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uncle_monty

Savings Accounts For Remainder Of 2010

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We all know that saving rates are rubbish. However, below are the accounts I've opened for my available balances and some of my incremental monthly savings (GBP portion only).

1. Santander Homesaver (5%):

Open with up to £5,000, then save up to £300pcm. You just have to i) be under 35 (??) and ii) agree to speak to a mortgage adviser upon closing the account to qualify. Variable rate, but I'd guess they won't be silly with this as they have the incentive of possible mortgage business.

2. Lloyds current account with Vantage (4%):

On balances between £5-7,000. Must pay in £1,000pcm (can pay it straight out again). Again, variable, but this rate has held for a long time, so hard to see how they'd cut it now (Lloyds staff who opened it said it was "extremely popular" and that "most people would close accounts if we changed the rate".

3. Principality Regular Saver (4%)

Save up to £500pcm. Fixed rate.

4. Northern Rock (3%)

£5,100 1 year ISA. Fixed.

Excluding the ISA, that's over £21,600 per year at between 4-5% gross. Double that if you have a partner (£43,200). And £15,600 / £31,200 of that is instant access.

It won't make you the richest person in the world (especially given its GBP), but it will help minimise real losses in these inflationary times.

Comments? Are there any other accounts that I've missed?

Monty

Edited by uncle_monty

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Good list, cheers for this!

Another one is that new Northern Rock's Little Rock (which sounds a little bit too much like Big Brother's Little Brother for my liking)

It's for kids only but we have a tiny little sprog now so I'm going to open one next week,

5% (and no tax to pay on it as it's a kids account and he's unlikely to reach his tax limit!)

fixed for 3 years (maximum you can put in is £20,000)

It's a bond thing though so the money is tied up for 3 years.

I don't know if it's a good idea or not, but rates have stayed horrifically low for so long now and are showing no signs of heading upwards at the moment.

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Good list. I myself have some money in NS&I index-linked and two Vantage accounts. I considered the mortgage-linked account but think the whole interview thing is a pain in the ass, so I've left that out. Here's hoping the Vantage rate doesn't drop (used to be 5% and you could have as many as you wanted whereas the limit is now 3).

Remainder of my money is going into shares and paying off student debt.

Not too keen on fixing rates any time soon.

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Santander Preferred in-credit current account. You get 5.00% Gross AER (3.91% net) on the first 2.5K for the first year. You have to pay in £1000 each month.

Also the Santander Flexible cash ISA is 3.2%, that's more than the Northern Rock 3% one.

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Excluding the ISA, that's over £21,600 per year at between 4-5% gross.

You are not getting at least 4% on your total because 2 of your accounts are regular savers.

You only get the full 4% on the first monthly deposit but each subsequent deposit gets less interest dropping to just 1/12 of 4% on the final deposit. When you work out the total interest for a year of deposits in a regular saver it is not the headline rate.

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You are not getting at least 4% on your total because 2 of your accounts are regular savers.

You only get the full 4% on the first monthly deposit but each subsequent deposit gets less interest dropping to just 1/12 of 4% on the final deposit. When you work out the total interest for a year of deposits in a regular saver it is not the headline rate.

True, if you feed in the regular monthly saving from another interest bearing account it increases the interest rate obtained from the initial deposit.

So maximum regular saving £250 per month. Deposit £3000 in an interest bearing account and make a regular withdrawal to pay into a regular saver.

Month 1 Deposit a/c £2750 @ 2% say, Regular Saver £250 @ 4%

Month 2 Deposit a/c £2500 @ 2% Regular Saver £500 @4%

Month 3 Deposit a/c £2250 @2% Regular Saver £750 @4%

and so on. Better than leaving it all in the normal deposit account all year surely.

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True, if you feed in the regular monthly saving from another interest bearing account it increases the interest rate obtained from the initial deposit.

So maximum regular saving £250 per month. Deposit £3000 in an interest bearing account and make a regular withdrawal to pay into a regular saver.

