A beginner’s guide to savings & how to maximise your interest

After covering investment last episode, this time Martin gives a beginner’s guide to savings, including top savings, a 25% savings boost for first-time buyers, a Help to Save 50% boost, regular savings and more. Plus, a warning for women aged between 41 and 90 who’ve previously cared for someone. And you tell us your instruction vs destruction tales.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  This BBC podcast is supported by ads outside the UK.

• 0:06Speaker 01

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• 0:34Speaker 02

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• 1:07Speaker 04

  BBC Sounds, music, radio, podcasts.

• 1:10Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, usually, much of it comes from my BBC Radio 5 live show with Adrian Charles. But don't worry, there's bonus money-saving tips and lots of them this week just for you lucky, lucky podcast listeners. Today's big subject is a beginner's guide to savings and how to maximise your interest, including cash ISAs, saving for your kid's university, a 25% boost for first-time buyers' savings, and a 50% boost that smacks the pants off any other savings out there on the little-known Help to Save account. For the rest of the intro, I'll do that with Adrian after the theme tune.

• 2:07Speaker 06

  So what have we got, my friend?

• 2:09Martin Lewis?

  Yeah, it's a big one this week. The main subject, last week we did a beginner's guide to investing. This week it's a beginner's guide to saving. How do you maximise the interest that on every penny you've got in savings accounts? How does the tax work? Should it be a cash ISA, normal savings, regular savings, help to buy, help to save? Lifetime ISA, where should you be putting your money or a combination of all of them? We've had hundreds of questions in. I'm going to try and get through as many of those as possible. I've also got a note for you about a state pension error. This applies to people who took time off work between 1978 and 2010 to look after children or someone with a long-term disability. You may be due tens of thousands of pounds.

• 2:49Martin Lewis?

  This week's tellers, instruction versus destruction. When have you not followed official product instructions and come a cropper or come out smiling? People are telling us their instruction or destruction tales. And in this week's mastermind, Adrian, it is on broadband.

• 3:10Speaker 06

  Okay.

• 3:10Martin Lewis?

  And you need to know something, mate.

• 3:12Speaker 06

  Go on.

• 3:12Martin Lewis?

  The score currently, you've got 10 right and 20 wrong. You're back at random chance levels. You need to get it right this week, mate.

• 3:20Speaker 06

  Okay, I'm pretty sure it'll get worse. My record on getting broadband deals is execrable.

• 3:28Martin Lewis?

  Now you're going to have to forgive me today. I'm having, I've just had one of those career flash in front of your face moments that I'm recovering from slightly right now.

• 3:35Speaker 06

  I love it. Let's clear some space.

• 3:36Martin Lewis?

  And I'd like to complain to the BBC facilities managers. We used to do this podcast on the third floor of Broadcasting House. We are now on the sixth floor of Broadcasting House.

• 3:47Speaker 06

  Promotion.

• 3:47Martin Lewis?

  Yeah, yes, maybe. The building, each of the floors are identical. They have different structures in them, but they're identical. And on, as you walk through, on the left-hand side, there are toilets.

• 3:59Speaker 06

  Yeah.

• 3:59Martin Lewis?

  There's a male toilet and a female toilet. What I have just learnt is on the sixth floor, the configuration is the other way around to on the third floor.

• 4:10Martin Lewis?

  The left-hand toilet on the third floor is male. The sixth floor, the left-hand toilet is female. There are two doors. Why are they different? So of course, I'm in my old mode, I'm thinking about the podcast. I blithely think, oh, I need to go to the, you should always go to the loo before you go on air, because you know, you don't want to be able to break in the middle. I'm walking in the door swings and a woman, as I'm just about getting in, is walking out. And my face, obviously in current climates, I'm thinking, oh my goodness, I've just walked in there. I didn't actually get in, there's a double door, I got through the first door, not through the second door. And I looked at her in horror, and she said, it's all right, I've done it. There are different way around on this floor. I said, I'm so sorry. She said, it's fine, I've done it myself, don't worry. I gave her a, we walked out, I gave her a high five, I said, thank you so much, and went to the men's loo. But you just, you can just-

• 4:53Speaker 06

  The high five was a brave, was a brave move.

• 4:55Martin Lewis?

  No, no, she was smiling, she was smiling and onside with me, thank heavens. I mean, it's just-

• 4:59Speaker 06

  There is a bloke in uniform just outside the door here. But it's all right, mate, we've-

• 5:03Martin Lewis?

  Why would they change the configuration on different floors? Why would you not always have it the same on every, what is the possible logic for that? The loser identical, why would you have it different way around?

• 5:12Speaker 06

  There will have been-

• 5:12Martin Lewis?

  Any facilities managers listening who has a decent answer to that, let us know.

• 5:16Speaker 06

  There will be a spreadsheet and a flowchart explaining why-

• 5:20Martin Lewis?

  I'm not sure flowchart is appropriate in this particular case.

• 5:23Speaker 06

  You're quite right.

• 5:27Speaker 06

  Okay, there's three letters on the, on the top of my, the next section, HRP.

• 5:34Martin Lewis?

  Home Responsibilities Protection.

• 5:35Speaker 06

  Right, never heard of the letters, never heard of what you, those three words, you've, I know what the words are, but put together, I don't know what they-

• 5:40Martin Lewis?

  Well, this is about a state pension error. And the reason that I'm doing it now is not because it's new, it isn't new. This has been around for quite a long time, and the government were contacting the potentially hundreds of thousands of primarily women aged between 40 and 90. It isn't only women, it's primarily women, and it'll generally be of that age. Because they may have been the victim of a state pension error that could mean their owed a fortune. The government was contacting them, but then Steve Webb, former pensions minister, got in touch with us, got in touch with me, and said, they've stopped contacting them. They're no longer doing the, trying to rectify this. They're not trying to rectify it, so I'm trying to rectify it by getting it out there. Just

• 6:22Martin Lewis?

  to show you the impact of this, I got an email from Silla, who'd read the information I put out there in this, who said, I've just received 15 years back pay from H M R C of £31,674 for underpayment of my state pension. Thank you.

• 6:39Martin Lewis?

  That is why this is important to listen to. So let me take you through it. From 1978 to 2010, the government had a system in place to protect state pension entitlement for those people who didn't earn enough to accrue a state pension through paid work because they were taking time off work to look after their children or someone with a long-term disability. Clearly, in that time period, it was mainly women who were doing that. It was called Home Responsibilities Protection, and it should have been awarded automatically to those claiming child benefit or who'd received income support throughout a full tax year while they were caring for someone with a long-term illness. It effectively gave you the national insurance contributions you would have otherwise got.

• 7:23Martin Lewis?

  So, and then, you know, you need around, it's only around 30 years of full national insurance contributions to get the full state pension. So if you're short of years, you don't get the full state pension. And you can see why, if you're missing 15 years, as that case study was, it's a huge amount of money because the state pension, once you get to retirement age, if you're in it. So who is most likely to be affected? Women currently between the age of 41 and 90, though it's mainly women between, of the age of 60s and 70s, but it could be anyone 41 to 90, who took time away from paid work to look after a child or a person with long-term disability at any point between 1978 and

• 8:02Martin Lewis?

  2010, who claimed child benefit or income support for the first time before May 2000. So effectively, your kids were born before May 2000, or your partner claimed child benefit, but you stayed at home to look after the kids. What do you do? You go on to gov.uk, you find your state pension forecast, and you look if you're entitled for the full state pension years. If you're not, then you need to check your gaps in national insurance years that you can also do on gov.uk. If there are gaps in your record from 1978 and 2010, and these were the years that you took off work to care for a child or someone with a long-term health condition, you may be missing Home Responsibilities Protection. At that point, we're getting technical in what you need to do.

• 8:45Martin Lewis?

