Best return with no risk on saving £1500/month over 2 years?
Discussion
PH financial wizards, I'm looking for some advice or suggestions please.
Next month I'll be paying off the mortgage (hurrah!).
I've been paying it off at £1500 per month for the past few years, and so for the next couple of years I'm planning on putting this amount per month into some sort of saving scheme. I've got no other debts to pay off, I'm already paying the maximum amount possible into my employers' Sharesave scheme, and also paying the maximum pension contribution that the company will match. After paying off the final "lump" of mortgage I'll still have a Rainy Day Fund of about £15k sat in easy access accounts. My priority now is to maximise funds for purchase of a larger house at some point in 2-3 years time, which will align with a Sharesave maturing in early 2022.
Question is, where can I put that money for the next couple of years where I'll get the maximum return, with the caveat that I'm not prepared to accept any risk of ending up with less than I paid in (i.e. ruling out stocks/shares etc)? Accepting of course that this will limit potential returns.
A brief bit of Googling reveals that there's a few regular saver accounts offering 2.5 to 2.75%, but these are limited to quite small monthly payments and I'd have to spread my money across 5 or 6 accounts. Premium bonds evidently aren't even keeping up with inflation. Are there any better options for making the most of my savings?
Next month I'll be paying off the mortgage (hurrah!).
I've been paying it off at £1500 per month for the past few years, and so for the next couple of years I'm planning on putting this amount per month into some sort of saving scheme. I've got no other debts to pay off, I'm already paying the maximum amount possible into my employers' Sharesave scheme, and also paying the maximum pension contribution that the company will match. After paying off the final "lump" of mortgage I'll still have a Rainy Day Fund of about £15k sat in easy access accounts. My priority now is to maximise funds for purchase of a larger house at some point in 2-3 years time, which will align with a Sharesave maturing in early 2022.
Question is, where can I put that money for the next couple of years where I'll get the maximum return, with the caveat that I'm not prepared to accept any risk of ending up with less than I paid in (i.e. ruling out stocks/shares etc)? Accepting of course that this will limit potential returns.
A brief bit of Googling reveals that there's a few regular saver accounts offering 2.5 to 2.75%, but these are limited to quite small monthly payments and I'd have to spread my money across 5 or 6 accounts. Premium bonds evidently aren't even keeping up with inflation. Are there any better options for making the most of my savings?
Simple answer is no.
No risk, no return.
The government does not want you saving money it wants you spending and investing, cant imagine savings interest rates will be outstripping inflation for many years yet.
Id take my chances on premium bonds, over 2 years you may get lucky and win a larger win, failing that you get an interest rate similar to savings accounts. ....whether you make 0.5 or 1% more is really your only risk....will premium bonds win more than savings over 2 years.
I have SIPP, stocks n shares ISA, just use premium bonds as a savings account, and keep a few months salary in there.
No risk, no return.
The government does not want you saving money it wants you spending and investing, cant imagine savings interest rates will be outstripping inflation for many years yet.
Id take my chances on premium bonds, over 2 years you may get lucky and win a larger win, failing that you get an interest rate similar to savings accounts. ....whether you make 0.5 or 1% more is really your only risk....will premium bonds win more than savings over 2 years.
I have SIPP, stocks n shares ISA, just use premium bonds as a savings account, and keep a few months salary in there.
S&P500 index fund.
2 years isn’t long but I expect it’ll be long enough for the American economy to rebound somewhat and give a return on your money.
No guarantees of course, it may return 30%, it may return -20%.
I’m not a financial professional. Just giving my opinion, I do put my own money into the above though and have profited over the last 3 years.
2 years isn’t long but I expect it’ll be long enough for the American economy to rebound somewhat and give a return on your money.
No guarantees of course, it may return 30%, it may return -20%.
I’m not a financial professional. Just giving my opinion, I do put my own money into the above though and have profited over the last 3 years.
Jonny_ said:
Premium bonds evidently aren't even keeping up with inflation.
I don't think anything is right now which can be considered low/no risk. As you say you can snag a few promotional rates by spreading things around, but even those are dropping (just had the email through from Marcus this morning to kindly inform me of my drop).If you're adamant on no risk for 2 years, then I personally thing PBs just because it's a bit of fun and you're going to earn knacker-all on anything else. I've done the same, but my circumstances are slightly different in that I'm opening the account with the maximum deposit and will be drawing down from it every month, so my odds will get lower throughout my short term vs yours that will go higher as you go.
Even if your PB's come out with a zero yield, at worst you've lost around £400 (what I'd expect you'll earn on £1500/month for 24 months from a savings account). At best you're a millionaire, but more likely you just about break even and have a bit of fun along the way....
Watch these 'regular savings accounts' as they are not always what you may be expecting re the interest rates.
eg £500/m at 2.5%. You may think if you pay in £6k over the year you'll get £150 interest. This is not the case, you may get 2.5% on the first £500 but you won't on the subsequent monthly investments. It's too complicated for me to give you the calcs but you'll probably end up with a lot less interest than you may be expecting over the year.
