Savings

Rapide561

Hi

If you get bored easily or have millioons of pounds stashed away, don't bother reading this!

As you are aware, Oscar and I are going to conquer Italy once and for all.

Until we have sorted out work, credit interest on our savings may be needed to suplly day to day funding.

But here is a way to boost you credit interest if you are prepared for a little effort...

Example....

Earlier this week, Britannia Building Scoiety launched an account paying a magic 7.5% gross - yes 7.5%! Fabulous, so off we trotted to open an account. The catch - you can only invest £250.00 (maximum) per calendar month - but that is OK.

Here is how to boost your savings

I have £3000.00 in a Nationwide "E saver" account paying 4.85% gross. Assuming rates do not change, £3000.00 will earn me £145.50 interest per year.

Each month, £250.00 is removed from the Nationwide and goes to the Britannia. Britiannia's own literature - and confirmed by my own "Countdown" style calculations will earn you £122.26 in gross interest.

Meanwhile, as your balance at Nationwide decreases by £250.00 per month, your Britannia account balance grows by £250.00 per month.

A Nationwide account, paying 4.85%, commening with a balance of £3000.00 and having £250.00 per month withdrawn, will earn your approximately £77.22 per year.

Add the £77.22 to the £122.26 and you earn £199.48 per year. Ok, you are only £53.98 per year better off, but do it with many such accounts - and I have opened many already and have more to do, and I calculate I will be a whopping £3400.00 per year better off.

The amounts mentioned are gross of UK tax.

Other banks/building socities offering regular saver accounts are

The Ipswich Building Society - a magic 8.25% gross on £250.00 max per month

The Stroud and Swindon - 7% on a maximum of £1000.00 per month.

The Yorkshire - 6.50% on a max of £500.00 per month.

The Alliance and Leicester - 12% (yes 12%) on a maximum of £250 per month (this was ahassle as I had to open a current account too, but who cares)

There are however other factors. Fix your money in a fixed rate bond - rates of over 6% are available and your "gain" is not as great. You also would need to keep your monthly payment amounts separate in an instant account.

You could also get an MBNA credit card. Remember they kindly lent me £18000.00 at 0% for eight months. Even after paying a one off payment transfer fee of £35.00, I will have netted about £500.00 out of the deal.

I am not a financial advisor, nor am I connected to any of the banks mentioned other than being a customer, but the facts and figures are there.

www.moneysupermarket.com

www.find.co.uk

www.fool.co.uk

www.moneysavingexpert.com

Rapide561

C7KEN

Russel I hope you have plenty of time to fill in your tax return ?, I assume you will remain a uk tax payer, I have found the best way to make serious money is to not pay it in tax, I am now retired and have investments such as sun life distribution bond where I can draw 5% tax fee and as it,s growth is over 10% I am still increasing its value by an amount greater than inflation, I let this build up over 20 years reinvesting the distributions now I draw 5% I have a friend formerly a top accountant who regularly advises goverment ministers (mainly on how to finance looking after elderly people that need care) and writes for the FT who advised me years ago how to invest for an easy later time in life , I did everything he said and now it's harvest time, his personal wealth is in millions so he has proven how to do it , he told me which schemes and peps to use and how to juggle them now I have no money worries whatsoever, am not yet retirement age but when I am the british goverment will be adding to my income so I will have to reduce my drawings by that amount from another source that I currently declare so as to keep the declared income to no more than £10.000 (husband and wife ) in short declare to your threshold then top it up by tax free methods

MicknPat

I am no tax or savings expert either but Russell is quoting saving schemes showing gross interest so unless he is tax exempt he will NOT get 7% from Britannia.

I found this out when I opened a similar scheme with the Halifax called the Regular Savings Account.

I saved the maximum permitted ( £250 per month ) for a year which equals £3,000.

I expected £210 minus tax all I received was £100.50. Shocked

So be warned

refuel

Hi
When you say "do it with many such accounts and..................I will be £3400 per year better off", does this mean you are going to, or have, opened £3400 divided by £53.98, equals nearly 63 identical Brittania and Nationwide accounts?? Or am I missing something obvious here? Confused

rickwiggans

You will get the 7%, but not 7% of £3000. Effectively you get it on half the amount - because only the 1st payment is in for the full year - the 12th payment is only in there for 30 days

MicknPat

Rapide561

Hi

I am aware that in month 1, I earn 7.5% on £250.00 only.

In month two I earn 7.5% on £500.00

In month 3 I earn 7.5% on £750.00 etc etc

It is a lot better than 4.85% at the Nationwide.

In response to the mention of 63 accounts - no - not quite 63 - but 38 as some allow higher deposits than others and some organisations allow more than one account.

I have calculated the above examples at Gross Rate - I will be a UK tax payer - certainly until 05/04/07.

Given a choice of spending several hours on the net, or "losing" £3000.00 per year.......the answer is easy!

Should anyone wish to calculate how much they will earn in interest on various types of account, visit

Rapide561

Hi

The 38 accounts total was mentioned in jest - I think I will settle at about 20. I am upto 14 so far!

I think further products will be launched on monday following the recent rate rise.

Rapide561