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.
£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;
- Hodge Bank One Year Fixed Rate Account – paying 1.8%
- Nationwide FlexDirect current account – paying 5% on balances up to £2,500 for the first year
- Nationwide Flexclusive Regular Saver – paying 5%
- Tesco Bank Current Account – paying 3% on balances up to £3,000.
Over the course of the year £10,000 saved in the model portfolio will generate £321.62 - an effective return of 3.22%. This compares to just £1 in a typical high street savings account, the NatWest Instant Saver paying 0.01%.
This mean a saver has made an additional £320.62 by using the model savings portfolio.
Existing savings accounts
| Amount | AER % | Gross interest per annum | Notes | |
|---|---|---|---|---|
| NatWest Instant Saver | £10,000 | 0.01% | £1.00 | Easy access |
| Total savings | £10,000 | 0.01% | £1.00 |
Recommended savings accounts
| Amount | AER % | Gross interest per annum | Notes | |
|---|---|---|---|---|
| High interest current accounts | ||||
| Nationwide Building Society FlexDirect current account | £2,500.00 | 5.00% | £125.00 | Bonus ends after 12 months |
| Tesco Bank Current Account (feeder account) | £2,750.00 | 3.00% | £34.37 | Diminishing balance to fund regular saver |
| Regular savers | ||||
| Nationwide Building Society Flexclusive Regular Saver (Issue 2) | £250 pm | 5.00% | £81.25 | 12 month term |
| Fixed term bonds | ||||
| Hodge Bank One Year Fixed Rate Account | £4,500 | 1.8% | £81.00 | 12 month term |
| Total savings | £10,000 | 3.24% | £321.62 | |
| Maximise the interest you can earn | Increase in gross returns of £320.62 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 Hodge Bank One Year Fixed Rate Account
Open and deposit £2,500 in Nationwide FlexDirect
Open and deposit £2,750 in Tesco Bank Current Account
Open and deposit £250 in Nationwide Flexclusive Regular Saver
Final balances:
£4,500 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£2,750 Tesco Bank Current Account
£250 Nationwide Flexclusive Regular Saver
Month 2
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide Current Account
£2,500 Tesco Bank Current Account
£500 Nationwide Flexclusive Regular Saver
Month 3
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£2,250 Tesco Bank Current Account
£750 Nationwide Flexclusive Regular Saver
Month 4
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£2,000 Tesco Bank Current Account
£1,000 Nationwide Flexclusive Regular Saver
Month 5
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£1,750 Tesco Bank Current Account
£1,250 Nationwide Flexclusive Regular Saver
Month 6
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£1,500 Tesco Bank Current Account
£1,500 Nationwide Flexclusive Regular Saver
Month 7
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£1,250 Tesco Bank Current Account
£1,750 Nationwide Flexclusive Regular Saver
Month 8
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£1,000 Tesco Bank Current Account
£2,000 Nationwide Flexclusive Regular Saver
Month 9
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£750 Tesco Bank Current Account
£2,250 Nationwide Flexclusive Regular Saver
Month 10
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£500 Tesco Bank Current Account
£2,500 Nationwide Flexclusive Regular Saver
Month 11
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£250 Tesco Bank Current Account – cancel DD so next month you don’t go overdrawn.
£2,750 Nationwide Flexclusive Regular Saver
Month 12
Day 1
Transfer £250 from Tesco Bank Current Account to Nationwide Flexclusive Regular 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 Hodge Bank One Year Fixed Rate Account
£2,500 Nationwide FlexDirect
£0 Tesco Bank Current Account – make sure you’re not overdrawn.
£3,000 Nationwide Flexclusive Regular Saver
After the twelfth month the Nationwide Current Account bonus ends and the Nationwide Flexclusive Regular Saver matures. Transfer your cash out of these accounts and start the process again.
Over the year this will have generated £321.62, an effective return of 3.22%. £10,000 cash saved in a typical high street easy access saver would have generated just £1, based on an interest rate of 0.01%.
This mean a saver has made an additional £320.62 by using the model savings portfolio.
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