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CASH ISAs
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This week, Aldermore launched a one, two and three-year fixed rate ISA, all of which pay highly competitive rates for their terms.
1 Year Fixed Rate Cash ISA pays 0.45% gross, 2 Year Fixed Rate Cash ISA pays 0.60% gross, and 3 Year Fixed Rate Cash ISA pays 0.70% gross. All ISAs pay interest on maturity and require a £1,000 minimum deposit to open. They allow further additions for 14 days from account opening. Earlier access is permitted subject to 90 days’ loss of interest on the one-year option and 180 days’ loss of interest on the two and three-year options. Transfers in are accepted but must be made within 10 business days. Transfers out are subject to the same interest-loss penalty as earlier access. These ISAs must be opened and managed online. For those looking to supplement their income, there are versions of these ISAs that
pay interest monthly
at the same gross rate.

Robin Squirrel

New fixed rate bonds

FCMB Bank (UK) launched new 18-month, two and three-year fixed rate bonds this week. Raisin UK – 18 Month Fixed Term Deposit pays 0.68% gross, Raisin UK – 2 Year Fixed Term Deposit pays 0.75% gross, and Raisin UK – 3 Year Fixed Term Deposit pays 0.90% gross. All bonds pay interest on maturity and require a £1,000 minimum deposit to open. These bonds benefit from Raisin UK offering a bonus of up to £50 that can be claimed when a first savings account is opened via its website (terms and conditions apply). Further additions and withdrawals are not permitted. These bonds can only be opened online but can then be managed by post, by phone and online.

Bonds rates rise

This week, Coventry Building Society increased the rates, changed the issue numbers and moved on the end dates on its three and five-year fixed rate bonds. Fixed Rate Bond (234) 31.08.2024 pays 0.65% gross yearly until 31.8.24 and Fixed Rate Bond (236) 31.08.2026 pays 1.00% gross yearly until 31.8.26. To open these bonds, a £1 minimum deposit is needed. Further additions are allowed within 14 days of account opening or while the issue remains open, whichever period is longer. Withdrawals are not permitted. These bonds can be both opened and managed in branch, by post, by phone and online. For those looking to supplement their income, there are versions of both these bonds that pay interest monthly at the same gross rate.

Chart-topping short-term bonds

This week, Atom Bank increased the rate on its six-month and one-year fixed rate bonds, resulting in both bonds topping the charts for their terms. 6 Month Fixed Saver pays 0.50% gross on maturity and 1 Year Fixed Saver pays 0.70% gross on anniversary. To open these bonds, a minimum deposit of just £50 is needed. They allow further additions for one week from account opening. Withdrawals are not permitted. These bonds must be opened and managed via mobile app. For those looking to supplement their income, there are versions of both bonds that pay interest monthly at the same gross rate.

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Savers Friend In Focus

Monthly interest

If you are looking to supplement your income using your savings, many banks and building societies offer accounts that pay monthly interest.

The best rate on a monthly interest account without opening restrictions this week comes from Kent Reliance with its Easy Access Account – Issue 45, which pays 0.45% gross monthly. A minimum deposit of £1,000 is needed to open this account. It allows further additions via cash at branch, otherwise by cheque or bank transfer. Withdrawals are permitted but the withdrawal method is dependent on how the account is opened. It can be both opened and managed in branch, by post and online.

New short-term bond

Shawbrook Bank launched an 18-month fixed rate bond this week. 18 Month Fixed Rate Bond Issue 22 pays 0.70% gross on anniversary on a £1,000 minimum opening deposit. It allows further additions while the issue remains open. Withdrawals are not permitted. The bond must be opened online but can then be managed by phone and online. For income-seekers, there is a version of this bond that pays interest monthly at the same gross rate.

Long-term bond launched

Halifax launched a five-year fixed rate bond this week. 5 Year Fixed Saver pays 0.50% gross on anniversary on a £500 minimum opening deposit. This bond allows further additions within 10 days of account opening. Earlier access is permitted on closure only and subject to 365 days’ loss of interest. It can be both opened and managed in branch, by phone, online and via mobile app. For those looking to supplement their income, there is a version of this account that pays interest monthly at the same gross rate.

ISA rates increase

This week, United Trust Bank increased the rates on its three and five-year fixed rate ISAs. ISA 3 Year Bond pays 0.70% gross and ISA 5 Year Bond pays 1.05% gross. Both ISAs pay interest on anniversary and require a £15,000 minimum deposit to open. These ISAs do not allow further additions. Earlier access is permitted subject to an interest-loss penalty. Transfers in are permitted. Transfers out are subject to the same interest-loss penalty as earlier access. Both ISAs must be opened by post but can then be managed by post, by phone and online.

At the same time, United Trust Bank increased the rates on its 15-month, two and three-year fixed rate bonds. UTB 15 Month Bond pays 0.68% gross, UTB 2 Year Bond pays 0.80% gross and UTB 3 Year Bond pays 0.90% gross. All bonds pay interest on anniversary and require a £5,000 minimum deposit to open. They do not permit further additions or withdrawals. These bonds must be opened online but can then be managed by post, by phone and online.

