How to split savings

jms2000

I have a reasonably large sum of money just sitting in my bank account and finally decided it needs to do something for me.

I’m wanting to split it into different savings products like an easy access, fixed term, the lifetime Isa and then money in my bank.

I’m just unsure as to a sensible percentage of my total savings. to allocate to each.

Reply 1

Kutie Karen

it depends on how old you are and what your plans are for the future. Eg if you are looking to buy a house then you need to keep it in an easy access kind of account for your deposit.

Reply 2

martin7

It also depends on what you mean by "reasonably large sum of money". My idea of "reasonably large sum of money" might be very different to yours.

Reply 3

jms2000

Original post by martin7

It also depends on what you mean by "reasonably large sum of money". My idea of "reasonably large sum of money" might be very different to yours.

That’s very true, everything depends on the person and their situation.

I was thinking putting the max £4000 into a lifetime cash ISA each year, then splitting my monthly savings by this: 40% 1 year fixed term, 25% easy access and 35% 31 day notice account.

Does this sound a sensible way of maximising my interest whilst keeping some money accessible enough if needed?

Reply 4

Pie-person

Definitely make use of pre-tax pension contributions if you’re not already.

Setup an emergency fund (ideally 3-6 months of expenses) in an easy access high yield savings account. Also set up any sinking funds for specific goals (home improvement, holidays, big purchases, house deposits etc) - maybe make use of fixed term savings accounts for these.

After that, you should ideally be invested. Make use of a stocks and shares ISA and pour money over time (pound cost average) into a global stock index tracker fund. If you’re a bit more risk averse maybe split the allocation 70/30 between a global stock index fund and a more defensive bond / REIT fund.

Having everything in cash is going to devalue your savings in the long run. Only keep as much cash as is necessary for emergencies or specific goals.

(edited 1 year ago)

Reply 5

normaw

Clearing and Applications Advisor, Universities Forum Helper

Original post by jms2000

I was thinking putting the max £4000 into a lifetime cash ISA each year, then splitting my monthly savings by this: 40% 1 year fixed term, 25% easy access and 35% 31 day notice account.

Maxing your lifetime ISA contribution every year is a good plan as you will get the 25% government contribution if you use the proceeds for house purchase or your pension. I wouldn't get too hung up on the proportion of savings in easy access v 31 day notice accounts as the interest rates for the best buys are very similar at the moment.

Sounds like you know what you're doing already, but this page is constantly updated with the best savings rates:

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Reply 6

ReadingMum

Are you working and contributing to a pension - enough to get the maximum contribution from your employer?