  Go and look it up, there are good guides online to what to do next. So I'm doing this as a clarion call rather than a full, here's everything you need to do to dot all i's and cross t's. If you're listening to this and it's not you, but you know someone it may be, it may have been your parent. Frankly, you know, someone born in 1980 could very well be listening to this now. You're 45. It's worth checking. It's huge money. These mainly women have been, you know, done over by a system error.

• 9:14Speaker 06

  As last week was podcast only, we should mention that you're talking about investments. This week, talking about savings, interest rates, cash ISAs, savings accounts and the like. And so what's the difference between savings and investments?

• 9:30Martin Lewis?

  Well, let's be really clear on this. I did this last week and it's important to do again. Saving is when you put your money away in an account, usually it's called a deposit account, where the capital is protected, the amount of money you protected and the interest is protected by the Financial Services Compensation Scheme. So, and that protects you up to £85,000, which means you put your money away, your capital is safe and you're guaranteed to get the interest rate that you are told. You know exactly what you're getting, exactly how much it is going to grow, and that's that. And the only risk is that inflation, you know, prices will rise quicker than your money is growing. Investing is where you put money in a risk-based product. It could be shares, it could be bonds and gilts, it could be

• 10:11Martin Lewis?

  property for that matter, in the hope that you will get more growth, but at the risk you may lose some or all of your capital. So the difference is you invest in the hope of more growth, but you have to understand it may not work for you. Saving, what's going to happen is absolutely guaranteed. Over the long term, if you've got a widespread of investments, investing will tend to outperform saving. Saving is the no-risk option. So if you're putting money away for the short term, money you're going to need to use, saving is better because you need that amount of money, you don't want to lose any. If you're putting it away for the long term and you can take a little bit of risk with it, investing tends to be better. This week, savings. Last week was a beginner's guide to investing.

• 10:56Martin Lewis?

  I've had some great feedback on it and our specialists were really good. So I would suggest that people go and have a listen back to that.

• 11:01Speaker 06

  We're hopefully kicking things off with you giving me five questions to ask before we get to them. And I'll take it, I can do this if you like, in the way as if I'm... I'm going back to my am damn rich.

• 11:12Martin Lewis?

  Oh, yeah.

• 11:13Speaker 06

  History, saying it as though I'm ruminating and asking myself the question.

• 11:17Martin Lewis?

  And that's what it is. These are my five questions people should ask themselves about their savings.

• 11:21Speaker 06

  Okay.

• 11:22Martin Lewis?

  To help them decide what to do.

• 11:23Speaker 06

  Okay, so here's the first one. Hmm. Now, do I want to maximize every penny? Or or decent, easy solutions? Is it about getting every penny or is it just about something easy?

• 11:38Martin Lewis?

  So this is about effort versus reward. Look, what most people want, I will be honest, is they want one or two savings accounts that pay them a good rate that they don't have to hassle or worry about. You want to be getting at the moment at least four and a half percent interest. You put your money away in it, you forget it until you need it, and it needs a little bit of managing. That's one solution and we'll be talking about that. Then there are some people, and they tend to be people who listen to what I talk about, who want to maximize every penny. So you know, every single penny of the money you're putting away in savings is earning the most possible interest. That will usually be, you know, think of a champagne fountain, Adrian. You know, you've got the glasses on the bottom and then the glasses above. And it goes up to the pinnacle of just one glass on the top. You know what I'm talking about?

• 12:22Martin Lewis?

  And then they pour the champagne in the top and it fills the first cup. And then once you've filled that one, it spills over to the next level. And if you're lucky enough to fill, well, that's what we're trying to do with savings in the perfect solution. You maximize every bit of savings in the one that pays the most. It'll be something like a regular savings account where you drip feed up to three hundred quid a month at seven percent interest. Once you've filled that, you look at the next tier, and then once you've filled that, you go down in tiers. So every penny you've got is earning the maximum. Takes work, takes effort, takes monitoring, takes savvy. Decide at the start which you are. Are you an easy life and I want it to be pretty good? Or are you, I want to maximize it, maybe get

• 13:01Martin Lewis?

  a twentieth or a tenth more on top because every single penny is perfect and I've got it all in my spreadsheet. You've got to decide that at the start.

• 13:09Speaker 06

  As you put your arms above your head, then I got quite distracted by the muscle definition in your arms.

• 13:14Martin Lewis?

  Thank you very much.

• 13:14Speaker 06

  Nice biceps.

• 13:15Martin Lewis?

  Thank you.

• 13:16Speaker 06

  Good guns.

• 13:17Martin Lewis?

  Yeah, sums out, guns out.

• 13:18Speaker 06

  Okay, second question. Hmm. Can I lock money away for years or do I need access?

• 13:24Martin Lewis?

  So this is a really important question. You're defining what you want with your savings. Are your savings something that you need to be able to use and spend? Or are they something where you can put them away for a defined time? That you will absolutely not be able to touch them in that time? If you're going to be putting them away for a defined time, then you can take a fixed savings account. Now, in a fixed savings account, the interest rates tend, although they're not always, to be higher. And they're guaranteed. In easy access or no notice, which is where you can take your money out whenever you want. The interest rates are variable, so they can move, so you need to monitor them. They can go down, they can go up, and you need to be on top of them. With a fixed account, you put money away for two years. You know exactly what the interest rate will be. It's locked in, it's guaranteed.

• 14:10Martin Lewis?

  But you can't access it, with the one exception of fixed rate cash ISAs. They're not allowed to lock your money away. But if you take your money out of those, you will lose some interest. So it's really worth having that thought. We're going to go through all the best products later, but is the thought, how much of my money do I need access to? How much can I lock away? I mean, clearly, you might have 30 grand. You might say, I want 10 grand of access to it. And you should always have a rainy day fund of a few months of bills. And I want 20 grand where I'm going to be locking, I can lock it away. And then I can get the guaranteed rate.

• 14:39Speaker 06

  So I ask myself now, am I putting new money aside regularly? Or is it all a lump sum?

• 14:46Martin Lewis?

  I'm really feeling the depth of the question. So this is a very simple one. I mean, if you're putting money aside regularly, there are special accounts called regular savings accounts. That only allow you to put a relatively small amount of money in, up to 200 to 300 pounds a month. But the interest rates are much higher. So that is a useful way to save. They tend to only last a year or so. There's a whole list of them. Alternatively, if you've got a lump sum, while you can drip feed it into a regular savings account to get the higher interest. If you're doing that, let's play it to the maximum. For most people, you'll just want to put it all in one place. Just a tiny little note, because lots of people get in touch with me about these regular savings accounts and say, it's a con, it's a con. I don't know why they use that voice, but they do. I don't know how they do it in writing, but they do. It's a con, it's a con.

• 15:30Martin Lewis?

  And this is the reason why they say that. Let's say it's paying 7% interest and you're putting 300 pounds ish in a month. At the end of the year, you've got 3 grand in the account. And they go, I've got 3 grand in the account, it's 7% interest. I should be getting 210 pounds interest. And they look in their account and they've got a total of 110 pounds interest. And they go, it's a con, it's a con. What's actually happening is you only get paid interest on the amount that you have in the account. Now, if you think about it, you're putting in roughly £300 a month. Well, you only have £3,000 in for the very last day. The month before, you had £2,700 in. You know, six months, you had 1,400, 1,500 quid in.

• 16:12Martin Lewis?

  So actually, the way to think about it is, I'm going to get roughly half the interest, I think I would, because while I've got £3,000 in at the end of the year, because these accounts normally last a year, my average balance over the year is about half that, 1,500 quid. So I'm going to get roughly 7% of 1,500 quid. But the crucial point about them is, on the money that is in there, you're still getting the best interest possible compared to anywhere else. So if you were moving it from a lump sum account, so let's say you had your money in 5% easy access savings and you were dripping that across into one of these regular savers, you're still earning money on the 5% easy access savings while it is moving into the regular saver.

