.

So given that a regular saver earns only half the interest that the headline rate implies across a full year, I suggested instead buying fixed bonds at 5% instead.

In some scenarios in would work out better, just not in the OPs scenario and not with easy access rates or ISAs so close in rate.

Like I said in the other thread, consider if you had a 7% reg saver youre already part way through the promotional term of, but the next best easy access was 3%. Or you could buy a 5% bond now (you don't know what bond rates would be available in a month or two time, those rates might be gone by then), then you could make more interest off the bond.

Or, if you had say £12k upfront, you could buy a 5% bond off the bat but you can only drip feed a regular saver ending up with half the headline interest. If the account you're drip feeding from has a poor rate you might be better off with the bond then as well.

I was surprised to see easy access savings and ISAs at around 5%, didn't think they'd be anywhere near that level. So in that case yeah I don't know why bonds would be worth it nor why the Pensioncraft guy seemed to be so keen on them.

Also I didn't mention this last night but those reg savers are normally tied into having a new current account or something from what I've seen, so those can be exhausted quite quickly.
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Not being funny but 7 is higher than 5.

As for the last line, already explained it to you. Tax treatment. The entire capital gain is tax free on these low coupon gilts making a 4% yield to maturity gilt much better than a 5% savings account for higher earners.
 
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200sols said:
Not being funny but 7 is higher than 5
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I'm not getting into an argument again but I'll say it one last time.

If you only have a month left on your reg saver at 7%, then the follow on /easy access/next best is 3%, but you can choose a 5% bond now (you don't know how long that bond rate will be around for) then you make more money buying the bond.
 
mattyfez said:
Not nessesarily if you are only allowed to put say £200 per month into that 7% account...

If you have a wad of cash, you could put 20k into an ISA at 4.x%.

4% of 20k would earn you £800 tax free interest over 12 months.
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No, 7 is always higher than 4. Even if its only on £200. Then it's a question of hassle or tax.

No point wasting isa allowances on cash either in my eyes but everyone is different.
 
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200sols said:
No point wasting isa allowances on cash either in my eyes but everyone is different.
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I'm running a 5% ish percent easy access saver and another one for cash ISA, but my plans are short term savings in prep to move funds into the mortgage in a couple of years when my cheap fix ends.

I didn't want to run the risk of stocks/shares ISA where the value could change a lot depending what I allocated funds to.
 
ChrisD. said:
S&P 500 is up 7% YTD, 25% for the past year, and 85% for the past 5 years as an example.
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Amazing returns I don't doubt it, but past performance does not dictate future performance, last I checked S&P was basically at ATH, there are risks with buying in at ATH levels.

I'd feel worse about putting funds that I want to use to pay off mortgage into an asset that then loses 10% instead of gaining the 5% it promises.
 
Dirk Diggler said:
I can only see 2 of them on Vanguard, Accumulating and Distributing. None of them showing those past returns, I'm assuming that I'm looking for something different?
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This is where I always get confused/need to read up, as they all seem to have their own funds/managers which aim to track the S&P 500, and multiple options in some cases. I use Fidelity and I'm half way between their all world and S&P 500 accumulator and I'm showing 22% return for the past year.
 
ChrisD. said:
This is where I always get confused/need to read up, as they all seem to have their own funds/managers which aim to track the S&P 500, and multiple options in some cases. I use Fidelity and I'm half way between their all world and S&P 500 accumulator and I'm showing 22% return for the past year.
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The trouble is, although the overall trend is up for the stock market if you need to cash out in the middle of a downturn (for example to clear the mortgage) you are going to be significantly worse off. Example, the S&P 500 for the last 5 years is charted below:

Capture.PNG

If you had to cash out for mortgage reasons in 2020 or in summer of 2023, you'd have been screwed.
 
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