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Investing Student Loan/Overdraft

So basically I've worked out I don't need my overdraft and all of my student loan. I've worked out in january I could invest £1250, and each year add another £1250 etc, in total 3 payments, investing £3750.

I'm thinking of sticking this money in a savings account, which at a guess the interest rate would be 4-4.5%, so if compounded monthly would return about £60 for the first year, £140 the next and over £300 on the final year.

Can anyone see any glaring holes in this plan, am I overlooking something important? If not, anyone suggest a good bank or savings plan.
Reply 1
Avatar for wiwarin_mir
wiwarin_mir
Money Supermarket will tell you the best paying accounts around. If you're gonna save it up for years til you're earning enough to pay tax then pick an ISA, or if you're only gonna save it for a short while pick whatever pays most interest and get an R85 form so you don't pay tax (assuming you won't be earning over £4000 a year).
Reply 2
Avatar for tbm
tbm
13
Premium bonds? At least then you have a chance to win monthly prizes and its tax free. (Ive won £350 so far and have £4000 invested).
L.J
You do realise that inflation means you'll owe more in interest on the loan than you'll make? :rolleyes:

no it doesn't, inflation is at least 1(RPI)% or 2(CPI)% lower than the interest you get on savings so you still make a profit....

and as they don't charge interest on the student loan, just inflation compensating charges you gain :smile:
Reply 4
Avatar for viviki
viviki
14
Current interest paid on student loan

How will the interest be worked out?
As the rate of interest is always based on inflation (Retail Prices Index as at March each year) the APR from 1st September 2005 is 3.2%. For those already repaying this will mean a small increase in the repayment amount compared to last year. The interest is calculated daily at the appropriate rate from the day your loans commences. The interest is added to your account every month.
Reply 5
Avatar for KizD
KizD
OP
12
Overdraft is interest free until I graduate. I just realised my overdraft won't increase by £1250 each year, by much less. So total investment will only be just over £2000, returning only about £120 over 3 years. Better than nothing I guess.
Get yourself down to a casino mate. Legend has it one guy blew his first installment, then doubled his money with his second installment.
Reply 7
Avatar for Curry4You
Curry4You
thanks all, just looked at the moneymarket site - mind boggling but am further investigating. :smile:
Reply 8
Avatar for Juno
Juno
20
MSE might help too, but it might be a bit slow as Martin Lewis' first TV show started today.
Reply 9
Avatar for tigger1430
tigger1430
7
theisticandy
no it doesn't, inflation is at least 1(RPI)% or 2(CPI)% lower than the interest you get on savings so you still make a profit....

and as they don't charge interest on the student loan, just inflation compensating charges you gain :smile:



Hmmm do you want to re-think? You DO get charged interest on your student loan, its' not much but you definately do....!!!! It isn't free money you know - how do you think the SLC is a profiting business?

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