• 16:56Martin Lewis?

  So don't not use a regular saver because of that mass. You're still getting the most interest on whatever money you had in that account. I'm interrupting the podcast. I've just explained to Adrian how regular savings accounts work, but I want to go through in a bit more detail what the best payers are out there. Now, the first thing to say is that many of the best are linked to current accounts. In other words, you have to have that bank's current account in order to open its regular savings account. I mean, they do it as a, you know, it's a bit like a bank switching bonus. You get this special high interest account linked to the current account, but they're very clever because you're only able to put a small amount of money in there, so the total cost of them isn't that big. Here are the current accounts that have linked regular savers that are worth opening.

• 17:43Martin Lewis?

  Zopa's Biscuit account, First Direct's account, Co-op Bank accounts, Nationwide Current accounts, Club Lloyds account, any NatWest account, any Santander account, any TSB account. All of those have regular savings accounts between 5% fixed up to 7.1% fixed. And worth noting, if you're not with one of those banks, there are a couple of those accounts that currently have Switchers bonuses. So you have First Direct, which pays 7% fixed for one year on its regular saver on up to 300 quid a month. Those new customers who've switched with it at the moment get a £175 bonus boost. Club Lloyds, that has a 6.25% regular saver fixed for a year,

• 18:27Martin Lewis?

  you can put up to £400 in, which is good because the bigger amount you can put in, the more interest you'd get, is also giving free cash, in its case, £185 for Switchers at the moment. NatWest is giving £175 on its reward account and its regular saver is 5.5% variable on up to 150 quid. Santander is giving £180 on its Edge account and that has a 5% fixed regular saver. And TSB is giving £100 upfront and then £15 a month cash back on its TSB current account and it has a 5% fixed regular saver. So you can see at the moment, what you can do is you could switch bank account to access a really good regular savings account and you get paid to do so.

• 19:09Martin Lewis?

  As an aside, there are also regular savings accounts that you don't need to switch bank account to. Principality Building Society, 7.5% fixed for six months on up to 200 quid. Skipton Building Society, 5.75% variable on up to 200 pounds for a year. And Progressive Building Society, 5.5% variable for a year on up to 300 quid. So if you do have a lot of regular savings, you could have a bank linked one, where you put your regular savings in, but if you've got more than 300 quid, you can open one or more of the Principality, Skipton and Progressive Building Society to absolutely maximise it. And this goes back to what I said before. These accounts are for those people who want to ensure every single penny is earning the maximum interest.

• 19:51Speaker 06

  Fourth question to myself, is tax on savings interest an issue for me?

• 19:56Martin Lewis?

  So the more you earn and the more savings you have, the more likely you are to be taxed on your interest. Here's how it works for most people. I'm going to ignore the one complexity here. If you are a basic rate taxpayer, a 20% rate taxpayer, you are allowed to earn a thousand pounds of interest in all savings accounts, tax-free. Only above a thousand pounds' interest is it taxed. If you are a higher rate, 40% taxpayer, you're allowed to earn 500 pounds of interest, tax-free. If you're a top 45% rate taxpayer, so you know, the above 125,000 pounds a year earnings,

• 20:37Martin Lewis?

  you don't get one of these. So for most people, let's do the maths. You have a thousand pounds as a basic rate taxpayer you can earn tax-free. It would take 20,000 pounds in a top paying 5% interest account to generate a grand's worth of interest. If you have less than 20,000 pounds in savings as a basic rate taxpayer, then the tax probably isn't relevant to you. Above that, you want to look at all the tax-free options like cash ISAs, which are a totally separate allowance, and look whether you need to put your money in there because you would earn more after-tax in a tax-free account than you would otherwise. But so whether you have to take in tax into account depends on how much you earn and how much you've got in savings.

• 21:22Martin Lewis?

  If you've got a few grand in savings and you're not a top-rate taxpayer, then tax on the interest is irrelevant to you.

• 21:28Speaker 06

  And finally, should I be investing rather than saving?

• 21:34Martin Lewis?

  So the answer to this for many people, especially younger people, is yes, with some of your money that you can afford to risk. We are too risk averse as a nation. That's one of the reasons the Chancellor was looking at cutting the cash ISA limit. That has been, well, at least postponed and maybe cancelled. The idea of cutting the cash ISA limit in order to encourage more people to invest in stocks and shares ISAs, I'm not sure it would have worked, but anyway, that's not the point. And so I am trying, even though it's not an area I cover, to make sure that I mention to people that, you know, if you are 20 or 30 and you have some spare cash that you can put away that is not going to be imminently usable for you, and you're not going to need it for five, 10 or 15 years. If you put it in a widespread of investments, could be a global index tracker fund,

• 22:19Martin Lewis?

  all this was covered in last week's Beginnings Guide to Investments, do go and listen to that, then on the balance of probabilities, that will substantially outperform putting your money in savings and you will be better off doing so. So the answer for certain amounts of cash that you can afford to risk is yes, you would be better off investing if you're doing it for the long term.

• 22:37Speaker 06

  A question from Gail. What's the best savings plan to give me access to for emergencies, but also has the best interest rate?

• 22:44Martin Lewis?

  Well, very easy. That is what an easy access account, now there are actually lots of different types, there's no notice and there's instant access, but easy access means you can get your money out within a few days if you need to do so without any real problems. At the moment, the top paying easy access account on the market is Chase, which is an app only bank account, but you can get the app only bank account, it just does a soft credit score, so it doesn't mark your credit file and you don't have to switch to get it. So you can open it just to get the savings account that's linked to it, that pays 5% from a minimum one pound up to a maximum three million, obviously you're only protected up to £85,000 per person. So the Chase account pays 5% for, that includes a newbie's bonus of 2.25%, so it's only

• 23:28Martin Lewis?

  for new customers to Chase. Otherwise, the next best interest rate is with Trading 212 new customers who get 4.76%, but that's a cash ISA. Even if you don't need the tax gain of a cash ISA, because a cash ISA is just a tax-free savings account, if the rates are high, you may as well put your money in there, even if you don't need the tax gain. So they're both easy access, Chase and Trading 212 would be the start point. Stop right there, I'm interrupting the pod because I just want to talk in a little bit more detail about cash ISAs while I've got a moment to do so. I've been doing this particular analogy since 2001 and it's not stale yet, I think it always works, so I'm going to do it for you now. I want you to picture a cake, we're going to think of it like a chocolate cake, that's

• 24:12Martin Lewis?

  going to represent cash savings, money in savings, though equally, it could be a strawberry cake to represent shares. Now normally, when you've got money in savings account, the tax officer can come along and take a bite of the interest.

• 24:30Martin Lewis?

  Tasty. But, all an ISA is, it's not a product. It stands for Individual Savings Account. It is a wrapper, like a protective piece of cling film, that you can wrap around your cake. The cake is still exactly the same chocolate cake. It's still the same savings account. If it's easy access, it's still easy access. You can take your money out when you want. If it's fixed, it's still fixed. The money is locked away with a guaranteed rate of interest. It's still just a savings account. The only difference is it now has this wrapper around it. And that means, when the tax officer comes along, oh, they can't bite it anymore. Because it's got the protective cling film around it. So when we talk about cash ISAs,

• 25:14Martin Lewis?

  people tend to think it's something different. Yeah, my money's locked away, I can't change provider. No. A cash ISA is just a normal savings account, that they, where the interest is not taxed. You get £20,000 a year maximum that you can put in a cash ISA. Once it's in the cash ISA, it stays tax-free year after year, until you take your money out. There's no tax when you take the money out. It's just, then it's no longer in the ISA. You don't get the tax protection anymore. So if you were to be, have savings that were taxable, and you put it in there, it'd be taxed. But as long as it's in the ISA, it's tax-free year after year. So you could put 20 grand in this year. As long as they don't change the allowance, it's 20 grand next tax year, 20 grand the year after that. And people could have a lot of money inside cash ISAs, inside that cling film. Also, crucially,

• 25:58Martin Lewis?

  don't think, when you've got your money in a cash ISA, that's it, you can't move it. You have a right to transfer your cash ISA. So that means if your cash ISA rate drops, and they will do, certainly if they're easy access, or when your fix ends, you can simply go to a new cash ISA provider. You open it up, and within the form, you don't have to put any new money in, you fill in the transfer details. Most cash ISAs will allow you to transfer. It will then take the money from your existing cash ISA. And put your money in that cash ISA or within the cling film. You're never taking it out. You're not losing your tax free status. And crucially, transferring does not count towards your allowance. So I said you're allowed to put £20,000 a year in a cash ISA.