Month 1 Deposit a/c £2750 @ 2% say, Regular Saver £250 @ 4%

Month 2 Deposit a/c £2500 @ 2% Regular Saver £500 @4%

Month 3 Deposit a/c £2250 @2% Regular Saver £750 @4%

and so on. Better than leaving it all in the normal deposit account all year surely.

That`s the way to do it !

I still get told that regular savings accounts are a waste of time, but for some reason I still use them. What a fool I am.

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You are not getting at least 4% on your total because 2 of your accounts are regular savers.

You only get the full 4% on the first monthly deposit but each subsequent deposit gets less interest dropping to just 1/12 of 4% on the final deposit. When you work out the total interest for a year of deposits in a regular saver it is not the headline rate.

Wrong. Clue was in the first two lines of my OP:

"We all know that saving rates are rubbish. However, below are the accounts I've opened for my available balances and some of my incremental monthly savings....."

I will earn 4% on every monthly deposit I make into the future when I have earnt it. You can't count accrued interest on money you haven't earned! :P

By contrast my large cash balances are earning 4-5% in accounts such as those listed above and other places such as M&S (4% virtually easy access).

Edited by uncle_monty

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Wrong. Clue was in the first two lines of my OP:

"We all know that saving rates are rubbish. However, below are the accounts I've opened for my available balances and some of my incremental monthly savings....."

I will earn 4% on every monthly deposit I make into the future when I have earnt it. You can't count accrued interest on money you haven't earned! tongue.gif

By contrast my large cash balances are earning 4-5% in accounts such as those listed above and other places such as M&S (4% virtually easy access).

In your original post you say "Excluding the ISA, that's over £21,600 per year at between 4-5% gross"

I thought that £21k included the future years monthly payments taken in advance. What does this £21k consist of if it doesn't?

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In your original post you say "Excluding the ISA, that's over £21,600 per year at between 4-5% gross"

I thought that £21k included the future years monthly payments taken in advance. What does this £21k consist of if it doesn't?

Incremental future monthly savings earning 4% when it is earnt.

I clearly make the distinction between balances and incremental monthly savings (from incremental monthly earnings). Put it in a spreadsheet if it makes it clearer.

Edited by uncle_monty

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To me you were giving the impression that this year your £21,600 will earn between 4% to 5% gross.

£5,000 at 5% Santander interest is £250

£7,000 at 4% Lloyds interest is £280

£300 per month at 5% Santander interest is £97.50 (not £180)

£500 per month at 4% Principal interest is £130 (not £240)

So £757.50 return on £21,600 which is 3.5% interest this year.

Once the £21,600 is invested for a year then if the rates stay the same that money earns £950 interest so 4.4%

Do you agree with that?

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To me you were giving the impression that this year your £21,600 will earn between 4% to 5% gross.

£5,000 at 5% Santander interest is £250

£7,000 at 4% Lloyds interest is £280

£300 per month at 5% Santander interest is £97.50 (not £180)

£500 per month at 4% Principal interest is £130 (not £240)

So £757.50 return on £21,600 which is 3.5% interest this year.

Once the £21,600 is invested for a year then if the rates stay the same that money earns £950 interest so 4.4%

Do you agree with that?

Every penny I deposit with Principality and Santander will earn 4%. I can't earn interest on each monthly deposit until I've accumulated it via my salary. Do you agree with that?

Therefore you're calculation is incorrect from a time-value of money perspective, as you can't apportion "lost" interest to cash balances that have "yet to materialise" (thanks you Mr Bovey ;) ).

Do you understand that?

Seems a pretty petty (and incorrect point) you seem to have focused on Redhat Sly. This thread is important thought-provoker for savers, and frankly you're muddying the water.

Like I said, a simple spreadsheet calculation will prove me correct and you wrong. Take a look - should only take 2 mins.

Monty

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Every penny I deposit with Principality and Santander will earn 4%. I can't earn interest on each monthly deposit until I've accumulated it via my salary. Do you agree with that?

