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

24:01I'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 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. 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 wrap around it.

25:03And 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, people tend to think it's something different. My money's locked away. I can't change provider. No. A cash ISA is just a normal savings account 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 have savings that were taxable and you put it in there it'd be taxable 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 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 you 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 all within the cling film.

26:34You'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. Well, if you've got an older cash ISA that you're transferring to a new provider, that doesn't change that£20 ,000 a year. The £20 ,000 a year is for new money. So hopefully, now you understand that cash ISAs are a piece of cake. 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? But I went between the two. I don't want to be checking it every week and swapping around the whole time.

27:10But if you want to go with a provider who can genuinely be relied upon to provide a competitive rate and is not going to suddenly quietly drop the rate to be on safe ground, how do I make that call? Well, the only real way to do that is to go for a fixed account 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.

27:47I 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 % newbies 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. 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.

28:21But after the first year, that interest rate is going to drop to 3 point. So it's going to drop to 2.75 percent. Get out of it because there are far better ones. And you've got to be active. You've got to be active.

28:37Tell us about the tell us before we get into more questions on savings. Instruction versus destruction. When have you not followed the official product instructions and either come a cropper or come out smiling. That was the tellers this week. Why don't you start with Louise? OK, 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. I think it wasn't hand wash only. I think that's the concept. She didn't follow the instructions, but it worked. OK. Take two.

29:18I don't understand. Okay, I'll miss take two. Okay. Louise, it seemed to have worked that well. The tellers is about when you've not followed the official product instruction. So clearly it was a dry clean only wedding dress. Oh, I see. You added it, you extemporised from what she'd actually done. Well, no, he didn't say it was dry clean only. It doesn't, but obviously it was. Yes. 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.

29:45Yes, 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. Correct. I'm sorry. Go on, do Paula. Show me how it's done. 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. Okay. I'm going to jump over the next one on the list because I like Mark so much. You nicked Mark. We both wanted Mark. I want it for myself. That's not fair.

30:21File 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? 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. I could do that. I could absolutely do that out of excitement with a remote-controlled helicopter. But you don't get instructions anymore. My late father was when he got an iPhone, he said, where's the book? I need a book to read the instructions.

31:02And of course, there isn't one. There's a quick start guide, isn't there? And then you're meant to load it up and do it. Let's do Edison. Instruction. Oh, have I I've 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 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 mean both rescuing a spider and fixing your Blu-ray player.

31:37And go on. You want to do... We'll finish on this one from 158 Symes. Huawei smartwatch. Screen fell off, only attached by a data cable. Huawei wanted£150 to replace the screen. It wasn't broken, it was still working, it was just unbonded. I got a£3.50 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. Let's go into more of your savings questions. 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?

32:25Most 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. 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 jemmy the best buy tables by having three month bonuses so they'd say their interest rate was five percent but two percent of that would only last three months so we would drop to three percent 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.

33:04I'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. 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.

33:41So 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. 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. 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.

34:16I read somewhere that it was£1 ,000 max interest a year. Or does it contribute to your work tax allowance, for example? So let's make this very plain. You have a personal... OK, 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 the 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 rate.

35:00as well, which I'll do very, very briefly. If you have low earnings, but high interest from savings, right? You with me? 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 of interest from savings tax-free.

35:55So 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. Money in a cash ISA, cash ISA interest is always tax-free, does not count towards the personal savings allowance. So you could have£1 ,000 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 £1 ,000.

36:50So 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£1 ,000 and it won't be taxed. If you earn over£1 ,000 in taxable savings, because all savings barring cash-isers are taxable, you just don't pay tax up to a certain amount, then your tax code is automatically changed by the government unless you do self-assessment. So the government changes will automatically mean that you're paying the tax. Did that make it for you? Yes, it does. Or unless you, if you earn over£10 ,000 then you have to do self-assessment,£10 ,000 of savings interest, but that's not many people.

37:31I'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 if you are on universal credit and you work and you earn at least a pound.

38:05They'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£50 a month in it. And after two years, you get a 50 % bonus on the maximum that you had in it.