• 26:43Martin Lewis?

  Well, if you've got an older cash ISA that you're transferring to a new provider, that doesn't change that 20 grand a year. The 20 grand a year is for new money. So hopefully now you understand that cash ISAs are a piece of cake.

• 26:55Speaker 06

  A question from me. The first question you got me to ask myself was, do I want to maximise every penny? Or do I want a decent, easy solution? When I'm between the two, I don't want to be checking it every week and swapping around the whole time. But if you want to go with a, go with a provider who can generally be relied upon to provide a competitive rate. And he's not gonna suddenly quietly drop the rate. Or what, you know, just to be on safe ground. How do I make that call?

• 27:23Martin Lewis?

  Well, the only real way to do that is to go for a fixed account. Where the rate, where the interest rate is guaranteed and you know the length. So, you know, you fix your interest for two years. You know exactly what you're going to be paid. It's going to be guaranteed. You're going to lock it in. There are a number of providers who give decent interest rates most of the time. But anyone who's got money in easy access. You need to be checking it at least every six months. I prefer to say every three months. It isn't a big deal. Hopefully you won't have to move it, but you should be checking it. Let's look at that Chase account quickly. Pays 5% interest. That includes a one year 2.25% newbie's bonus. So another way of looking at that is that account is going to pay you at least 2.25% for one year. Because that is the fixed bonus that you're getting. The rest is variable if interest rates dropped.

• 28:08Martin Lewis?

  So you know for a year with that account, you're probably going to have maybe not the very best on the market interest rate. But it would be quite unlikely for it not to be decent for the first year. But after the first year, that interest rate is going to drop to three point. So it's going to drop to 2.75%. Get out of it because there are far better ones. And that, and you've got to, you've got to be active. You've got to be active.

• 28:35Speaker 06

  Tell us about the tell us before we get into more questions on savings.

• 28:38Martin Lewis?

  Instruction versus destruction. When have you not followed the official product instructions and either come a cropper or come out smiling? That was the tell us this week. Why don't you start with Louise?

• 28:50Speaker 06

  Okay, Louise checked the washing instructions on the wedding dress. Hand wash only, it said, and that's what she did. Excellent. So this is an instruction, not a destruction. Could have gone horribly wrong.

• 29:04Martin Lewis?

  I think it wasn't hand wash only. I think that's the concept. She didn't follow the instructions, but it worked.

• 29:12Speaker 06

  Okay.

• 29:15Martin Lewis?

  Take two.

• 29:15Speaker 06

  I don't understand. Okay, I missed take two. Okay.

• 29:18Martin Lewis?

  So the tell us is about when you've not followed the official product instructions. So clearly it was a dry clean only wedding dress.

• 29:25Speaker 06

  Oh, I see.

• 29:26Martin Lewis?

  You extemporized from what she'd actually written.

• 29:28Speaker 06

  Well, no, he didn't say it was dry clean only, but obviously it was.

• 29:30Martin Lewis?

  But obviously it was.

• 29:31Speaker 06

  Yes.

• 29:32Martin Lewis?

  And it says, hand wash my wedding dress in the bath. Turned out perfect. All the stains, mainly at the bottom, came out and saved myself £160. What we need to know is why she has stains on her bottom after her wedding.

• 29:42Speaker 06

  Yes, well, let's not go into that too deeply. And ironically, I've messed up the item. So I've done a destruction myself by not listening to your instructions.

• 29:51Martin Lewis?

  Correct.

• 29:51Speaker 06

  I'm sorry. Go on, do Paula. Show me how it's done.

• 29:53Martin Lewis?

  Paula, destruction. I put my brand new set, not just one, the whole set of six fruit and salad storage boxes in the dishwasher before using them for the first time, only to find out they weren't dishwasher safe an hour later.

• 30:08Speaker 06

  Okay. I'm going to jump over the next one on the list because I like Mark so much.

• 30:15Martin Lewis?

  You nicked Mark. We both wanted Mark.

• 30:16Speaker 06

  I want it for myself.

• 30:18Martin Lewis?

  That's not fair.

• 30:19Speaker 06

  File this under destruction. Bought a remote control helicopter. Didn't bother reading the instructions. In particular, the part where you needed to switch the remote control on before starting the helicopter. The result?

• 30:34Speaker 06

  The rotors immediately started turning, took off, hit a tree, then came crashing down before my feet. Total write-off in less than five seconds.

• 30:44Martin Lewis?

  I, I, I, I could do that. I could absolutely do that out of excitement with a remote-controlled helicopter.

• 30:50Speaker 06

  But you don't get instructions anymore. My, my late father was, when I got, he got an iPhone, he said, where's the book? I need a book to read the instructions. And of course, there isn't one.

• 31:01Martin Lewis?

  There's, there's a quick start guide, isn't there? They have the, and then you mention load it up and do it. Let's do Edison. Instruction. Oh, oh, have I done that one? No. Instruction. My Blu-ray player had a volume control fault. It was increasing the volume to the maximum by itself and ignoring remote control. So I opened the main unit and found there were, a spider was cosy inside. I rescued him, put the unit back together, and it's worked perfectly since. You probably invalidated the warranty though. That's what they always tell you if you do that. But well done you. You, you mean, both rescuing a spider and fixing your Blu-ray player.

• 31:33Speaker 06

  Mm-hmm. And go on, you want to do, you, you.

• 31:37Martin Lewis?

  We'll finish on this one from 158 Symes. Huawei smartwatch. Screen fell off, only attached by a data cable. Huawei wanted a hundred and fifty pounds to replace the screen. It wasn't broken, it was still working, it was just unbonded. I got a three pound fifty tube of B7000 adhesive. I'm sure other adhesives are available. After watching three YouTube videos, solid as a rock and it's still watertight. Instruction versus destruction.

• 32:03Speaker 06

  Let's go into more of your savings questions. Uh, Marie, the best rates are only for new customers and only last a couple of months. How's best to figure out if it's only new customers or also open to those who've had an account previously who'll get the higher rate? Most of the MSE top savings accounts are only for those who've never had an account before, so good savings rates don't hold up for long-term savers.

• 32:32Martin Lewis?

  Some of that is right, some of that is wrong. So we had a spate around the ISA season in April, where some providers were trying to gemmy the best buy tables by having three month bonuses. So they'd say their interest rate was 5%, but 2% of that would only last three months. So it would drop to 3% afterwards. I actually took a decision in the way that we listed best buys, and we tend to be one of the biggest on this frankly, that I wouldn't put them in the best buy tables on that rate. I'd put them in on the rate that they would drop to afterwards, and I would reverse it that way around, which actually stopped them doing it. So we're no longer seeing the two month best buy rates. That isn't happening anymore.

• 33:13Martin Lewis?

