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  • FIRST POST
    dmih50
    70,000 to invest and need monthly income
    • #1
    • 22nd Sep 04, 4:58 PM
    70,000 to invest and need monthly income 22nd Sep 04 at 4:58 PM
    We are selling our property and moving into temporary accomodation. We hope to have between 70-75K equity which we need to invest for 6-12 months, we are both basic rate taxpayers. We would prefer a monthly income to help towards renting. I have looked on the net for easy access savings accounts, best rates seem to be internet based.
    How safe are this accounts (I have read articles about some web sites which use same/similar names and logos as some financial institiutions and are not genuine.) How can I ensure the money I transfer will be safe? Is it true that if the company is covered by financial compensation scheme max claim is around 31K per account? Would be grateful if someone could give advice.
Page 1
  • Reaper
    • #2
    • 22nd Sep 04, 6:31 PM
    • #2
    • 22nd Sep 04, 6:31 PM
    Internet based accounts are fine. For security always type in the web address yourself, or select it from your favorites. If you do that you will be safe.

    The scams involve setting up a copy of the site and then emailing everybody to say "click here" to go to the site and type in your username and password. Clicking on their link takes you to the copy web site where they record the username and password you type in.

    The banks involved quickly get the scamers web sites closed down so you would have to be both careless and unlucky to get hit by it.

    Each of you should take out a cash-ISA, that's 3000 each. The rest will have to go in a normal savings account. It sounds as though you have already researched the market for the best rates.

    As for the compensation limits - I'm not sure what the limiuts are but if your figures are right and it worries you simply split your investment between 2 savings accounts with different companies.

  • ED
    • #3
    • 22nd Sep 04, 6:51 PM
    • #3
    • 22nd Sep 04, 6:51 PM
    7075,000 equity would divide (almost perfectly) into a Mini Cash ISA each, for you two (if not already obtained in this tax year) and an online savings a/c with two separate bdg societies or banks.

    Only a fortnight till Base Rate decision is next due, so new offers may appear (or current ones get withdrawn). But as you may have seen, Birmingham Midshires (a division of Halifax plc) offers 5.40% gross (including bonus for 1st 12 months). Online Saver allows instant access via free BACS transfers to one linked bank or bdg society a/c.

    Each month, you two could pay rent, etc, by making a transfer from Online Saver. It's not essential to literally have X's credited per month in interest. For instance, suppose you invest 35,000 @ 5.40% gross for 6 months. If the rate doesn't change, & you both remain Basic Rate tax payers, you're likely to gain approx 126 interest, net of tax, for each month. That's in addition to gains from the other a/c, remember.

    5.20% is offered by Yorkshire BS. I have no personal experience of how long it takes to transfer-out 's. Anyone here able to give an example? For instance, if a customer goes online on a Monday, does it really take "5 banking days" (as Yorkshire's site states) for cleared funds to reach the destination a/c?
  • Rjohnmatt
    • #4
    • 22nd Sep 04, 6:54 PM
    • #4
    • 22nd Sep 04, 6:54 PM
    The maximum one should invest in any one financial institution in the UK is 30.000(Or is it 31.000,dont remember).If the company goes bust , you get your money back 100% if the investment is less than this amount.Its covered by a financial act , the name of wich i dont remember either , but essentially this is what it means.
  • ED
    • #5
    • 22nd Sep 04, 9:52 PM
    • #5
    • 22nd Sep 04, 9:52 PM
    Rjohnmatt very wise of you to express caution. The maximum usually recommended is 35,000 per financial institution (bank or bdg soc, etc).

    That's what I meant (above) re selecting two institutions with suitable savings a/c's, perhaps + 3,000 for each of the 2 people to invest in Mini Cash ISAs, if not already catered for in the current tax yr.
  • lurkio
    • #6
    • 24th Sep 04, 2:46 PM
    • #6
    • 24th Sep 04, 2:46 PM
    not sure you are right about the 100% guarantee - last time I looked into this it was 100% of the first 3000 and 90% of up to 31000 and zip after that
    am I right ? anybody know for sure ?
  • ED
    • #7
    • 24th Sep 04, 3:34 PM
    • #7
    • 24th Sep 04, 3:34 PM
    Only 1 digit wrong, both Rjohnmatt (it's 90% not 100%) and lurkio (it's 2,000 not 3,000). Here's the info re Financial Services Compensation Scheme established under the Financial Services and Markets Act 2000 :

    "Payments under the Scheme are limited to a maximum of 31,700, that is 100% of the first 2,000 of an investor's total shares and/or deposits (other than deferred shares - permanent interest bearing shares), and 90% of the next 33,000. Most investors are covered including individuals and small firms. Although most shares and deposits in UK building societies are denominated in sterling, the euro and other European Economic Area currencies are also covered."
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