What to do with £30,000?

inventivename · 2 September 2014 at 1:53PM

hello

I have £30,000 in savings and am hoping for some ideas on what to do with it.

-It is currently split between an ISA paying 1.4% and a regular savings account paying 1.5%, I have access to both accounts if I need the money.

- I'm early thirties, no kids, I earn £24,000 a year, no debts (apart from a student loan, I think about £10,000, but I don't really pay attention to that), I own a car (paid for), I started a pension about 2 years ago and I rent.

The obvious thing people say is to buy a house and I'm not totally against this idea but I couldn't really afford a house that i'd want and the commitment I would have to make to buy a house that I don't really want doesn't seem worth it.

I'm open to any sort of idea as I really don't have a clue what to do. I was thinking about buying something tangible that would appreciate in value, but I don't know what.

Thanks for any advice given

kidmugsy · 2 September 2014 at 2:18PM

inventivename wrote: »

I have £30,000 in savings ... currently split between an ISA paying 1.4% and a regular savings account paying 1.5%, I have access to both accounts if I need the money.

Current accounts: open two Plus accounts at TSB, paying 5% gross. Open a Club account at Lloyds (4%) and a Flexdirect at Nationwide (5%). That's above £10k taken care of, paying good interest. Balance up this cautious saving by holding equities in your pension. Of the remaining £20k or so, consider buying £5k of gold sovereigns, if you have a cheap safety deposit available. That leaves around £15k. That's trickier: financial assets seem generally expensive at the moment, and you may not want to invest in long-term stuff anyway.

JohnRo · 2 September 2014 at 2:35PM

Can you pay your rent with a credit card and get a credit limit worth playing with?

I stooze my rent and get 0.5% cashback as well as the interest earned on the balance borrowed. The savings aren't mind blowing but every little bit in my pocket and not theirs helps.

High interest current accounts such as TSB Classic Plus paying 5% gross interest ought to be utilised. You're allowed two of those as an individual and earn interest on up to £2K in each account so that's £4K earning 5% gross.

There are other similar accounts listed on MSE.

The default account is up to 20K in a Santander 123 paying 3% gross plus or minus for the associated fees and cashback rewards.

Most on MSE seem to suggest some sort of additional pension contribution as they provide tax relief which is money for nothing at the other end, but it locks the money away and removes any access and flexibility which you might require in the near term.

xylophone · 2 September 2014 at 3:02PM

Try the Santander 123 and use a couple of TSB Classic Plus ( funding each other by SO) on the same day, ditto 2-3 BOS Vantage? Add a Nationwide Flexdirect and fund by back and forth transfer from one of the other accounts?

The above should keep your emergency savings accessible and earning interest.

Consider regular contributions to a stocks and shares ISA ?

http://monevator.com/find-the-best-online-broker/

http://monevator.com/vanguards-cheap-trackers-lower-charges/

http://monevator.com/simplest-possible-isa-portfolio/ might be worth a read.

inventivename · 2 September 2014 at 4:53PM

kidmugsy wrote: »

consider buying £5k of gold sovereigns. .

Thanks very much for the advice so far people.

Why do you recommend gold?

My limited knowledge on the subject is that the price of gold normally goes up during a recession, which is why it rocketed a few years ago and as the economy improves it should come down. The price of gold has slowly been coming down for the last two years and I would of thought as long as there is not another crash and the economy recovers it would continue coming down, making it the complete wrong time to buy gold.

inventivename · 2 September 2014 at 5:53PM

xylophone wrote: »

Try the Santander 123 and use a couple of TSB Classic Plus ( funding each other by SO) on the same day, ditto 2-3 BOS Vantage? Add a Nationwide Flexdirect and fund by back and forth transfer from one of the other account

I'm really sorry, I have no idea what this means

kidmugsy · 2 September 2014 at 7:56PM

inventivename wrote: »

Why do you recommend gold?

On a long term view, gold is an insurance against various economic catastrophes, including both hyperinflation (very unlikely at the moment) and depression. It is also an asset whose value doesn't depend on government fiat, nor on someone repaying debts to you.
It tends (it is claimed) to be uncorrelated with equities, so if one goes down the other might well hold its value, or go up.

The attraction of (post 1837) sovereigns is that they are free of VAT and CGT, and that they are "liquid" i.e. easily sold if needs be. Unlike a house, it's also easy to sell part of a stock of sovereigns. Since I don't have access to a safety deposit I hold gold by a different means, an ETF. If I could find a convenient safety deposit I'd swap to sovs.

xylophone · 2 September 2014 at 10:12PM

I'm really sorry, I have no idea what this means

The idea is to use interest paying current accounts to your advantage.

TSB Classic pays 5% on up to £2000 - you are permitted two sole accounts.

You deposit £2000 in each - you set up a standing order for £500 from each to other for the same day of the month.

You transfer the interest monthly to another interest paying account.

You can open up to three BOS Vantage accounts (3% on up to £5000) - you set up SO to transfer £1000 a month between them in the same way - take out interest monthly and pay to another interest bearing account.

The Nationwide Flex direct pays 5% on up to £2500 - you pay in that amount then set up a standing order from one of your accounts to credit it with £1000 a month and set up a standing order to bring it back again.

The Santander 123 pays 3% on up to £20,000 and offers cashback on certain direct debits - details here http://www.santander123.co.uk/?gclid=COL1y9O4w8ACFVMRtAod7BoAiQ

Club Lloyds pays up to 4% on a tiered basis - details here https://www.clublloyds.com/

You need to pay attention to the funding requirements but with the capital you already have you should be able to meet them by recycling your money.

atush · 2 September 2014 at 10:18PM

I personally have and do hold gold.

But I never buy when it is still this popular (even if less popular than a few years back).

gozaimasu · 3 September 2014 at 1:16AM

I don't think buy a house is an "obvious" suggestion at all? You wouldn't get much for your money as you'd need to set aside ~£10k for all the fees/costs associated (leaving a few grand savings safety net) with buying a house, then £20k deposit is only 10% on a £200k house.

Any chance you'd get a mortgage on a £24k salary? You'd be lucky to buy a 1 bed flat for £100k.

atush · 3 September 2014 at 12:02PM

I do think a house is an obvious long term goal. As pensioners ( I assume you dont want to work forever) who own rather than rent have a much lower personal inflation rate.

However, if you dont have enough now, and are certain you pay in enough to your pension (what % of your salary do both of you put in?) then I think savings going forwards should be into a S&S isa. For equity exposure, to beat inflation over the longer term, and it could put you into a position to buy later?

What to do with £30,000?

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