IMHO they are misleading.
eg £500/m at 2.5%. You may think if you pay in £6k over the year you'll get £150 interest. This is not the case, you may get 2.5% on the first £500 but you won't on the subsequent monthly investments. It's too complicated for me to give you the calcs but you'll probably end up with a lot less interest than you may be expecting over the year.
IMHO they are misleading.
Edited by megaphone on Thursday 14th May 10:48
megaphone said:
Watch these 'regular savings accounts' as they are not always what you may be expecting re the interest rates.
eg £500/m at 2.5%. You may think if you pay in £6k over the year you'll get £150 interest. This is not the case, you may get 2.5% on the first £500 but you won't on the subsequent monthly investments. It's too complicated for me to give you the calcs but you'll probably end up with a lot less interest than you may be expecting over the year.
IMHO they are misleading.
Half the advertised rate to get the true rate. eg £500/m at 2.5%. You may think if you pay in £6k over the year you'll get £150 interest. This is not the case, you may get 2.5% on the first £500 but you won't on the subsequent monthly investments. It's too complicated for me to give you the calcs but you'll probably end up with a lot less interest than you may be expecting over the year.
IMHO they are misleading.
Edited by megaphone on Thursday 14th May 10:48
megaphone said:
Watch these 'regular savings accounts' as they are not always what you may be expecting re the interest rates.
eg £500/m at 2.5%. You may think if you pay in £6k over the year you'll get £150 interest. This is not the case, you may get 2.5% on the first £500 but you won't on the subsequent monthly investments. It's too complicated for me to give you the calcs but you'll probably end up with a lot less interest than you may be expecting over the year.
IMHO they are misleading.
Not especially misleading.eg £500/m at 2.5%. You may think if you pay in £6k over the year you'll get £150 interest. This is not the case, you may get 2.5% on the first £500 but you won't on the subsequent monthly investments. It's too complicated for me to give you the calcs but you'll probably end up with a lot less interest than you may be expecting over the year.
IMHO they are misleading.
Why would you expect to get paid interest on money you haven't paid into the account?
Somebody said:
[quote=bogie....just use premium bonds as a savings account, and keep a few months salary in there.
What's been your recent yield if you don't mind me asking? Thanks for the input all.
Yes, understood that the headline rate only really applies to the first payment, the effective rate decreasing from thereon in. So with a rate of 2.75% I'd be looking at total interest of just under a grand on £36k saved over 2 years.
That is undoubtedly a pretty low return. Better than taking a chance and ending up with next to nothing, but barely worth the effort of setting up 6 savings accounts to spread it across.
So I'm starting to rethink Premium Bonds. I can certainly afford to "risk" missing out on £900-odd in interest. Only a slim chance of a decent return, true, but I'm guaranteed to at least get back what I paid in, and any prizes are tax free.
Yes, understood that the headline rate only really applies to the first payment, the effective rate decreasing from thereon in. So with a rate of 2.75% I'd be looking at total interest of just under a grand on £36k saved over 2 years.
That is undoubtedly a pretty low return. Better than taking a chance and ending up with next to nothing, but barely worth the effort of setting up 6 savings accounts to spread it across.
So I'm starting to rethink Premium Bonds. I can certainly afford to "risk" missing out on £900-odd in interest. Only a slim chance of a decent return, true, but I'm guaranteed to at least get back what I paid in, and any prizes are tax free.
Jonny_ said:
Thanks for the input all.
Yes, understood that the headline rate only really applies to the first payment, the effective rate decreasing from thereon in. So with a rate of 2.75% I'd be looking at total interest of just under a grand on £36k saved over 2 years.
That is undoubtedly a pretty low return. Better than taking a chance and ending up with next to nothing, but barely worth the effort of setting up 6 savings accounts to spread it across.
So I'm starting to rethink Premium Bonds. I can certainly afford to "risk" missing out on £900-odd in interest. Only a slim chance of a decent return, true, but I'm guaranteed to at least get back what I paid in, and any prizes are tax free.
In much the same way that it's "misleading" to say you get 2.75% on a regular savings account, it's misleading to say you earn £1k having invested £36k - you won't have invested that much until the very end!Yes, understood that the headline rate only really applies to the first payment, the effective rate decreasing from thereon in. So with a rate of 2.75% I'd be looking at total interest of just under a grand on £36k saved over 2 years.
That is undoubtedly a pretty low return. Better than taking a chance and ending up with next to nothing, but barely worth the effort of setting up 6 savings accounts to spread it across.
So I'm starting to rethink Premium Bonds. I can certainly afford to "risk" missing out on £900-odd in interest. Only a slim chance of a decent return, true, but I'm guaranteed to at least get back what I paid in, and any prizes are tax free.
If you want risk-free, the a bank account it is.
Premium bonds are 1.4% average - but that factors in a small number of people winning big and conversely lots winning nothing at all. It's better than the lottery, but a pretty poor system of guaranteeing any returns.
Personally, I'd set up the regular savers - £900 is a lot of money for no work - it's just a shame that all the good ones have gone (i.e. FD @ 5%).
Edited by Jakg on Thursday 14th May 21:34
bogie said:
Somebody said:
[quote=bogie....just use premium bonds as a savings account, and keep a few months salary in there.
What's been your recent yield if you don't mind me asking? Gassing Station | Finance | Top of Page | What's New | My Stuff