  But we do have a lot of accounts where you get a bonus rate lasting for a year. And there is no way around that. Those are all the best rates on the market at the moment. I mean, there are some, you know, Atom Bank is the top open to all rate that doesn't include a newbie deal. It's 4.6% at the moment, no minimum. But with that one, the rate will fall to 2.5% in any month that you withdraw. So the honest answer is you have to play all the different accounts. Remember, you're protected up to £85,000 per person, per financial institution. So unless you have more than that, it doesn't really matter what the account is, as long as it's UK regulated, because you have the same protection. So once you've used one, go to another as a newbie, and you should be able to do it.

• 33:58Martin Lewis?

  But Atom Bank is the top non newbie bonus account that is available right now. And it's just a question of scrolling down the lists.

• 34:06Speaker 06

  Ben, as I am actually, on reflection, reading his question, says he's unclear how tax works on a normal savings account at my bank. I read somewhere that it was £1,000 max interest a year. Or does it contribute to your work tax allowance, for example?

• 34:23Martin Lewis?

  So let's make this very plain. You have a personal, so, okay, let's start at the beginning. The vast majority of people have a tax-free allowance. That is how much you can earn from any source, whether it is work or savings or anything else when you don't pay tax. It is typically £12,570 a year. Whether that comes through work or through interest on account. Any total of earnings that you have, we'll call it earnings. If you are a basic rate tax, there's a thing called the starting savings rates as well, which I'll do very, very briefly. If you have low earnings but high interest from savings, right, you with me?

• 35:06Martin Lewis?

  So let's say you're earning £13,000 a year, but you've got £4,000 savings interest. There is a starting savings allowance that says you can earn up to £5,000 of interest tax-free. Here's how that works. It's £5,000 on top of your £12,570. But for every pound you earn from work above £12,570, you lose a pound of that £5,000 allowance. I'll try and make this simple. If you earn £12,570 from work, you could earn £5,000 of interest from savings tax-free. If you earned £13,570 from work, £1,000 above that limit, you can now only earn £4,000

• 35:51Martin Lewis?

  of interest from savings tax-free. So once you earn £17,570, you no longer get any starting savings allowance. On top of that, there is the personal savings allowance, which is the one that applies to most people. So if you're a basic rate taxpayer, 20% taxpayer, you can earn £1,000 of interest from any savings whatsoever, your bank account, current account, savings account, anywhere, and you won't pay tax on it. That is on top of your normal tax-free allowance.

• 36:29Martin Lewis?

  Money in a cash ISA, cash ISA interest is always tax-free, does not count towards the personal savings allowance. So you could have a thousand pounds of interest earned from normal savings, but you could also have money in cash ISAs and that's still tax-free because it doesn't count towards the thousand pounds. So the answer to the question is, it's not about the bank account, it's about all interest earned in all forms of savings interest or current account interest. You could have up to a thousand pounds and it won't be taxed. If you earn over a thousand pounds in taxable savings, because all savings barring cash ISAs are taxable, you just don't pay tax up to a certain amount, then your tax code

• 37:13Martin Lewis?

  is automatically changed by the government unless you do self-assessment. So the government changes will automatically mean that you're paying the tax. Okay. Did that make it for you? Yes. Or unless, if you earn over ten thousand pounds, then you have to do self-assessment, ten thousand pounds of savings interest, but that's not many people. I'm interrupting the podcast again for an extra bit of the podcast. This time I want to talk to you about the Help to Save scheme. It is by far the best paying form of savings you will ever get, and if you have access to it, it is the first place you should be putting your money. But interestingly, I haven't had any questions on it, which worries me that not enough people know about it, so I'm going to talk to you about it in brief here. The first crucial part about Help to Save you need to understand is it is only available

• 37:58Martin Lewis?

  if you are on universal credit and you work and you earn at least a pound. They've actually dropped the threshold recently of how much you need to be earning in order to get Help to Save, so it's now just a pound. And what it does is it gives you a 50% boost on what you save, even if you have withdrawn the money. So, anyone on universal credit, you should be opening this up, even if you don't have the money to put in it right now, because even if you were to get extra work, that meant you were no longer eligible for universal credit, you would still be able to keep this account open once you've opened it. So here's how it works. You can save up to fifty pounds a month in it, and after two years, you get a 50% bonus on the maximum that you had in it.

• 38:42Martin Lewis?

  Let me try and explain that. So let's imagine you're maxing it out, you're putting fifty quid in a month, you've got fifty quid in, a hundred quid, a hundred and fifty, two hundred, two fifty, two, three hundred, three fifty, four hundred, four fifty, five hundred, five fifty, six hundred, you've got six hundred quid in. No, you've just had an emergency, your window's been smashed, it's terrible, you're going to need to pay for it, it's going to cost you the whole six hundred quid. So you do that, you take your money out of savings instead of having to borrow for it, and you therefore pay for your new window, ignore, it might be more than one window, we'll call it cost six hundred quid, you get the point I'm trying to make. Now you've got nothing in the account and unfortunately you can't afford to put any more money in the account for the remaining two years. At the end of the two years, you get a fifty percent bonus on the maximum you had in the account, well, the maximum you had in was six hundred pounds. So even though you have nothing in the account now,

• 39:28Martin Lewis?

  you still get a three hundred pound bonus, even though you took the money account out. And then for another two years after that, you get another fifty percent bonus calculated on the maximum balance you had in over the second two, two-year period compared to the first two-year period, works in a very, very similar way. It's absolutely off the charts for people who use it. If you're on universal credit and you work, you should be opening a help to save account. It is by far the best form of savings possible.

• 40:01Speaker 06

  Al, we have got hold of, and he is going to share with us his question.

• 40:06Martin Lewis?

  Baby, you can call me baby, baby, call me Al.

• 40:08Speaker 06

  I might have, depending on his age, you will have heard that before, but Al, come on, fire away.

• 40:13Speaker 00

  Yeah, I am old enough.

• 40:14Speaker 06

  Right.

• 40:16Speaker 00

  Right, so I've got roughly ten years left on my mortgage.

• 40:20Martin Lewis?

  Yeah.

• 40:21Speaker 00

  And I want to reduce the term of that significantly, if I can, by overpaying. Am I better off overpaying on my mortgage each month? Or putting money into a cash ISA each month and either at the end of the year or at the end of however many years it takes me to save enough, then pay off my mortgage in a lump sum?

• 40:45Martin Lewis?

  Are you, a couple of questions. What is your mortgage rate? Are you on a fixed or special deal or are you on the standard variable rate?

• 40:52Speaker 00

  So fortunately, I'm still on a very low fixed until December twenty twenty six at the moment.

• 40:58Martin Lewis?

  What rate is that?

• 41:00Speaker 00

  Uh, one point one seven, um, similar. I've looked at at the current rates, if I were to change it now and it'd be an extra two hundred pound a month onto my mortgage.

• 41:12Martin Lewis?

  Don't go near that, no, you've got you've got a wonderful rate.

• 41:14Speaker 00

  No, no, no, no.

• 41:15Martin Lewis?

  Absolutely.

• 41:16Speaker 00

  Absolutely, I'm I'm aware of that, I'm just wondering, once I then come off that rate.

• 41:20Martin Lewis?

  Okay, so here's the logic, let's make this really simple. Paying off your mortgage is like saving at the mortgage rate, tax free. Yeah, that it's the equivalent, so let's let's take very very, just I I know you'll probably understand this, but for everyone listening. If you've got a thousand pounds in savings at four percent, that means you get forty pounds a year on it. If you have a thousand pounds of mortgage debt at four percent, that means it's costing you forty pounds a year. So they're the same thing, they're just two sides of the same coin. Your fix rate is one point one seven percent. You can earn five percent in savings. Right now, you will be massively better off putting the money into savings than paying off your very cheap mortgage.

• 42:06Martin Lewis?

  However, on, was it December twenty twenty six, you said?

