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£265k - advice on how to invest
Jimcole_2
Posts: 5 Forumite
I'm just in the process of selling my flat to move to a new area to rent for 1 year. I'll have approx £265k in cash and want some advice on how best to invest it as i'm relatively naive about savings.
My initial plan was to put the lump sum into a standard high street savings account which gives approx 5% net return. Obviously i want to protect this investment so don't want invest it riskily in hope of a bigger return but is this the best place for my money over 1 year?
I was planning on taking 12k initially to puy aside in a similar saving account with monthly access but use this to help pay my rent over this year.
Any advice on this?
Some people have told me to put this into bonds others have said split the investment across a number of banks to mitigate the risk.
I'm a higher tax payer and don't need regular access to the money.
All help much appreciated!
My initial plan was to put the lump sum into a standard high street savings account which gives approx 5% net return. Obviously i want to protect this investment so don't want invest it riskily in hope of a bigger return but is this the best place for my money over 1 year?
I was planning on taking 12k initially to puy aside in a similar saving account with monthly access but use this to help pay my rent over this year.
Any advice on this?
Some people have told me to put this into bonds others have said split the investment across a number of banks to mitigate the risk.
I'm a higher tax payer and don't need regular access to the money.
All help much appreciated!
0
Comments
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Saviles Delight. It runs today at Southwell 4.20 pm. Good luck.Krusty & Phil Madoff, 1990 - 2007:
"Buy now because house prices only ever go UP, UP, UP."0 -
1 yr is too short for stocks and shares.
Some options.
1. 3k into mini cash ISA now, and 3.6k in April.
2. 30k into index linked certificates (3 & 5 yr) for a minimum of 1 yr (to get any interest).
3. 200k into a 1 yr fixed rate bond.
4. Rest into several different instant access savings accounts. Assuming you are a basic rate tax-payer, you need 6.25% gross to get a 5% net return.In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:0 -
ad44downey wrote: »Saviles Delight. It runs today at Southwell 4.20 pm. Good luck.
Thanks had £20.00 on it at 7/2 - nice winner.0 -
I hope jimcole got his money on the nag, he'd be a millionaire now!!!!0
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"I hope jimcole got his money on the nag, he'd be a millionaire now!!!!"
Alas Napoleon, if only, if only....0 -
1 yr is too short for stocks and shares.
Some options.
1. 3k into mini cash ISA now, and 3.6k in April.
2. 30k into index linked certificates (3 & 5 yr) for a minimum of 1 yr (to get any interest).
3. 200k into a 1 yr fixed rate bond.
4. Rest into several different instant access savings accounts. Assuming you are a basic rate tax-payer, you need 6.25% gross to get a 5% net return.
Thanks for your help Jonbvn - whats the advantage of putting into a bond, is it just because it is guaranteed? and if so why wouldn't i put all £265k into this?0 -
Thanks for your help Jonbvn - whats the advantage of putting into a bond, is it just because it is guaranteed? and if so why wouldn't i put all £265k into this?
An ISA is tax free, and you are only allowed to place £3,000 a year into a cash one, rising to £3,600 this year. As it's tax free it will usually outperform any other standard savings account, so it would generally be accepted to take care of an ISA first in priority of bank savings accounts. That allowance cannot be carried over to another year, you either use it or lose it, so to build up a tax free savings account it is best, if possible, to use your yearly allowance each year.
The "savings bonds" or fixed term deposits fix your rate, which is advantagous as we appear to be entering a period of falling rates. \most people would not likw to deposit that amount of money with one institution as only £35,000 is covered under the compensation scheme if you institution goes bankrupt.
The index linked certificates are also tax free, and assuming inflation holds up represent particularly good value to you as a higher rate taxpayer.Hope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0 -
Thanks for your help Jonbvn - whats the advantage of putting into a bond, is it just because it is guaranteed? and if so why wouldn't i put all £265k into this?
Make sure you consider tax on savings. This means ISA's and ILSC's generally offer a better net return than other savings.
The attraction is that the rate is fixed for the term of the bond. With interest rates likely (certain due to US IMHO) to fall locking in a good rate now is a good idea. If you have a concern that a NR scenario could effect you, consider bonds with several banks/bs.
Note that the word "bond" above is a misnomer.In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:0 -
Make sure you consider tax on savings. This means ISA's and ILSC's generally offer a better net return than other savings.
The attraction is that the rate is fixed for the term of the bond. With interest rates likely (certain due to US IMHO) to fall locking in a good rate now is a good idea. If you have a concern that a NR scenario could effect you, consider bonds with several banks/bs.
Note that the word "bond" above is a misnomer.
thanks Jonbvn, very useful
As this cash is also my wifes and she doesnt work can i get her to invest it under her name so we're only liable for the lower level tax -20% - on it?0 -
thanks Jonbvn, very useful
As this cash is also my wifes and she doesnt work can i get her to invest it under her name so we're only liable for the lower level tax -20% - on it?
On 250k your wife would certainly enter the lower rate tax band if it was all in her name.
However, regarding the ISA's; you can open one each before April and that will take care of £6k and shield it from the taxman. In the new tax year starting in April you will be able to shield a further £3600 each in another ISA.
If you invested the 250k in a bank account paying 6% then you would derive £15k interest on it, so you or your wife would be liable to some tax on it. Your wife would be liable to less tax as she's not using her taxfree allowance due to her not earning.
If you put it all in your name it could push you into the 40% tax bracket if you're not careful. So you need to do the sums here.0
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