sudden windfall - what to do (sensibly) with the money

Fleur_2

My husbands father has just given us a cheque for 10,000 - OMG!!!
That is a lot of money in my eyes. We'd like to pick the boards brains about how best to invest it so that, should we have to (my job right now is pretty insecure), we could get our hands on it but at the same time earn a decent amount of interest on it.

His Mum opened a high interest account with Nationwide (with whome we have a current account) but I haven't looked into this yet. It is, apprently, an instant access and she is earning around £185 a year on it (I don't know her initial investment - I think it is £10k too)

Any suggestions / recomendations?

I have heard ING are quite good.

mystic_trev

Nationwide have an e-savings account paying 4.75%

innovate

Assuming you are after a savings account, you can do better than 4.75% with Nationwide. Check out Martin's Savings & Investments articles, you find the link on the left.

Tim_L

The difference in interest you will get on the best paying account relative to the Nationwide 4.75 is going to be less than £50 a year after tax - worth having but not massively significant.

The main thing here (assuming you are both taxpayers) is to ensure you get it into a cash ISA, preferably instant access. If there are two of you and you don't already have a cash ISA each, use your full £3000 allowances now to cover £6000, then immediately in April 2006 put the rest in. In the meantime the residue can be in any instant access account you can find - Cahoot are offering 5.25% I think and you can get cashback from Rpoints (or similar cashback sites) for opening the account in the first place which will net some more cash - £10 each if you both open accounts.

Hawksmuir

In a similar situation, and using the money to pay of the mortgage, at £1,000 / month without penalties, the rest is being put into our isa's so we can access if required.

Fleur_2

Thanks for the ideas guys.
I will print this off and show it to him in doors.
I think that the instant access ISA idea is maybe the best route to follow.

Thanks again

Tim_L

One other thing to consider is that having savings above a certain level will affect your ability to claim benefits if your job really is insecure. This could be costly.

In this case it may actually be better to spend some of the money somewhere, but it's a fine judgement call and will depend on joint circumstances and your confidence about finding work were you to be made redundant. Worth talking to someone at the CAB to discover what the rules on savings/benefits are.

Probably I'd take the slight risk of having savings above the threshold personally as second guessing all the disasters that can befall you is impossible, but if there was something you were thinking of buying anyway this might possibly swing a decision.