• 42:10Speaker 00

  Yes.

• 42:11Martin Lewis?

  From December twenty twenty six, your mortgage rate is probably going to be somewhere in the four or five percents. And because that's after tax and you're probably talking quite a substantial amount of money, at that point, paying off your mortgage will become much better than saving. Not only that, the fact that at that point, when you come to remortgaging to get a new deal, you would have much less mortgage debt you would be borrowing may enable you to get a better rate. So, all in all, the the maths says right now. Put that money in the highest interest safe savings that you can possibly get, making sure that you can access it in December 2026. Now, the reason I phrase it that way

• 42:56Martin Lewis?

  is that means you could put all of the money, if you have a lump sum right now, in a fixed rate for a year because you know you're not going to need it until December 2026 because it's for paying off your mortgage. You just need to make sure that in December 2026, you can get that money out without penalties. And then at that point, I mean, clearly, I don't know what interest rates will be then. At that point, it will be very likely that you would be far better off to pay off the mortgage once you get to then. Does that make sense?

• 43:24Speaker 00

  Yeah, absolutely. And the thing with the cash ISAs, because I'm not going to be saving more than £20,000 a year, the cash ISAs at the moment, the interest rates are similar to the fixed rates anyway.

• 43:41Martin Lewis?

  Exactly. So even if you're not going to have the tax benefit, there's no harm in putting money in a cash ISA right now and maximizing that. I just want to do a general rule for everybody else on this. So, very briefly, the simple rule is this, if your mortgage rate is higher than the after-tax rate you can earn in savings, you're generally better off to overpay the mortgage, making sure it counts as a capital overpayment so that it reduces the term. If your savings rate is high, you're better off to save. Always, though, keep a cash emergency fund aside of three to six months' worth of bills, rather than paying off your mortgage because you don't want to lock that cash away, and make sure there aren't overpayment penalties if you're going to overpay. Most people can overpay a mortgage up to 10% a year without penalties. Those would be the general checks. Thank you for your call.

• 44:24Speaker 06

  Okay, very good. We've got about a minute left. What would you like?

• 44:27Martin Lewis?

  Let's do one more savings question, why not?

• 44:28Speaker 06

  Okay, let's take us to the savings page. We need to save money, says

• 44:36Speaker 06

  Jacqueline, I think this is to support our child at university in three years' time. What's the most tax efficient savings option that will give a reasonable return? I'm a standard rate taxpayer, my husband's a higher rate taxpayer.

• 44:46Martin Lewis?

  Wow, well, that's a big question. So the first thing is, well done. You don't need to focus on tuition fees. Most tuition fees are paid for first time undergraduates in the UK. The really big thing, especially if you live in England, is the parental contribution. The maintenance loan, the living loan that students get to go to university is means tested based on family income, which is generally a proxy for parental income for most eighteen, eighteen year olds who are going to go to university. And here's how it works. You actually, in England, you start to lose maintenance loan at total family income, combined family income of just twenty five grand. That's not a lot. You get to down to around fifty percent of it, but the maximum of seventy thousand pounds. So that's five thousand pounds a year per course that you will need to put away to meet up the shortfall in the maintenance loan.

• 45:30Martin Lewis?

  I will do more details in the podcast of what you do on the back of that.

• 45:33Speaker 06

  Thank you very sweetly, Martin, always. I'm patient, just coming up to one o'clock.

• 45:39Martin Lewis?

  So you heard on Five Live the music playing and I didn't get to finish that answer, but luckily by the magic of a podcast, I can do it right now. So you're lightly talking about somewhere up to five thousand pounds a year per course that you would need to save away. So that's fifteen thousand pound maximum, though there are, how much should I save for my child to go to university calculators? And it does depend on which of the UK nations you're in. So it is very worth doing that, even if your child is just aged twelve, ten or twelve now, to see how much money would you need? Because the earlier you start to save, the better, the more time you have to spread the cost. But what you'll be talking about here is, first of all, in that debate between whether

• 46:20Martin Lewis?

  you should save or you should invest, because this is a definitive amount of money that you will need in a relatively short space of time, this is probably savings money, not investment money. You know, you've only got three years, or the questioner only has three years before their child goes to university, you want to be putting this in savings. Now, we've talked about easy access accounts and the top ones of those. I would certainly think that if you have a lump sum of money available right now, then you'd be wanting to put that into fixed rates. And the reason I'd be looking at putting it into fixed rates is both because the rate is guaranteed, but also because there are predictions that UK interest rates are going to drop. So while the easy access rates would follow along suit with the

• 47:01Martin Lewis?

  UK base rates dropping, UK interest rates dropping, fixed rates are fixed. So you could get a three-year fix right now with Birmingham Bank at 4.44%, minimum £5,000, or NSNI 3.88%, a two-year fix with DF Capital at 4.44%, or Kahoot, part of Santander, 4.1%, if you want a bigger name, a one-year fix with GB Bank at 4.53%, or Virgin Money, if you want a bigger name, at 4.16%. So you can see, with all of those, the money is locked away. You can't touch it, but the interest rate is guaranteed. So you could put some money in there. You could have some money in the top easy access that we've talked about. And perhaps you might also want to drip some money into regular savings account,

• 47:46Martin Lewis?

  which now we're in the pod, I can say I talked about earlier in the pod in detail and went through all the best buys there. So it would somewhere be a combination of all of those.

• 48:03Martin Lewis?

  Hello, welcome to Money Mastermind. Adrian currently has 10 right and 20 wrong in the last mastermind. You got it wrong, meaning you are now doing no better than random chance. Adrian, if your mastermind strategy were any more chaotic, it would qualify as abstract art.

• 48:19Martin Lewis?

  So, shall we? I like this week's question.

• 48:23Speaker 06

  Go on.

• 48:23Martin Lewis?

  Okay.

• 48:25Speaker 06

  You always like it.

• 48:26Martin Lewis?

  No, I like this one particularly.

• 48:27Speaker 06

  Self-loathing.

• 48:28Martin Lewis?

  No, no, no, it's not, it's not. I can tell, do you know, half the time it takes me to prepare for this programme is not writing this question. I agonise, I'm Friday, I write them on a Friday and I sit in agony going, what am I going to do? How am I going to make this work? So I mean, it's just like the reward for the pain. Now, are Adrian signs up for broadband the same way he gets into most relationships? Hopeful, slightly naive and not reading the small print. Six months in, with a bit of candlelight buffering, Netflix and chill. It's all going well, until the direct debit sneaks up by a fiver. No explanation, no warning, just a silent financial betrayal.

• 49:12Martin Lewis?

  Like your routers. This is a bit I really like.

• 49:18Speaker 06

  Don't spoil it by saying it, I'm just enjoying it.

• 49:22Martin Lewis?

  Like your routers been routing other people on the side.

• 49:29Martin Lewis?

  Like your router's been routing other people on the side. Yes, one minute Adrian was watching Bake Off on catch-up. The next he's searching how to break up with wifi without losing custody of my landline. So today's question, Adrian. Is this legal? If a broadband firm does a price hike mid-contract year unannounced, what are your current rights on packages you get now? Is it A, you can leave penalty free within 30 days of notification? B, it's breaking the rules, so you can complain to the telecoms ombudsman and it should freeze your price? Or C, while it's frowned upon, you have no rights apart from wait until your contract ends then ditch?

• 50:12Martin Lewis?

  So it puts a price up mid-contract unannounced on a package that you get today. You can leave penalty free within 30 days of notification of the price rise. It's breaking the rules, so you can complain to the telecoms ombudsman and it should freeze your price? Or while it's frowned upon, you have no rights apart from wait until your contract ends then ditch?

• 50:37Speaker 06

  I'm feeling a bit dismal about this, so I'm gonna go for C. It's frowned upon, it's not cricket, but they do it anyway.

