Monthly savings for £20,000 in 5 years
Two scenarios — zero interest vs 5% AER.
Short answer
£333/month cash, or £294/month in a 5% AER account.
Breakdown
- Total months: 60
- Cash-only plan: £333 × 60 = £19,980
- 5% AER plan: £294/month (compound growth does some of the work)
- Interest earned over 5 years at 5%: ~£2,360
Other rates on the same target
- 3% AER (typical easy-access): ~£309/month
- 4% AER (competitive easy-access): ~£302/month
- 7% (long-run equity tracker): ~£279/month
Weekly & daily equivalents
- Per week (cash): ~£77
- Per day (cash): ~£11
- Per week (5% AER): ~£68
If you can only save less
Saving £233/month instead — 70% of the target rate — still reaches roughly £13,986 in 5 years (cash) or £14,000 at 5% AER. A smaller amount you sustain every month almost always outperforms a larger pledge that collapses in month four.
Where to keep this money
For a 5-year horizon, a Stocks & Shares ISA invested in a global equity tracker has historically outperformed cash by a wide margin over decade-long horizons. Cash drags the real return down once inflation is accounted for. For balances above the £85,000 FSCS limit per institution, spread across providers.
Inflation-adjusted target
At 3% long-run inflation, £20,000 in 5 years' time is worth roughly £17,252 in today's money. To preserve real purchasing power you'd actually need to hit £23,185 in 5 years — about £53/month extra on the cash plan. A 5% AER account broadly keeps pace with inflation; a 3% account does not.