38:44Let me try and explain that. So let's imagine you're maxing it out. You're putting£50 in a month. You've got£50 in,£100,£150,£200,£250,£300, £350,£400,£450,£500,£550,£600. You've got£600 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 600 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 600 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.

39:20At the end of the two years, you get a 50 % bonus on the maximum you had in the account. Well, the maximum you had in was 600 pounds. So even though you have nothing in the account now, you still get a£300 bonus, even though you took the money account out. And then for another two years after that, you get another 50 % bonus calculated on the maximum balance you had in over the second 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 or credit and you work, you should be opening a Help to Save account.

40:00It is by far the best form of savings possible. Al, we have got hold of, and he is going to share with us his question. Baby, you can call me baby baby, call me Al. I might have, depending on his age, you will have heard that before. But Al, go on, fire away. Yeah, I am old enough. Right. Right. So I've got roughly 10 years left on my mortgage. Yeah. 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?

40:48A couple of questions. What is your mortgage rate? Are you on a fixed or special deal or are you on the standard variable rate so fortunately i'm still on a very low fixed until december 2026 at the moment and uh 1.17 um similar i've looked at at the current rates if i were to change it now and it'd be about an extra 200 pound a month onto my mortgage you've got you've got a wonderful no no no no absolutely absolutely i'm aware of that i'm just wondering once i then come off that rate. 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.

41:33Yeah, it's the equivalent. So let's take a very, just, I know you'll probably understand this, but for everyone listening, if you've got a thousand pounds in savings at 4%, that means you get 40 pounds a year on it. If you have a thousand pounds of mortgage debt at 4%, that means it's costing you 40 pounds a year. so they're the same thing. They're just two sides of the same coin. Your fixed rate is 1.17%. You can earn 5 % in savings. Right now, you will be massively better off putting the money into savings than paying off your very cheap mortgage. However, on, was it December 2026, you said?

42:12Yes. From December 2026, your mortgage rate is probably going to be somewhere in the 4 % or 5%. 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 math says right now put 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 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.

43:08You 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? Yeah, absolutely. And the thing with the cash crisis, because I'm not going to be saving more than£20 ,000 a year, that the cash ISAs at the moment, the interest rates are similar to the fixed rates. Exactly. 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 maximising that.

43:50I 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 rates 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.

44:21Most people can overpay a mortgage up to 10 % a year without penalties. Those would be the general checks. Thank you for your call. OK, very good. We've got about a minute left. What would you like? Let's do one more savings question. Why not? OK, let's take us to the savings page. We need to save money, says 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. Wow, well, that's a big question. So the first thing is well done.

44:52You 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 18-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 25 grand. That's not a lot. You get to down to around 50 % of it at the maximum of£70 ,000.

45:25So that's£5 ,000 a year per course that you will need to put away to meet up the shortfall in the maintenance loan. I will do more details in the podcast of what you do on the back of that. Thank you very sweetly, Martin, always. A pleasure. Just come up to one o 'clock. 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 likely talking about somewhere up to£5 ,000 a year per course that you would need to save away. So that's£15 ,000 maximum. Though there are how much should I save for my child to go to university calculators.

46:04And 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 10 or 12 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 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.

46:38You 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 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 NS &I, 3.88%.

47:17A 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, which now are in the pod. I can say I talked about earlier in the pod in detail and went through all the best buys there.

47:54So it would somewhere be a combination of all of those.

48:05Hello, 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. So, shall we go? I like this week's question. Go on. Okay. You always like it. No, I like this one particularly. You're raised in self-love and... No, no, no, it's not. It's not. Do you know, half the time it takes me to prepare for this programme is done on writing this question. I agonise on Friday. I write them on a Friday and I sit in agony.

48:41going, what am I going to do? How am I going to make this work? So it's just like the reward for the pain. Now, our 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. Like your rooters... This is the bit I really like. Don't spoil it by saying it. I'm just enjoying it. Like your rooters been rooting other people on the side.

49:31Like your rooters been rooting 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 Wi-Fi 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.

50:14So it puts the 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.

