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  • FIRST POST
    • poimyboy
    • By poimyboy 5th Jan 18, 4:55 PM
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    poimyboy
    Investment for retired persons
    • #1
    • 5th Jan 18, 4:55 PM
    Investment for retired persons 5th Jan 18 at 4:55 PM
    We are a retired couple with £20,000 of old ISA money and we are earning a very small amount of interest on this. Is it better to split this money into various investments or purchase Cash or Invement ISAs with this. We are very confused by some of the products online.
Page 1
    • soulsaver
    • By soulsaver 5th Jan 18, 5:08 PM
    • 1,521 Posts
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    soulsaver
    • #2
    • 5th Jan 18, 5:08 PM
    • #2
    • 5th Jan 18, 5:08 PM
    Stock & shares (S&S)? Depends on your attitude to risk, age, objectives etc.

    Multiple high interest bank current accounts optimised between a couple will get you near 4% on aggregate, risk free (other than inflation erosion).

    All discussed on here. Nationwide, Tesco, TSB, etc
    • poimyboy
    • By poimyboy 6th Jan 18, 7:37 AM
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    poimyboy
    • #3
    • 6th Jan 18, 7:37 AM
    Thank you for your reply
    • #3
    • 6th Jan 18, 7:37 AM
    Further to your response does it mean it is better to spread it about.
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jan 18, 8:49 AM
    • 5,121 Posts
    • 9,770 Thanks
    enthusiasticsaver
    • #4
    • 6th Jan 18, 8:49 AM
    • #4
    • 6th Jan 18, 8:49 AM
    Do you have other money available and do you need to access it to live off?

    Depending on your attitude to risk you can either transfer the isas to stocks and shares isas in a low cost multi asset fund set at the appropriate level of risk for you or distribute it around high interest current accounts
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jan 18, 8:53 AM
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    enthusiasticsaver
    • #5
    • 6th Jan 18, 8:53 AM
    • #5
    • 6th Jan 18, 8:53 AM
    Further to your response does it mean it is better to spread it about.
    Originally posted by poimyboy
    Most high interest current accounts have an upper limit for paying interest. Nationwide is £2500, Tesco is £3000 so you would need to open a few in both names to move £20k in. There are usually a few hoops to jump through too like moving money in and out monthly to satisfy income rules and sometimes setting up DDs. It depends on your attitude to that.

    We use Santander 123 as that pays 1.5% on £20k which is the only account that will pay interest up to a larger amount.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • username12345678
    • By username12345678 6th Jan 18, 12:06 PM
    • 167 Posts
    • 72 Thanks
    username12345678
    • #6
    • 6th Jan 18, 12:06 PM
    • #6
    • 6th Jan 18, 12:06 PM
    We use Santander 123 as that pays 1.5% on £20k which is the only account that will pay interest up to a larger amount.
    Originally posted by enthusiasticsaver
    Oh for the days of an account each for you and the wife plus a joint acc all paying 3%.
    • soulsaver
    • By soulsaver 6th Jan 18, 12:38 PM
    • 1,521 Posts
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    soulsaver
    • #7
    • 6th Jan 18, 12:38 PM
    • #7
    • 6th Jan 18, 12:38 PM

    We use Santander 123 as that pays 1.5% on £20k which is the only account that will pay interest up to a larger amount.
    Originally posted by enthusiasticsaver
    For comparative purpose you only get 1.2% after fees with Santander with £20k - and you can now beat that with one account in several other places.

    The AA – 1.32%
    Sainsbury's Bank – 1.31%
    Post Office – 1.3%

    https://www.moneysavingexpert.com/savings/savings-accounts-best-interest?_ga=2.50223846.1954305227.1513475767-679811915.1492047907
    Last edited by soulsaver; 06-01-2018 at 12:42 PM. Reason: link added
    • eskbanker
    • By eskbanker 6th Jan 18, 1:03 PM
    • 6,039 Posts
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    eskbanker
    • #8
    • 6th Jan 18, 1:03 PM
    • #8
    • 6th Jan 18, 1:03 PM
    For comparative purpose you only get 1.2% after fees with Santander with £20k - and you can now beat that with one account in several other places.

    The AA – 1.32%
    Sainsbury's Bank – 1.31%
    Post Office – 1.3%

    https://www.moneysavingexpert.com/savings/savings-accounts-best-interest?_ga=2.50223846.1954305227.1513475767-679811915.1492047907
    Originally posted by soulsaver
    True as stated, but many (most?) Santander 123 customers will mitigate the fees by taking advantage of the cashback offered on various household bills, so it's often not difficult to achieve the 1.5%.
    • soulsaver
    • By soulsaver 6th Jan 18, 3:36 PM
    • 1,521 Posts
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    soulsaver
    • #9
    • 6th Jan 18, 3:36 PM
    • #9
    • 6th Jan 18, 3:36 PM
    True as stated, but many (most?) Santander 123 customers will mitigate the fees by taking advantage of the cashback offered on various household bills, so it's often not difficult to achieve the 1.5%.
    Originally posted by eskbanker
    However, you can get the cashback and still get the better rates elsewhere by going 'lite'.
    • ValiantSon
    • By ValiantSon 6th Jan 18, 7:05 PM
    • 155 Posts
    • 155 Thanks
    ValiantSon
    However, you can get the cashback and still get the better rates elsewhere by going 'lite'.
    Originally posted by soulsaver
    No, you can't normally. You can't get 1.5% on £20,000 anywhere else with easy access. The easy access savings accounts are currently not paying that much (as your own previous post shows). Splitting the money across other current accounts also won't yield the 1.5% return. You can get 5% on £2500 with Nationwide, but that is only for one year so should be ignored for comparison as it is a bonus rate, whereas Santander is an ongoing rate). You can get 3% on £6000 with two Tesco accounts, assuming you have 6 direct debits to allocate to them. You can get 2% on £15,000 with Bank of Scotland Vantage, assuming you have another 6 direct debits to allocate to them. You can get 2% on £5000 with Lloyds, assuming you have a further 2 direct debits. You can get 3% on £1500 with TSB, without direct debits.