New short-term bonds

Skipton Building Society launched two and three-year fixed rate bonds this week. 2 Year Fixed Rate Bond Issue 152 and 2 Year Fixed Rate E-Bond Issue 152 both pay 0.50% gross on anniversary, while 3 Year Fixed Rate Bond Issue 152 and 3 Year Fixed Rate E-Bond Issue 152 pay 0.65% gross on anniversary. These bonds all require a £500 minimum deposit to open. They allow further additions until 26.5.21. Withdrawals are not permitted. 2 Year Fixed Rate Bond Issue 152 and 3 Year Fixed Rate Bond Issue 152 can be opened and managed in branch, by post and by phone, while the E-Bonds can only be opened and managed online. For those looking to supplement their income, there are versions of all these bonds that pay interest monthly at the same gross rate.

At the same time, Skipton Building Society launched two and three-year fixed rate ISAs. 2 Year Fixed Rate ISA Issue 152 and 2 Year Online Fixed Rate ISA Issue 152 pay 0.50% gross and 3 Year Fixed Rate ISA Issue 152 and 3 Year Online Fixed Rate ISA Issue 152 pay 0.65% gross. All ISAs pay interest on anniversary and require a £500 minimum deposit to open. They allow further additions until 26.5.21. Earlier access is permitted on closure only and subject to 180 days’ loss of interest on the two-year options and 240 days’ loss of interest on the three-year options. Transfers in are accepted until 26.5.21. Transfers out are subject to the same interest-loss penalty as earlier access. 2 Year Fixed Rate ISA Issue 152 and 3 Year Fixed Rate ISA Issue 152 can be opened and managed in branch, by post and by phone, while the online options can only be opened and managed online. For income-seekers, there are versions of all these ISAs that pay interest monthly at the same gross rate.

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Rachel Thrussell

Ask Rachel

Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.

My parents have given me a few thousand pounds that I think I am going to use to help buy a house sometime in the next couple of years. What type of account should I put the money into in the meantime?

If you are definitely going to buy a house with the money, then you could open a Lifetime ISA. This is a Government scheme that offers generous bonuses to savers, although there are a number of things that you’ll need to consider first – our guide on Liftime ISAs should help you decide. However, if there is a chance that you will use the money for something else, then a straightforward savings account may be more appropriate. An easy access account (or ISA) may be best if you don’t know when you’ll need the funds, while a fixed rate bond (or ISA) could be an option if you’re confident you won’t need the funds for a certain period of time.

Get your savings questions answered by Rachel by emailing rachel@saversfriend.co.uk We regret we cannot answer emails personally

This week's
average rates

How do your savings compare?
No Notice 0.16%
Notice 0.36%
Cash ISA 0.39%
1 Year Fixed Rate Bond 0.44%
2 Year Fixed Rate Bond 0.51%
3 Year Fixed Rate Bond 0.67%
4 Year Fixed Rate Bond 0.72%
5 Year Fixed Rate Bond 0.90%
5 May 2021

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Wizard Squirrel

Alternative sources of income

Are ETFs a good investment option for DIY investors?

If you boost your income through investing, you may have heard of exchange-traded funds (ETFs) but might be unfamiliar with what these are or whether they are a good investment option for DIY investors.

To help you decide if this type of investment is a good option, we’ve outlined what makes ETFs different to other types of investments and the pros and cons of these investments.

What are ETFs?

An ETF allows investors to buy and sell a basket of assets without having to buy all the components individually, but unlike a mutual fund, an ETF can be bought and sold throughout the trading day.

Laith Khalaf, financial analyst at AJ Bell described ETFs as very similar to a tracker fund. Khalaf explained: “Plain vanilla ETFs are very similar to tracker funds, in that they follow the performance of a broad market index, and do so at extremely low cost. They can also be held in ISAs and SIPPs just like traditional funds, and so have their gains and income sheltered from tax. Probably the most attractive edge that ETFs offer is they can be traded throughout the day, giving investors greater scope to buy on dips. By contrast, tracker funds work on a forward pricing basis, so you never know exactly what price you will pay. Over the long term, this isn’t likely to make a big difference, but some investors like to invest part of their portfolio more tactically, and some simply want to know they can buy and sell immediately, as they can with listed shares.”

The benefit of ETFs allowing investors to buy and sell throughout the trading day, combined with the benefits of a fund makes ETF potentially a good investment choice for some investors, but it is important to remember that all investments carry a risk. Khalaf added: “While there are definitely some weird and wacky options in the ETF space, the most popular options with DIY investors show they are predominantly using ETFs to gain exposure to major markets, just as they would an index tracker fund. As ETFs rise in profile, more investors will likely join the growing throng of converts.”

Although investing in an ETF can be a good way for experienced DIY investors to benefit from investing in major markets, this type of investment is not for everyone. Possible risks include the costs involved, fluctuations in price and a potential lack of liquidity when an investor wants to sell. All of these could result in a loss of capital. As such, investors should carefully consider all options and, ideally, get advice from an independent financial adviser before making investments.

If you are interested in investing in ETFs, one of the easiest ways to invest is through investment platforms. Our guide on investment platforms provides more information about investing this way, as well as how to get started.

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