Advice for £37000

dawnk_2

I recently sold my house and have £37000 left over. It is currently sitting in a lloyds tsb savings account (i dont even know what the interest rate is) I probably wont be touching the money for about a year and really dont have a clue about the best thing to do with it apart from putting my allowance in my cash isa. As the interest rate have just dropped where is the best place to invest my money?

Any advice please!! Thanks

[Deleted User]

Hi,

I'd suggest the following:

1. As you're already aware, generally ISA's are a good place to start:

http://www.moneysavingexpert.com/sav...gs-without-tax
and http://forums.moneysavingexpert.com/....html?t=401374

2. Regular savings accounts are good too:

http://www.moneysavingexpert.com/sav...vings-accounts
and http://forums.moneysavingexpert.com/....html?t=608697

Regular savings accounts are generally a good place for new money e.g. monthly pay cheques, however if for example you have £3k in a 6% high-interest bank account drip-feeding into a 10% regular savings account then you're essentially getting 8% interest on average for your £3k which beats most fixed rate products - albeit with a bit more work.

3. If you want something with a little less work then fixed rate savings accounts are a good option:

http://www.moneysavingexpert.com/sav...interest#fixed
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

4. One other thing you might like to consider is getting a decent instant access savings account:

http://www.moneysavingexpert.com/sav...st#topaccounts
and http://www.thisismoney.co.uk/saving-...&in_page_id=50

5. Finally if you're a higher rate tax payer then NS&I's 3 and 5 year Index Linked Savings (http://www.nsandi.com/products/ilsc/index.jsp) look good, paying 1% above the RPI inflation rate. Currently this is 5.0% so that’s a rate of 6.0% overall.

The attractiveness of these is that the savings are tax-free meaning it's better for higher-rate taxpayers. Basic rate taxpayers would need to earn 7.5% in a normal savings account to match this, while higher rate taxpayers would need 10.0%.

One thing to note is if inflation drops then so does the rate for these savings. It'll always be higher than inflation and tax free though. It's also best to leave the cash in there for at least three years though and at least £100 must be deposited (maximum is £15,000), so it's not for those who want a short term place to save.

justaquickie

If you managed to sell your house then you should be offering me advice! As you already bank with LloydsTSB, one convenient option you might consider is a 6 month Term Deposit with them. Still showing at 6% AER fixed on their website, but you'd have to check it's still available. 12 month terms not quite so attractive at 5.5%. I opened one recently - all done immediately and simply over the phone. Fine if you're happy to tie the money up.

By way of disclaimer: there will be slightly better rates out there to consider. I only point out option one because it may be convenient for you.

dawnk_2

thankyou. I seem to be investing my money in paying off my families credit cards at the moment! I was very lucky selling the house, had my fingers crossed right up until the last day!