Therefore you're calculation is incorrect from a time-value of money perspective, as you can't apportion "lost" interest to cash balances that have "yet to materialise" (thanks you Mr Bovey ;) ).

Do you understand that?

Seems a pretty petty (and incorrect point) you seem to have focused on Redhat Sly. This thread is important thought-provoker for savers, and frankly you're muddying the water.

Like I said, a simple spreadsheet calculation will prove me correct and you wrong. Take a look - should only take 2 mins.

Monty

I agree with Redhat Sly's calculations. By forcing you to drip feed money into the accounts you only get 3.5% for first yeat and then 4.4% for second year. This makes it an average of 3.95% each year. You can get a fixed income bond for two years at 3.7% today. The gain from moving the money around all the time and checking your calender every week is just £54 per year. You can probably have a meal out for two at today's prices.

If you don't have money in hand to invest you cannot resonably presume that you will have it next month. You risk lossing the incentive that was promised and maybe more. You cannot count on future income for your plans. This is why the banks are in trouble is it not? Lending to people to based on future expectations that did not materialise.

Edited by 888

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I agree with Redhat Sly's calculations. By forcing you to drip feed money into the accounts you only get 3.5% for first yeat and then 4.4% for second year. This makes it an average of 3.95% each year. You can get a fixed income bond for two years at 3.7% today. The gain from moving the money around all the time and checking your calender every week is just £54 per year. You can probably have a meal out for two at today's prices.

If you don't have money in hand to invest you cannot resonably presume that you will have it next month. You risk lossing the incentive that was promised and maybe more. You cannot count on future income for your plans. This is why the banks are in trouble is it not? Lending to people to based on future expectations that did not materialise.

Sigh........ Wrong, wrong, wrong.

I'm not being "forced to drip feed" any money through, which is the point of my premise. Each month a small portion of my current monthly earnings goes into monthly savings @ 4%. The cash balances (i.e. lump-sum savings) are already allocated!

For simplicity (assuming 1 regular saver @4%):

Month 0: Reg Saving Balance (£0 @ 4%), plus other cash saving (£0 (because I'm not drip-feeding balances, rather monthly actual earnings)@ 0%) = £0

Month 2: RSB (£250 @4%), plus £0 @ 0% = £0.83

Month 3: RSB (£500.83 @4%), plus £0 @ 0%) = £1.67

etc.

Each month on my accruing balance I earn 4%. There is no opportunity cost because, aside from the 3 day transfer from salary account to regular saver, the money has only just come in to my possession. You do get that don't you? You can not calculate interest on a cash flow stream in the same way as you do a fixed balance. Banking 101.

Therefore, as stated in my OP, "I earn 4% on my incremental monthly savings". Put it in excel, you will see what I mean (I can't be bothered).

Monty

PS Your second para is a little patronising. I have a pretty secure job that affords me a large portion of free cash flow to allocate each month. I invest in currencies, commodities, fixed income, wine, etc. (some are up over 150% this year), so am hardly pushing the boat out on a reg saver here or there.

Like I said to Redhat Sly, just sharing the benefit of my investigations with fellow members. I hope some take up the accounts I've identified, as every little helps ward of real term losses on savings.

Perhaps you could try to do something helpful to a fellow HPCer..........?

PPS

Also, why would I sign up to a fixed bond for such a piddling amount (3.7%), when I have near instant access to the vast majority of my GBP assets at between 4-5%?

I think I'll stick my own gameplan, mate.

Edited by uncle_monty

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Every penny I deposit with Principality and Santander will earn 4%. I can't earn interest on each monthly deposit until I've accumulated it via my salary. Do you agree with that?

Therefore you're calculation is incorrect from a time-value of money perspective, as you can't apportion "lost" interest to cash balances that have "yet to materialise" (thanks you Mr Bovey wink.gif ).

Do you understand that?

Seems a pretty petty (and incorrect point) you seem to have focused on Redhat Sly. This thread is important thought-provoker for savers, and frankly you're muddying the water.