50:39I'm feeling a bit dismal about this, so I'm going to go for C. It's frowned upon. It's not cricket, but they do it anyway. Is that really what you're just thinking? No rights, no nothing. OK, final answer? Well, no, because doesn't it depend on... What I was thinking, from memory, one of the providers, Virgin or somebody, I can't remember, was saying that they could still do it. Am I getting mixed up with something else? What's your answer, Adrian? I'll go for that. I can't change horses now. So you're going for C? Yeah. You're going with the pessimistic option? Yeah. OK, so important to understand the rules changed in January this year, which is why it was important.

51:26It's a current contract, and the rules I'm about to talk about only apply to contracts taken out since January. Can I change my answer now? No. No, OK. Not once I've started to give you information. You're locked in. I said final answer. You said yes. And I'm locked in. And you're locked in. I'll go to the Quizmaster Ombudsman. So until then, while it was frowned upon, you basically had no rights. So let's have his uh-uh. I'd always have that one ready in my case. 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.

52:03So 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 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.

52:49And 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've 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. 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.

53:24producer matt hello matt hello mate hello hello thank you very much let's do some of these questions what have you got for me let's get into it okay starting with um martin good name good name um 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 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 fixed rate cash ISAs aren't that good.

54:08You 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 invest it in, shares they earn. 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.

54:45But 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 in the same place that you found this podcast, which is a beginner's guide to investing that will talk you through it.

55:23But 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. 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? 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.

56:07But 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 42 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. So absolutely, once you've used up your cash ICA, you still have your personal savings allowance, your£1 ,000 of interest a year you can earn from any savings, or£500 a year if you're a higher rate taxpayer.

56:53Put your savings where it earns the most interest. If you're paying tax on it, the rule's still the same. Put the savings where it earns the most interest. Yes, it'll be taxed, but the highest interest rate is the better. We've got one from Kerry. Her oldest, who is now 23, 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 18, 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? There absolutely is something similar. It is called the lifetime ISA known as a LISA.

57:31Now, 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 25 % on top to be used as a first time property. Lifetime ISAs can only be opened by those between the ages of 18 and 39. So your son can do it on his 18th birthday. A 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 18th birthday, put a quid in because that starts the clock ticking and therefore you'd have it open for a year once you're ready to use it and you could put more money in.

58:13Second, 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 age 60, which is a very long time away for your 18 year old, then you effectively pay a penalty to withdraw of 6.25 % of what you put in.

58:59In 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-doop, a Lysa is fantastic for you. If you're in, say, the south-east 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.

59:39Do 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 ISA. Some people still have them, but they're now closed products. The lifetime ISA is now the first time buyer ISA that's available. One more. Yep. 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 ISA. 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?

1:00:19I don't have loans. I pay my credit card off in full each year. In full. And she also retires in three years. 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 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.

1:00:55I 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're burning 3 % after 40 % tax has been taken off. Still, it is some interest and you should be maximising it. 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. You may not want to do that because the older you get, the less risky you want to be.

1:01:29But 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 have more in savings in case you need it and less in investments is the general rule. 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.

1:02:06And 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, we did this in the pod last week. The reason 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 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.

1:02:44You'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 5 to 10 years that you've got running up to it, you can choose your time before that to switch from investments to savings.

1:03:20But 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 fund of global assets of thousands of shares, which in general over the long term outperform savings.

1:03:40Now, 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. 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? It is. Well, because I actually drew a picture of a cube on my notes just to check it.

1:04:12And 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? Yeah, but I'll tell you how we could make hay with this. Because next time you say more edges than a dot dot dot, what shape should you use? Dodecahedron. Dodecahedron. Is that the one with 12 planes? How many edges is that? A lot. A lot. How many edges? What's it called again? Dodecahedron. A dodecahedron.

1:04:50That's a 12-sided. So I know that's a 12-sided shape, Martin. Is that right? That's right. OK, yeah. Just tell us what's happening in the cricket and we'll tell you what's happening. You can Google away. There's 30 edges to a dodecahedron. There we go. 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?

1:05:22I've got meals. I've got to pay. So I'm going to work, work, work, whatever. I've got miles. I've got to feed. So I'm going to make sure everybody eats. 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 martinlewispodcast at bbc.co.uk. 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.

1:06:02I've got bills, I've got to pay

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