    So, assuming it is a £20,000 deposit we are talking about then the "easiest" way to cover this is with 2 Tesco and 3 Bank of Scotland accounts. You would need to have 12 direct debits set up across these accounts to gain the interest. Given that you are also intending to maintain a Santander 123 Lite for the cashback, that's a hell of a lot of extra direct debits to find (yes, you could set the up for charities, but then that is eating into your returns - and some of us have a moral objection anyway to using the charities in this way).

    Once you've overcome the direct debit hurdle then how much interest would you gain? I'll allocate for best return:

    Tesco = £180 (3% on £6000)
    Bank of Scotland = £280 (2% on £14,000)
    Total = £460
    Total with Santander = £300

    It would appear from the above figures that switching away from Santander wins, but that isn't taking into account the cashback on direct debits. How much that comes to is dependent upon how much bills are, so that needs to be factored in too. It is true that it is unlikely to be as much as £160, but it could quite easily be £100-£120. This would mean that you were still better off with switching away from Santander, but not likely switching away and keeping the direct debits earning cashback with Santander 123 Lite.

    I agree that it can be done, but it isn't a straightforward proposition due to the direct debit requirements.

    It is disappointing that Santander cut the interest rate from 3% and increased the fees, but it is still a decent offering compared to (near) like for like alternatives in easy access savings.
    • eskbanker
    • By eskbanker 6th Jan 18, 7:21 PM
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    eskbanker
    However, you can get the cashback and still get the better rates elsewhere by going 'lite'.
    Originally posted by soulsaver
    No, you can't normally. You can't get 1.5% on £20,000 anywhere else with easy access. The easy access savings accounts are currently not paying that much (as your own previous post shows). Splitting the money across other current accounts also won't yield the 1.5% return.
    Originally posted by ValiantSon
    Soulsaver's (valid) point was that using the full 123 gives a net 1.2% plus the cashback but that it's better to use the Lite alternative to earn the same cashback while earning more than 1.2% elsewhere (e.g. in the instant access accounts listed), although strictly speaking there's still £12 to deduct from that annual return for the 123 Lite monthly £1 fee.
    • ValiantSon
    • By ValiantSon 6th Jan 18, 7:44 PM
    • 155 Posts
    • 155 Thanks
    ValiantSon
    Soulsaver's (valid) point was that using the full 123 gives a net 1.2% plus the cashback but that it's better to use the Lite alternative to earn the same cashback while earning more than 1.2% elsewhere (e.g. in the instant access accounts listed), although strictly speaking there's still £12 to deduct from that annual return for the 123 Lite monthly £1 fee.
    Originally posted by eskbanker
    Yes, I understood that, and I did acknowledge that what they proposed was possible. My point was that it isn't entirely straightforward.
    • eskbanker
    • By eskbanker 7th Jan 18, 12:42 AM
    • 6,039 Posts
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    eskbanker
    Soulsaver's (valid) point was that using the full 123 gives a net 1.2% plus the cashback but that it's better to use the Lite alternative to earn the same cashback while earning more than 1.2% elsewhere (e.g. in the instant access accounts listed), although strictly speaking there's still £12 to deduct from that annual return for the 123 Lite monthly £1 fee.
    Originally posted by eskbanker
    Yes, I understood that, and I did acknowledge that what they proposed was possible. My point was that it isn't entirely straightforward.
    Originally posted by ValiantSon
    Still unconvinced you're understanding - I said that a classic 123 holder can achieve 1.2%+cashback on £20K (which may or may not be 1.5% in total), to which soulsaver pointed out that a 123 Lite holder can get the same cashback with a nominal balance while (for example) getting 1.32% on the £20K with AA, which is therefore better than using the full-fat 123 account for the £20K.

    In both cases this only involves two active direct debits (which will be two of those earning the cashback anyway), so soulsaver's suggestion is a simple way of outperforming mine, whereas your hypothetical model of opening lots of current accounts with a bunch of artificial extra direct debits is a different scenario altogether from what anyone else had actually proposed!
    • ValiantSon
    • By ValiantSon 7th Jan 18, 1:10 AM
    • 155 Posts
    • 155 Thanks
    ValiantSon
    Yes, I really did understand. There's no need to explain it again.

    I don't consider the interest paid on the easy access savers to significantly outweigh that offered on 123. I do consider the interest offered using other current accounts to, but then there are significantly greater difficulties in achieving that.
    • soulsaver
    • By soulsaver 7th Jan 18, 2:27 AM
    • 1,521 Posts
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    soulsaver
    Sigh..
    Good info for the OP though, if not confused by it all...
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