Like I said, a simple spreadsheet calculation will prove me correct and you wrong. Take a look - should only take 2 mins.

Monty

I'm not trying to muddy any waters. I'm merely pointing out that an account like yearly Fixed Rate Regular Saver does not pay the headline rate on the full amount of cash invested over the term. I am trying to help people who may not realise that.

£500 a month at "4%" does not pay £240 on the £6,000 invested it pays nearer £130 (2.17%)

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For simplicity (assuming 1 regular saver @4%):

Month 0: Reg Saving Balance (£0 @ 4%), plus other cash saving (£0 (because I'm not drip-feeding balances, rather monthly actual earnings)@ 0%) = £0

Month 2: RSB (£250 @4%), plus £0 @ 0% = £0.83

Month 3: RSB (£500.83 @4%), plus £0 @ 0%) = £1.67

etc.

Each month on my accruing balance I earn 4%. There is no opportunity cost because, aside from the 3 day transfer from salary account to regular saver, the money has only just come in to my possession. You do get that don't you? You can not calculate interest on a cash flow stream in the same way as you do a fixed balance. Banking 101.

First, I have no doubt you wish to pass on a good deal to other HPC memebers, and indeed for your own circumtances your plan works for you, because you are filling in the accounts with cash as you earn throughout the year. However, there is anoher side to the coin. For an invester with say £100K cash to invest. He would want his cash to be earning a high rate of interest on day one. Drip feeding according to caps and monthly limits is not what he wants. What I and the other chappy was trying to demonstrate is that the banks are not truely offering the saver the perceived rate of interest, although it may fit your circumstance.

BTW, you maths shows you earn 0.33% (4%/12) interest per month on the BALANCE that you have in the account, NOT the capital of £21,600 @ 4% per annum.

Edited by 888

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First, I have no doubt you wish to pass on a good deal to other HPC memebers, and indeed for your own circumtances your plan works for you, because you are filling in the accounts with cash as you earn throughout the year. However, there is anoher side to the coin. For an invester with say £100K cash to invest. He would want his cash to be earning a high rate of interest on day one. Drip feeding according to caps and monthly limits is not what he wants. What I and the other chappy was trying to demonstrate is that the banks are not truely offering the saver the perceived rate of interest, although it may fit your circumstance.

BTW, you maths shows you earn 0.33% (4%/12) interest per month on the BALANCE that you have in the account, NOT the capital of £21,600 @ 4% per annum.

The other was the premise of my OP. You decided to apply this simple post to a mythical invester (sic) with £100k balance to which it clearly doesn't apply.

In terms of maths, I've repeatedly said to both you and Redhat to run the numbers in excel. Pounds, shillings and pence reveal themselves there, proving my 4% on monthly incremental savings is correct as stated in my OP.

Do you understand? Do you disagree? Thought not.

What a waste of time. This is bordering on trolling now. :angry:

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I'm not trying to muddy any waters. I'm merely pointing out that an account like yearly Fixed Rate Regular Saver does not pay the headline rate on the full amount of cash invested over the term. I am trying to help people who may not realise that.

£500 a month at "4%" does not pay £240 on the £6,000 invested it pays nearer £130 (2.17%)

Fair enough.

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We all know that saving rates are rubbish. However, below are the accounts I've opened for my available balances and some of my incremental monthly savings (GBP portion only).

1. Santander Homesaver (5%):

Open with up to £5,000, then save up to £300pcm. You just have to i) be under 35 (??) and ii) agree to speak to a mortgage adviser upon closing the account to qualify. Variable rate, but I'd guess they won't be silly with this as they have the incentive of possible mortgage business.

2. Lloyds current account with Vantage (4%):

On balances between £5-7,000. Must pay in £1,000pcm (can pay it straight out again). Again, variable, but this rate has held for a long time, so hard to see how they'd cut it now (Lloyds staff who opened it said it was "extremely popular" and that "most people would close accounts if we changed the rate".

3. Principality Regular Saver (4%)

Save up to £500pcm. Fixed rate.

