Large deposits

Highfield_2

My question is what you do temporarily with a large amount of money as I am worried about it's security.

I believe that the Financial Compensation Fund only guarantee £31,700. I am selling a house and after expenses, will have £300,000 to park somewhere for about a year. I want to put it somewhere safe till I go overseas. Having had some very big companies go belly up on me in the past, I am wary about putting to much with one company. Surely there are companies which cover large amounts with insurance, or ring fence them.

Any advice would be appreciated.

ManAtHome

You're right about the compensation limit, so just the obvious really - split it amongst 10 institutions.. Bit of a pain, but at least you won't jump any time a particular bank, b-soc, or insurance company is mentioned. As it's for a year, £30k should end up with less than £31,700 in each.

dunstonh

Realistically, the chances of one of the big banks going under is highly unlikely. Indeed, if one does, we will all be affected, even if you dont use them.

KTF

The chances of a mainstream bank going bust is almost nill. I really wouldnt worry about it that much.

ffacoffipawb

KTF wrote:

The chances of a mainstream bank going bust is almost nill. I really wouldnt worry about it that much.

If he went about investing a maximum of £35,000 with a bank, the likes of Wayne Rooney would run out of banks before he ran out of money!

Robert_Sterling_3

No ordinary customer of any building society has ever lost money which they had placed in a building society in the past 50 years if ever.
When the Grays Building Society was robbed of most of its assets ( More than 90% ) over a period of about 40 years not only did they get the interest they were guaranteed they actually got 100% of their deposits and any interest due. All the other building societies contributed to this compensation.
The only customers to lose money were the Directors of the Society. As directors they had to invest at least £1000 in the society and they did not get their investments back. The Chief Executive, who had taken the money, committed suicide.

Stonk

The chance is indeed almost nil - bit not completely nil. There are numerous recent examples of seemingly impregnable companies that have gone spectacularly bust, and to say "it won't happen to a bank" is to have your head in the sand, a la ostrich.

Personally, I honestly don't think it will happen, but I am not prepared to stake my life's savings on it - they mean too much to me. I would be absolutely gutted if I put £300K in a bank and got back £31,700.

I think of the effort of opening a few extra accounts as representing the insurance premium for the peace of mind.

Another benefit of having multiple accounts is that you are hedged against the effect of one institution reducing its interest rate. The drop won't affect you as much as if you had all your money in that one place.

rrwfotr

Hi you also need to think of interest as well on 300k you could earn approx 10k of interest over a year...

rozeepozee

My father lost his life savings in the BCCI scandal in 1990, so it does happen.

home_alone

I have had around your figure with ING for the past year or so and feel safe, although as you say you can not see the future. I need quick access to my money and ING have given very good service, with about 14 million customers worldwide and getting close to 1 million in the UK sort of gives me a warm feeling.

gary

Stonk

home_alone wrote:

I have had around your figure with ING for the past year or so and feel safe, although as you say you can not see the future. I need quick access to my money and ING have given very good service, with about 14 million customers worldwide and getting close to 1 million in the UK sort of gives me a warm feeling.

With respect, a feeling of safety derived from their size or service is misplaced. Big, (previously) respected, companies can go bust as well. These features make it unlikely they will go bust due to lack of custom, but that's not the kind of thing that brings financial institutions down.

Doom doom doom. I sound like the Daily Mail. We're probably talking about the difference between 1 or 2 in 10,000.

There are quite a few accounts available that have similar rates and features to ING, all with good customer service. In fact, the only one of the many internet instant-access accounts that I have been dissatisfied with is ICICI.

I have to admit it would be psychologically nicer seeing £1000 interest arrive in an account each month, rather than 10 accounts each receiving £100.