How to get 2.36% interest on your £50,000 savings – the Moneywise model savings portfolio
9th November 2017 15:30
by Moneywise Team from interactive investor
Cash savers continue to battle against low interest rates and poor returns across the market, but there are ways to get more out of your savings pot.
With the effect of high inflation also whittling away the real value of cash, savers are looking for new ways to beat the savings market.
- Beat the banks with current account ping pong
Moneywise and Savings Champion have created a model savings portfolio which helps savers get the best return possible return on their cash.
The rules
Our portfolio is based on using high interest current accounts, regular savers and one-year bonds in order to maximise your total return.
- Read about: Free regular investing | Open a Stocks & Shares ISA | Cashback Offers
Money will be drip fed through the accounts in order to achieve the best returns. There is some legwork involved in setting up this portfolio, but we think the returns make it worthwhile.
There are ways in which you can earn slightly more interest, but this will require multiple current accounts. We have limited our portfolio to two current accounts for simplicity.
Many current accounts have requirements such as minimum pay-ins each month and need a number of active direct debits. Make sure you have ‘float money’ on top of the figures listed below so that you can pay your direct debits each month.
Also ensure that by the end of the year you do not go overdrawn on any of your current accounts, as this is likely to incur fees and charges. We’re looking at a one-year timeframe in our analysis and will not include accounts that charge a fee.
Depending on how much you’re saving, we have two model portfolios for you to use. If you want to get the best return possible on a smaller sum, you can try the £10,000 Moneywise model savings portfolio instead.
£50,000 savings portfolio
For a £50,000 cash pot you will be able to maximise your savings by using a pair of current accounts, a linked regular saver and a fixed rate one-year bond.
To start, you need to open the following four accounts;
- Al Rayan Bank 12 Month Year Fixed Term Deposit- paying 2.10%
- Nationwide FlexDirect current account – paying 5% on balances up to £2,500 for the first year
- Nationwide Flex Regular Online Saver – paying 5%
- Tesco Bank Current Account – paying 3% on balances up to £2,750.
Over the year this will have generated £1,182, an effective return of 2.32%. £50,000 cash saved in a typical high street easy access saver would have generated just £75, based on an interest rate of 0.15%.
This mean a saver has made an additional £1,107 by using the model savings portfolio.
Note, the Gatehouse account's rate is an expected profit rate (EPR). Find out what this means in our guide.
Existing savings accounts
Here's what a typical savings account will give in interest per annum:
| Account | Amount | AER % | Gross interest per annum | Notes |
|---|---|---|---|---|
| HSBC Flexible Saver | £50,000 | 0.15% | £75 | Easy access |
| Total savings | £50,000 | 0.15% | £75 |
Recommended savings accounts
And here's what you can get with the Moneywise portfolio of savings accounts:
| Account | Amount | AER % | Gross interest per annum | Notes |
|---|---|---|---|---|
| High interest current accounts | ||||
| Nationwide Building Society FlexDirect current account | £2,500 | 5% | £125 | Bonus ends after 12 months |
| Tesco Bank Current Account (feeder account) | £2,750 | 3% | £41.25 | Diminishing balance to fund regular saver |
| Regular savers | ||||
| Nationwide Building Society - Flex Regular Online Saver | £250 pm | 5% | £81.25 | 12-month term |
| Fixed term bonds | ||||
Al Rayan Bank 12 Month Year Fixed Term Deposit | £44,500 | 2.05% | £956.75 | 12-month term |
| Total savings | £50,000 | 2.32% | £1,204.25 | |
| Maximise the interest you can earn | Increase in gross returns of £1,204 in year one | |||
You will be required to move money between your accounts in order to meet the minimum monthly pay-in requirements, but these can be set up as standing orders. Leave a couple of days between these money transfers to ensure the money has cleared in your account and you don’t go overdrawn.
For the Tesco Bank Current Account you will need to pay in at least £750 and pay at least three direct debits each statement month. The Nationwide FlexDirect does not require any direct debits, but you will have to pay in £1,000 a month or more.
Here’s how to do it.
Month 1
Day 1
Open and deposit £44,500 in Al Rayan Bank 12 Month Year Fixed Term Deposit
Open and deposit £2,500 in Nationwide FlexDirect
Open and deposit £2,750 in Tesco Bank Current Account
Open and deposit £250 in Nationwide Flex Regular Online Saver
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£2,750 Tesco Bank Current Account
£250 Nationwide Flex Regular Online Saver
Month 2
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account - meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide Current Account
£2,500 Tesco Bank Current Account
£500 Nationwide Flex Regular Online Saver
Month 3
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£2,250 Tesco Bank Current Account
£750 Nationwide Flex Regular Online Saver
Month 4
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£2,000 Tesco Bank Current Account
£1,000 Nationwide Flex Regular Online Saver
Month 5
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£1,750 Tesco Bank Current Account
£1,250 Nationwide Flex Regular Online Saver
Month 6
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£1,500 Tesco Bank Current Account
£1,500 Nationwide Flex Regular Online Saver
Month 7
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£1,250 Tesco Bank Current Account
£1,750 Nationwide Flex Regular Online Saver
Month 8
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£1,000 Tesco Bank Current Account
£2,000 Nationwide Flex Regular Online Saver
Month 9
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£750 Tesco Bank Current Account
£2,250 Nationwide Flex Regular Online Saver
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£500 Tesco Bank Current Account
£2,500 Nationwide Flex Regular Online Saver
Month 11
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£250 Tesco Bank Current Account – cancel standing order so next month you don’t go overdrawn.
£2,750 Nationwide Flex Regular Online Saver
Month 12
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flex Regular Online Saver
Transfer £1,000 from Nationwide FlexDirect to Tesco Bank Current Account – meets funding requirement
Day 4
Transfer £1,000 from Tesco Bank Current Account to Nationwide FlexDirect – meets funding requirement
Final balances:
£44,500 Al Rayan Bank 12 Month Year Fixed Term Deposit
£2,500 Nationwide FlexDirect
£0 Tesco Bank Current Account – make sure you’re not overdrawn.
£3,000 Nationwide Flex Regular Online Saver
After the twelfth month the Nationwide FlexDirect bonus ends and the Nationwide Flex Regular Online Saver matures. Transfer your cash out of these accounts and start the process again.
Over the year this will have generated £1,204.25, an effective return of 2.41%. £50,000 cash saved in a typical high street easy access saver would have generated just £75, based on an interest rate of 0.15%.
This means a saver has made an additional £1,204.25 by using the model savings portfolio.
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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