4. Northern Rock (3%)

£5,100 1 year ISA. Fixed.

Excluding the ISA, that's over £21,600 per year at between 4-5% gross. Double that if you have a partner (£43,200). And £15,600 / £31,200 of that is instant access.

It won't make you the richest person in the world (especially given its GBP), but it will help minimise real losses in these inflationary times.

Comments? Are there any other accounts that I've missed?

Monty

Hsbc premier customers get 8% on reg savings up to £250 month, double it for joint accounts.

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Hsbc premier customers get 8% on reg savings up to £250 month, double it for joint accounts.

Nice, but you need to pay them £25 a month for the privilege. Or have £50,000 deposited with them. Or earn £100,000 and pay it into the account each month. Or have a £300,000K+ mortgage with them.

Good rate for anyone that fits that criteria though obviously.

Edited by christhpc

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2. Lloyds current account with Vantage (4%):

On balances between £5-7,000. Must pay in £1,000pcm (can pay it straight out again). Again, variable, but this rate has held for a long time, so hard to see how they'd cut it now (Lloyds staff who opened it said it was "extremely popular" and that "most people would close accounts if we changed the rate".

Thanks Uncle Monty for sharing this info. I have also been reviewing my savings recently and this was valuable. I didn't see anyone mention this, but you can have up to 3 Lloyds Vantage accounts so between them you can have up to £21000 invested at 4% AER. Sadly the interest on any money above £7000 is a miserly rate. You need to pay £1000 a month into a/c 1 then pay it by s/o into a/c2 and repeat again from a/c 2 to a/c3 and from a/c3 into a high interest savings a/c of your choice or your current a/c if you need to spend it each month.

FYI That is what I'm doing at present so I can confirm it works.

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2. Lloyds current account with Vantage (4%):

On balances between £5-7,000. Must pay in £1,000pcm (can pay it straight out again). Again, variable, but this rate has held for a long time, so hard to see how they'd cut it now (Lloyds staff who opened it said it was "extremely popular" and that "most people would close accounts if we changed the rate".

Thanks Uncle Monty for sharing this info. I have also been reviewing my savings recently and this was valuable. I didn't see anyone mention this, but you can have up to 3 Lloyds Vantage accounts so between them you can have up to £21000 invested at 4% AER. Sadly the interest on any money above £7000 is a miserly rate. You need to pay £1000 a month into a/c 1 then pay it by s/o into a/c2 and repeat again from a/c 2 to a/c3 and from a/c3 into a high interest savings a/c of your choice or your current a/c if you need to spend it each month.

FYI That is what I'm doing at present so I can confirm it works.

Where does it say you can open 3 accounts? I applied for one today and I had to tick a box saying that I don't have any other Lloyds TSB accounts.

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Where does it say you can open 3 accounts? I applied for one today and I had to tick a box saying that I don't have any other Lloyds TSB accounts.

I didn't have a Lloyds TSB account, but when I applied to open a Vantage a/c I asked if I could open more than one. They checked the terms and said I could open up to three Vantage accounts so that's what I did and I also checked that the s/o arrangement was OK which they said was fine.

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2. Lloyds current account with Vantage (4%):

On balances between £5-7,000. Must pay in £1,000pcm (can pay it straight out again). Again, variable, but this rate has held for a long time, so hard to see how they'd cut it now (Lloyds staff who opened it said it was "extremely popular" and that "most people would close accounts if we changed the rate".

Thanks Uncle Monty for sharing this info. I have also been reviewing my savings recently and this was valuable. I didn't see anyone mention this, but you can have up to 3 Lloyds Vantage accounts so between them you can have up to £21000 invested at 4% AER. Sadly the interest on any money above £7000 is a miserly rate. You need to pay £1000 a month into a/c 1 then pay it by s/o into a/c2 and repeat again from a/c 2 to a/c3 and from a/c3 into a high interest savings a/c of your choice or your current a/c if you need to spend it each month.

FYI That is what I'm doing at present so I can confirm it works.

Thanks STA.

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