• 50:45Martin Lewis?

  Is that really what you're just thinking? No rights, no nothing?

• 50:51Martin Lewis?

  Okay. Final answer?

• 50:54Speaker 06

  Well, no, because doesn't it depend on, what I was thinking, from memory, one of, one of the providers, Virgin or somebody, I can't remember, was saying that they, they could still do it or something. Am I getting mixed up with something else?

• 51:10Martin Lewis?

  What's your answer, Adrian?

• 51:13Speaker 06

  No, I'll go for that. I can't change horses now, so I'll go.

• 51:16Martin Lewis?

  So you're going for C?

• 51:17Speaker 06

  Yeah.

• 51:17Martin Lewis?

  You're going with the pessimistic option?

• 51:18Speaker 06

  Yeah.

• 51:19Martin Lewis?

  Okay, so important to understand, the rules changed in January this year, which is why it was important. It's a current contract and the rules I'm about to talk about only apply to contracts taken out since January.

• 51:30Speaker 06

  Can I change my answer now?

• 51:31Martin Lewis?

  No.

• 51:31Speaker 06

  No, okay.

• 51:33Martin Lewis?

  Not once I've started to give you information. You're locked in. I said final answer, you said yes.

• 51:37Speaker 06

  And I'm locked in.

• 51:38Martin Lewis?

  And you're locked in.

• 51:38Speaker 06

  I'll go to the Quizmaster ombudsman.

• 51:40Martin Lewis?

  So until then, while it was frowned upon, you basically had no rights. So let's have his uh-uh.

• 51:47Speaker 06

  I'd always have that one ready in my case.

• 51:49Martin Lewis?

  The rules are now... That in general, when you sign up for a broadband package, they must tell you in pounds and pence what the rises will be in advance. So I've got a Virgin Media advert in front of me at the moment. It says on a two-year contract, it's currently £23.99 a month. And then it says £27.49 from April 2026, £30.99 from April 2027. So it must tell you in advance what the price rise is. And the vast majority of broadband firms do that. There is one major firm who doesn't. Sky, which may have been what you were thinking of. Sky doesn't include future price rises. And the rules therefore state, if you don't

• 52:32Martin Lewis?

  include future price rises, and you do a price rise mid-contract, then customers can leave penalty free within 30 days of notification on broadband and phone lines questionable. And there's a legal case over whether it also applies to digital television at the moment. And that's something that is being argued. So the correct answer was A, because there was no pre-notification of price rises, you are entitled to leave penalty three within 30 days. But this only applies if you got your contract since January 2025. But many of those will be rolling out soon. Otherwise, in most cases, you'll know what the price rises are going to be in advance.

• 53:13Martin Lewis?

  Right now, we're into your pod-only bits, and there's lots more savings questions. And sitting in to help me this week, as we're doing it in the afternoon, is PM, producer Matt. Hello, Matt. Hello, mate.

• 53:23Speaker 07

  Hello, hello. Thank you very much.

• 53:25Martin Lewis?

  Let's do some of these questions. What have you got for me?

• 53:27Speaker 07

  Let's get into it. Okay, starting with Martin.

• 53:32Martin Lewis?

  Good name.

• 53:33Speaker 07

  Good name. Which will give me the best return over five years? I've got 20K. Do I keep renewing a cash ISA or invest and leave it in a stocks and shares ISA? I don't need easy access.

• 53:47Martin Lewis?

  I don't know, and nor does anyone. One of those, as I talked about earlier in the show, the cash ISA. You know, your capital is protected and you will get a defined amount of interest. Now, if you locked it away in a fix right now, you'd know exactly what you were getting. But five-year fix rate cash ISAs aren't that good. You might want to put it in an easy access cash ISA. But then, of course, you're at the mercy of UK interest rates dropping. And as easy access rates are variable, they will drop. Putting it in a stocks and shares ISA. Well, there's no such thing. A stocks and shares ISA is a wrapper. It's not a product. It just says that you put your money away and you then invest it. And that investment is then free of capital gains tax and any tax on the dividends that you, if you invested in shares, they earn.

• 54:32Martin Lewis?

  But it's what you choose to invest within a stocks and shares ISA that will dictate its return. And of course, because that's a risk-based product, no one can tell you in advance what will happen. But a five-year period is a pretty decent period to be investing. It is long enough that you can hopefully ride out short-term volatility in the market. So as long as in five years' time, there won't be a certain day that I need my money today, regardless of what's happening, then hopefully over five years, if this is money you can afford to risk, putting it in a stocks and shares ISA will outperform. As for which the best stocks and shares ISAs are and what you should be looking at. A global spread is good, but why not listen back to last week's podcast that you can find

• 55:16Martin Lewis?

  in the same place that you found this podcast, which is a beginner's guide to investing that will talk you through it. But as for the, I can't give you a definitive answer. I could say on the balance of probabilities over that time period, hopefully stocks and shares will outperform cash, as long as it's a widespread of investment in something decent. But no one knows the answer. You know, I could tell you in five years.

• 55:37Speaker 07

  Okay, a question from Daryl. He's asking, if I max out my ISA allowance, can I still save in a standard savings account on top of the ISA? What do you do if you have more than your tax-free allowance? Is it best to save or put it on your mortgage?

• 55:54Martin Lewis?

  Okay. Well, I've already covered whether you should be putting money into your mortgage or saving. And that all depends on the relative interest rates of your mortgage compared to the top savings rates. But let me answer your question of, once I've used up my cash ISA, can I also have other savings? Let me be very plain. You can have as many savings accounts as you like. You could have forty two different savings accounts and you could have a cash ISA. In fact, you could have multiple cash ISAs from different tax years in different providers. So you can have fixed accounts and easy access accounts and fixed cash ISAs and easy access cash ISAs from different years and regular savings accounts and no notice accounts. That is what that theory of putting every penny where you get the most of it from.

• 56:38Martin Lewis?

  So absolutely, once you've used up your cash ISA, you still have your personal savings allowance, your thousand pounds of interest a year you can earn from any savings and or £500 a year if you're a higher rate taxpayer, put your savings where it earns the most interest. If you're paying tax on it, the rule's still the same. Put these savings where it earns the most interest. Yes, it will be taxed, but the highest interest rate is the better.

• 57:02Speaker 07

  We've got one from Kerry. Her oldest, who is now twenty three, used his Help to Buy ISA for or is saving on his Help to Buy ISA for a deposit on his first home. Second child is approaching eighteen, but there doesn't seem to be anything similar. What's the best option for him to be able to save to buy a house probably over the next two to five years?

• 57:23Martin Lewis?

  There absolutely is something similar. It is called the lifetime ISA known as a LISA. Now, there are differences between the Help to Buy ISA and the lifetime ISA, but the basic premise is the same. In a lifetime ISA, you can put up to £4,000 a year and the state will add twenty five per cent on top to be used as a first time property. Lifetime ISAs can only be opened by those between the ages of eighteen and thirty nine, so your son can do it on his eighteenth birthday. Couple of crucial rules. First of all, you have to have a lifetime ISA open for a year before you can use the bonus towards a first time property. So even if you don't have the money, on his eighteenth birthday, put a quid in because that starts the clock ticking and therefore you'd have it open for a year once you're

• 58:08Martin Lewis?

  ready to use it and you could put more money in. Second, while a Help to Buy ISA could be used on a property costing up to £250,000 or £450,000 in London, a lifetime ISA can be used on any first time residential property with a mortgage. Up to £450,000. So it's worth checking that. And the reason it's worth checking that is one of the advantages of the Help to Buy ISA over the Lifetime ISA. With the Help to Buy ISA, you could take your money out, no problem. Even if you weren't using it to buy a house, you just wouldn't get the bonus. With a Lifetime ISA, if you take money out and you're not buying a qualifying house, or you don't leave it until you're aged 60, which is a very long time away for your 18-year-old,

• 58:51Martin Lewis?

  then you effectively pay a penalty to withdraw of 6.25% of what you put in. In other words, you have 10 grand in there, you don't get the bonus, you will have got the interest. But if you've got a total of 10 grand in there, you would get back £9,375. And the main reason that happens to people is people who end up buying a house above £450,000, above a qualifying house. So if you're in a part of the country where it is very unlikely for your son to be buying a property that costs over £450,000, and he's certainly going to be buying the property in the next five years or so, whoop-de-doo, a ISA is fantastic for you. If you're in, say, the southeast of England where it's questionable whether he'd buy his first property under £450,000, then there's a much greater question mark about the Lifetime ISA.

