Lump Sum Investment

pauljmaguire

I have recently received a £100K lump sum. I am married and have a young son. My wife does does not work and I am a higher rate taxpayer.

Can anyone offer advice on risk adverse and tax beneficial ways of saving/investing this cash given that I do not need immediate access to it?

McSaver

the 100k in a high rate savings account in your wifes name in accounts such as Icesave and kaupthing edge should give you maximum returns but she will have 2 declare how much interest as it will take her above her personal tax allowance. You could also pay £3,600 each into a cash ISA and the interest recieved is tax-free unless you have used your ISA limits up.

EdInvestor

N&SI tax- free index- linked certificates (30k a year pp) are best bet for the HRT. Wife can earn 6k in interest tax free via personal allowance.Should cover the waterfront.

Energize

£7.2k in ISA's at 6.25% giving you £450. Then give the rest to your wife to put into a 1yr 7.2% Bond with ICICI, giving you another £6,681.6. Or if you want to spread the risk or need regular access to the money, a Kaupting edge savings account might be better. You would only pay about £136.32 in tax, giving you a total interest of £6,994.68.

pauljmaguire

McSaver wrote: »

the 100k in a high rate savings account in your wifes name in accounts such as Icesave and kaupthing edge should give you maximum returns but she will have 2 declare how much interest as it will take her above her personal tax allowance. You could also pay £3,600 each into a cash ISA and the interest recieved is tax-free unless you have used your ISA limits up.

What is a bond?

Baldur

pauljmaguire wrote: »

What is a bond?

In the sense posted above, "...a 1yr 7.2% Bond with ICICI", 'bond' is just a marketing buzzword with no real meaning - the product is basically a fixed-rate, fixed-term savings account.

<Edit> For a definition of 'Bond' in its investment sense, see http://www.investordictionary.com/definition/bond.aspx

dunstonh

Bond is so misused nowadays that it can mean anything.

The most recent misuse is by some banks and building societies when they refer to fixed term deposits. Bond can also mean investment bond (also another historical misuse of the term but been with us much longer). It can refer to corporate bonds, premium bonds. Guaranteed equity/income bonds (those can be confusing as they can be held in multiple tax wrappers).

pauljmaguire

Is there any risk associated with taking out, say a one year bond to take advantage of the fixed interest rate?

Baldur

pauljmaguire wrote: »

Is there any risk associated with taking out, say a one year bond to take advantage of the fixed interest rate?

As per dunstonh & my posts above, if the 'bond' is a fixed rate savings account, the risk is the same as for any other savings account.