How to get 3.42% interest on your £10,000 savings – the Moneywise model savings portfolio

The Moneywise Team
25 October 2017
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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.

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.

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 larger sum, you can try the £50,000 Moneywise model savings portfolio instead.

£10,000 savings portfolio

For a £10,000 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;

Over the course of the year £10,000 saved in the model portfolio will generate £344.25 - an effective return of 3.44%. This compares to just £15 in a typical high street savings account, the HSBC Flexible Saver paying 0.15%.

This mean a saver can make an additional £329.25 by using the model savings portfolio.

Note, the Al Rayan 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:

AccountAmountAER %Gross interest per annumNotes
HSBC Flexible Saver£10,0000.15%£15Easy access
Total savings£10,0000.15%£15 

Recommended savings accounts

And here's what you can get with the Moneywise portfolio of savings accounts:

AccountAmountAER %Gross interest per annumNotes
High interest current accounts
Nationwide Building Society FlexDirect current account£2,5005%£125Bonus ends after 12 months
Tesco Bank Current Account (feeder account)£2,7503%£41.25Diminishing balance to fund regular saver
Regular savers
Nationwide Building Society - Flex Regular Online Saver£250 pm5%£81.2512-month term
Fixed term bonds
Al Rayan 12 Month Fixed Term Deposit£4,5002.15%£96.7512-month term
Total savings£10,0003.44%£344.25 
Maximise the interest you can earnIncrease in gross returns of £329.25 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 £4,500 in Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month Fixed Term Deposit
£2,500 Nationwide FlexDirect
£750 Tesco Bank Current Account
£2,250 Nationwide Flex Regular Online Saver

Month 10

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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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:

£4,500 Al Rayan 12 Month 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 course of the year £10,000 saved in the model portfolio will generate £344.25 - an effective return of 3.44%. This compares to just £15 in a typical high street savings account, the HSBC Flexible Saver paying 0.15%.

This mean a saver has made an additional £329.25 by using the model savings portfolio.

In reply to by anonymous_stub (not verified)

Very useful article - thank you.

In reply to by anonymous_stub (not verified)

You could earn more than 3.22% by adding more 5% Regular Savers fron First Direct and M&S Bank, although the latter would involve switching a current account, which has at least two DDs. First Direct does not need direct debits being paid out each month, but the £1K needs to move across all four current accounts to satisfy the minimum monthly payin rewuirements

In reply to by anonymous_stub (not verified)

About 30 mins work in the 1st month to set the accounts up, then 10 minutes a month for 12 months. Comes to 2-1/2 hours work for £360. i.e. £144/hour. A bit more than I get paid per hour. How about you?

In reply to by anonymous_stub (not verified)

Hi, when I posted my last 2 comments on this article, they were in response (reply) to 2 particular comments left by other people. Does this facility not work?RegardsAdrian

In reply to by anonymous_stub (not verified)

Thanks for your help in

In reply to by anonymous_stub (not verified)

Nicely done. Obviously you can get a good return for a small amount of money (10k). I belong to a different saver segment (Monthly income around 5k, savings well above 10k, tight work-life balance). The model you propose requires an effort that perhaps is not justified by those returns (around 200gbp per year more than just leaving the money at a 1.2% savings account).My question is: Would you have a similar model for a bigger sum of savings (e.g. 100-200k gbp). For such an amount, the effort would be worthwhile.

In reply to by Patrick Allenby (not verified)

5% regular saver gives about 2.7% of actual saving in the end of the year. You add to the ballance gradually and the interest is counted every day, or month - thus, in the beginning, it's 5%, just on a low ballance. Heck the 2.7% total in the end, and that's why it wouldn't enchance the 3.22% of these 10k sum.

In reply to by anonymous_stub (not verified)

More important than eeking more from savings accounts, is campaigning to get banks being more diligent to stop fraudsters’ transactions, copying Lloyd’s landline system for One Time Passcodes and blacklisting the banks used by fraudsters(I’m afraid I do not diligently watch for messages or use social media, especially as my time is taken up recovering from a vishing scam in the name of BT and Action Fraud)

In reply to by anonymous_stub (not verified)

Super article Cheers

In reply to by anonymous_stub (not verified)

Great article - thank you.

In reply to by Portland Bill (not verified)

Poor folks you mean!Tut tut how sad people view others like this!

In reply to by Portland Bill (not verified)

Hi Adrian,

Our apologies, the site has been experiencing a glitch with the comment reply facility, but it should now be working properly if you'd like to try again.

Thanks,

The Moneywise Team

In reply to by anonymous_stub (not verified)

Mr Williams, what a great effort this is. I myself do not possibly have time to do all of that messing around but as a newsletter subscriber and regular visitor to the site your effort on our behalf is very much appreciated. At first I thought there was a mistake with the figures but I went through it all again and it checks out, just wish I had the time and the will since my savings are being eroded by inflation as are most people's.

In reply to by anonymous_stub (not verified)

You are not restricted to a Flexdirect by the longstanding FlexAccount, which has been the proverbial favourite for free travel insurance for many years. Furthermore, you could switch it after a year, when it's rate falls to 1%, earning the switching bonus and having it closed for you, so you can reopen in a years time and repeat the process. Switching say to First Direct for example, would then qualify you for another 5% Regular Saver. If you preferred to switch to M&S to earn a considerably higher bonus, you would have had to add two ACTIVE direct debits, during the year.All 5% regular savers, except Nationwide's, can only be taken out IF you join the bank via the recognised switching procedure, which is not the big deal people think and performs the account closure process,. useful in the case of Flexdirect.First Direct, a truly phenominal bank, whose customer service never ceases to amaze me, , also does not require DDs, but does need £1K PING PONG Standing orders to satisfy minimum monthly input requirementThe use of several banks to achieve higher interest amounts warrants the use of a flow chart

In reply to by anonymous_stub (not verified)

Since I am already a Nationwide current account holder, I would have to close my current account in order to open a Flexdirect current account. The Flexdirect account does not suit my requirements, or I would have changed to it when first introduced.Would Nationwide accept closing a Flexdirect account after 12 months in order to open another one immediately to repeat your exercise? Interest on the Flexdirect account is calculated daily so the £125 is an overestimate.I already transfer £500 monthly into a Flexclusive Regular Saver.All this is before tax, in my case at 40% - net gain 2 local pub dinners for two.

In reply to by anonymous_stub (not verified)

Just think of all the more socially productive uses to which all the time and energy involved in all this could be better put. What a waste of a life.

In reply to by anonymous_stub (not verified)

This is for people who have nothing to do at all.

In reply to by Portland Bill (not verified)

I think you can set up standing order for monthly transfers, saving 10 mins/month=110 mins over the year?

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