Help to Save 50% bonus on Savings 📈

First Time Investing 🐣
1

As the new tax year is approaching and I have noticed lots of new users here, I thought I would create a thread on the government’s Help to Save scheme. It is an excellent high “interest” (bonus) account available to eligible people on low incomes and some benefits like Working Tax Credit, Child Tax Credit and Universal credit.

You can only open an account if you are eligible and you do not have to continue receiving the qualifying benefit to retain the account and benefit from the bonuses.

You are allowed to save a maximum of £50 a month over 4 years and for every £1 you save, you receive a 50p bonus to a maximum of £600 in the first 2 years. The 3rd and 4th years bonus is 50% of the difference between your maximum balance in years 1 and 2 and your maximum balance at the end of year 4 to a maximum of £600. You can withdraw money at any time if you have an emergency but it will affect your final bonus.

This is by far the best place to start saving - and you could invest your £1200 bonus into your sipp or ISA at the end of the 4 years.

We (me and the Mrs) opened accounts about 16 months ago and save the maximum into both accounts and I opened an ISA and SIPP at the same time, in anticipation of our earning increasing over the next year or so and taking us out of the eligibility bracket (hopefully).

I have not worked out the equivalent interest rate but it is pretty high % equivalent. I imagine some clever bods here could work it out, but if you save the maximum each months not only does the first £50 earn 50% over 4 years, but so does the last £50 which is only invest for 1 month!

More info below and a link to the gov.uk Help to Save page. I hope that this is useful for some of the new lower income peeps here, or anyone finding themselves in a less favourable financial situation but still able to save.

https://www.moneysavingexpert.com/savings/help-to-save/

Open an account below

6 Likes
2

Hi, i am also upto the max in my help to save account, and fully agree that it is an outstanding product. Yet, does supporting this product open up an old chestnut ? If most people agree that a 4 to 5% return on stock market investments is good and what we all should be aiming for. Then if you can achieve this in a bank with, 85k protection, should we all be looking to move some or even all of our stock market investments into cash in the bank…just a thought :thinking:

3

If you invest in the stock market and tilt your investments slightly away from the norm to achieve a higher long term growth, all that time the market was choppy and you kept accumulating say 10 - 15 years and then things really take off you will see outstanding growth.

But if you spend say 5 - 10 years in cash interest accounts instead, you’ll miss those accumulation years and when things take off, cash will be absolutely obliterated.

Help to save probably gets beat over a 4 year period by placing £50 per month into the stock market. And even if it does not now, it will over a longer period.

1 Like
4

You aren’t looking at the full picture.
Inflation is at 11% in the UK.
If you get 4-5% interest, your annual return is a negative 6-7%(!).
Average yearly stock market returns of the SP500 are ~7% after inflation - which would equate to 18% return in the above example.
(I willfully ignored differences in inflation between countries and exchange rates for this toy example)