• 59:36Martin Lewis?

  Do go and do more reading on it, but the Lifetime ISA is absolutely a product that is similar. I mean, it took over the Help to Buy ISA. Help to Buy ISAs, some people still have them, but they're now closed products. The Lifetime ISA is now the first-time buyer ISA that's available.

• 59:53Speaker 07

  One more.

• 59:54Martin Lewis?

  Yep.

• 59:54Speaker 07

  Tracy, she has savings and she's now getting taxed on the interest. Her tax code has been reduced to 895L. She's maxed out her cash ISAs, she's got premium bonds, she's bought gold bullion. Any advice, please? I like the thought of investing, but I'm scared I'll lose. Can you have an additional stocks and shares ISA if you've got the max 20K in cash ISAs this financial year? I don't have loans, I pay my credit card off in full each year.

• 1:00:21Martin Lewis?

  In full!

• 1:00:22Speaker 07

  And she also retires in three years.

• 1:00:25Martin Lewis?

  Well, first of all, well done. You're doing really, really well. You've got absolutely everything right, but you have used up all your tax-free allowances. The answer is you're allowed to put £20,000... Thousand pounds into ISAs in a tax year. That could be all cash ISAs, all stocks and shares ISAs, or a combination of both. You've used your cash ISA, you don't have a stocks and shares ISA allowance left because you've used the maximum 20 grand. I mean, once you're above, once you're paying tax on savings interest, you're paying tax on savings interest. I mean, 5%, if you're a 20% rate taxpayer, you still earn 4% after 20% tax is taken off. That's still a good interest rate on the top easy access account. If you're a higher rate taxpayer, you'd be earning 3% after 40% tax has been taken off. Still, it is some interest and you should be maximizing it.

• 1:01:09Martin Lewis?

  As for stocks and shares, well, you're three years away from retirement. But being blunt with typical life expectancy, you've probably got, you know, 20 to 25 years left. That is a long enough time to be able to invest some. And you may not want to do that because the older you get, the less risky you want to be. But you could go for a low risk fund with a widespread of investments. It's never a choice, by the way, should I save or should I invest? I mean, the real question is, of my spare assets, of my total savings, how much should I save? How much should I invest? And as you get older, you should be, have more in savings in case you need it and less in investments is the general rule.

• 1:01:53Martin Lewis?

  And I mean, really older, once you're into retirement and beyond. But still, most people should have a split of assets if you've got, I mean, we're not talking people who don't have any money. We're talking people who've got money, as you do, a split of assets. And certainly at your age, you would want a proportion of your assets into stocks and shares. That would be an investment, you know, you might want to have 20% of the spare money that you've got in. Because you've got time for it to grow. And just to explain a bit more, although we did this in the pod last week. The reason that the time makes a difference is because of the volatility. Right, the only two prices when you're investing that matter are the price you buy at and the price that you sell at. The reason volatility is a problem is if you need that

• 1:02:35Martin Lewis?

  money in a year and it happens to have dropped in a year's time, then you're crystallising the loss that you've made. You're forced to crystallise the loss that you've made, that becomes real. Whereas if you have more time, you could hold on and hopefully, you know, you wait and things go back up, no guarantees, and things go back up and you sell at a better time and you choose your time to sell when it's suitable for you. And that's really a key to investing. Investing is for money where you can choose when you get out. If you have a locked in time that you're going to need to get out, then you're going to be at risk of the volatility. Now, if that locked in time is 10, 15 years away, that isn't a problem because you know in that five to 10 years that you've got running up to it, you can choose your time before that to switch from investments to savings.

• 1:03:18Martin Lewis?

  But I wouldn't be that scared of investing. You might want to dip your toe in the water. But remember, we're not talking about investing in an individual share that's high risk. We're talking about investing in a fund and a widespread of fund of global assets of thousands of shares, which in general, over the long term, outperform savings.

• 1:03:37Martin Lewis?

  Now, that's the end of the podcast main, but I just want to show you a little bit that we cut out of the conversation with Adrian. It was done because the test match was on at the time. And well, to be honest, the conversation got a little bit edgy.

• 1:03:50Speaker 06

  Okay, let's go to the cricket. And Martin, earlier Ellie said the batsman had more edges than a dice. And I asked Ellie, how many edges does a dice have? And she didn't know. As indeed I didn't know until I Googled it. That is correct. Is 12 the answer you got to Ellie?

• 1:04:05Speaker 08

  It is. Well, because I actually drew a picture of a cube on my notes just to check it. And I'm appalled that you're outing my mathematical uselessness in front of the mathematical genius that is Martin Lewis. But yes, it is true. Having made a comment. The thing is that with a comment like that, if you make a comment like that, then you should be able to back it up, shouldn't you?

• 1:04:25Speaker 06

  Yeah, but I'll tell you how you could, we could make hay with this because next time you say more edges than a... dot, dot, dot. What shape should you use? Is it a tetra?

• 1:04:35Martin Lewis?

  Dodecahedron.

• 1:04:36Speaker 06

  Dodecahedron?

• 1:04:37Speaker 08

  Is that, was that the one with 12 planes?

• 1:04:40Speaker 06

  No, but how many edges is that?

• 1:04:41Martin Lewis?

  A lot.

• 1:04:42Speaker 08

  A lot.

• 1:04:43Speaker 06

  So how many edges does a, what's it called again?

• 1:04:45Speaker 08

  Do decahedron.

• 1:04:46Speaker 06

  A doe decahedron.

• 1:04:48Speaker 08

  That's a 12 sided. So I know that's a 12 sided shape, um, shape, Martin. Is that right?

• 1:04:53Martin Lewis?

  That's right.

• 1:04:54Speaker 06

  Okay, yeah. Well, just tell us what's happening in the cricket and we'll tell you.

• 1:04:57Speaker 08

  I'll tell you what, you can do, you can Google away.

• 1:04:59Speaker 06

  There's 30 edges to a doe decahedron.

• 1:05:01Speaker 08

  There we go.

• 1:05:04Martin Lewis?

  That's it for this week. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast. If you've not enjoyed it, well, it's you who've been listening this long. It's your own fault, isn't it? Yeah, yeah, you, not me, you. Yeah, I didn't listen this long. I didn't force you. I don't have control of your radio. Why are you blaming me?

• 1:05:34Speaker 09

  Martin Lewis is the founder of moneysavingexpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing [email protected]. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

• 1:06:08Speaker 04

  BBC Sounds. Music, radio, podcasts.

• 1:06:14Speaker 10

  In our time is a world-class seminar every week. Why was Jeremy a lonely snail? What were lines doing in York in the third century? I'm Misha Glennie and every week I'm joined by expert guests to explore the ideas that shape our world.

• 1:06:29Speaker 11

  It's one of the first times really that you consistently see someone painting teeth. I know that sounds bonkers. If I was going to define mathematics, I would say it's the study of structure.

• 1:06:38Speaker 10

  In our time. Listen on bbc.com or wherever you get your podcasts. Tea or coffee? Love a cup of tea.