Where I’m investing my money in 2009 – Part 1

So far my adventure has earned me over £2000 which I currently have sitting in a current account paying next to nothing in interest so it’s time to start thinking about making this money work for me.

Now normally the stock market is a good place to look for good returns but given the current instability in the markets I’d prefer to invest my money into something a little bit safer.

Now you might not thinks banks are as safe as they were but seeing as the Government seems to be guaranteeing all savings they are still a safe bet. However interest rates have plummeted in the last three months from paying an average of 2.46% in September to just 0.81% in December (Source: Bank of England). And it’s likely to only get worse as this is before January’s 0.5% interest rate cut.

There are however still some good rates around from banks that are still keen to attract deposits, particularly if you are willing to lock away your cash for a fixed period or commit to regular savings. A regular saver account would fit my needs perfectly as I can pay in the money I earn from my adventure each month, and getting in quick before the rate cut earlier this month I was able to bag myself an account paying 7% over the next 12 months.

I’m limited to deposits of £500 per month which means if I make four equal deposits of £500 each over the next 4 months I’ll earn £95.55 interest on just those 4 deposits alone (assuming basic rate of tax).

Then anything I earn after April can be deposited in the regular saver account each month, but seeing as interest is only paid on amounts actually in the account they’ll earn far less interest as there wont be as many months left.

And with a standing order setup to make the deposit each month, all my work is done!