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£450,000 to save

I am in the process of selling my house and expect £450,000 equity from the sale.

Before buying another house, I intend to rent for 6 months-as with 2 very small children I dont want to rush into anything. I threrefore need immediate access to my cash should I need to buy something quickly !!

The theroy is, in order to pay my rent, I intend to put the £450,000 in a regular no notice "clean" savings account and (after tax) pay the rent with the interest.

Should I split the money into say 5 differnt providers?? eg, ICICI, Cahoot,Bradford & Bingley etc -all of which are receommended as the highest interest rate providers for this type of account or dump it all in one account??

Im concerned as this is my life savings and I know most banks are "safe" but wondered if any of you had done anything similar or could give me your honest opnions about what you would do in my circs.

how easy is it to open these accounts-is there a good way of doing so quickly? Have any of you had any nasty experiences??


All advice is much appreciated !! Thanks.
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Comments

  • codetown
    codetown Posts: 685 Forumite
    I personally would stay clear of ICICI, having read so many bad experiences. It might be too risky for someone to risk their main savings.
    Also dividing the sum up into at least four separate chunks would give you additional security and stability.

    I would choose first an absolutely solid-rock institution to start with, even if it does not offer top-class interest. For example Nationwide, where the e-saving is anyway at 4.65 above 50.000 pounds and is absolutely easy and fast to move to your current account. I would put there something like 150.000 pounds.

    Then I would choose three easy access online only accounts such as First Direct, BRADFORD & BINGLEY esavings and Cahoot. ANd I would put 100.000 each.

    Then according to your needs, you could also monthly take a part out of one of the online savings and put it into a regular saving or Children Accounts or for ISA Allocations and Pension top-up (if applicable).
    A&L is quite popular today for ISA and has also a good online account with 5.2% interest (but limited to max 25.000 pounds, therefore not in the list above). So you might want to add it to the list of your providers!

    As for opening times, it is very conveninet that you start with applications as soon as possible, even if with 1 pound each. For Nationwide you can go to a branch and depending on their speed you might be on within 10 days (the application for esavings is separate after you have the flexaccount!). But check the requirements for the cc. I don't remember if today they ask you to have a salary paid into it.
    Between application and real possibility to use an online account it might well be a couple of weeks, as you will need to get papers in the post, sign them and send them back. So it is not that fast.
  • Sting_2
    Sting_2 Posts: 149 Forumite
    You might want to concentrate on accounts offering mothly interest since you will be required to pay your rent monthly (I assume).

    ING direct pays 4.5% interest and is paid monthly.

    Cahoot's saving account pays 4.85% with interest paid monthly, but only £250,000 can be invested.

    FirstDirect e-savings account pays 5% with monthly interest, with an upper limit of £500,000.

    But the best account is the ICICI account at 5.15% with monthly interest and no savings limit. I have read codetown's comments and have too also read the reports of the problems people have had, however the ICICI bank is covered by the FSA so you might want to consider investing just £35,000 of your savings here which would mean your savings are (relatively) safe since the first £2,000 are covered at 100% and the next £33,000 are covered at 90%.

    If you are with a partner you could both open accounts.

    Hope this helps.
  • Juni_3
    Juni_3 Posts: 170 Forumite
    Watch out for the accounts that look like they pay good interest but stop interest for a month if you make a withdrawal. As with the FirstDirect e-saver account.

    I would stay well clear of ICICI personally. I know of so many people (personally and on this board) who have had big problems transferring money in and out. It only takes one of these problems and you've lost the interest advantage even if you put every penny with them (which would be a big mistake in itself).

    I have about twice your amount with the majority being in ING and the rest split between Cahoot and A&L.

    It's a bit worrying not being able to split the money between enough accounts to take full advantage of the FSA cover but banks going bust is thankfully very rare.
    Debt in 1993: £35,000 | Debt in 2006: £0 | Assets in 2006: £2.3m and counting. :j

    Anything is possible with hard work, determination and the love of a good woman. :D

    There is no upper, middle or lower class. Simply those that have class and those that don't. ;)

  • Hi All
    Just about to be in a similar postion to you cat, will be selling and cashing in main residence and will have £650k to invest, but need monthly draw to pay £1500 rent whilst waiting for a renovation prop to come up.

    I was wanting to ask money experts their advice on the movement of funds. We are doing our own conveyance, so we have to nomiate a bank account for the 650k to be sent by the buyers solictor.

    Should we open a savings account now (which has no withdrawal penalties) and then transfer funds to smaller pots and lose daily interst while the sending bank takes four days to process or set up four or so best at the time accounts and pay additonal TT charges to solicitor on the day of completion.

    My salary is 30k my wifes salary is 17k, but only just began working in month 10 no tax to pay this yr on her code of 489

    My questions:
    Which account is best to open for 650k
    Which accounts will allow a monthly draw
    Will i have to pay captial gains tax on the interest
    Are bonds any good to save tax i.e withdraw monthly capital sum and not use interst and let it accrue to replace capital?

    Look forward to hearing from you
  • free4440273
    free4440273 Posts: 38,438 Forumite
    avoid ici like the plague -i have said this before, i am happy to say so again. :eek:
    BLOODBATH IN THE EVENING THEN? :shocked: OR PERHAPS THE AFTERNOON? OR THE MORNING? OH, FORGET THIS MALARKEY!

    THE KILLERS :cool:

    THE PUNISHER :dance: MATURE CHEDDAR ADDICT:cool:
  • codetown
    codetown Posts: 685 Forumite
    I suggest to divide the money into separate chunks for extra security.
    I would go with at least 3 chunks in three different institutions. And forget ICICI if you want to avoid trouble.

    You are basic tax payer (and so is your wife), so the interest will be taxed at 20%. The bank itself will keep this 20% tax unless you ask explicitly to do differently.

    To get 1500 pounds net interest monthly you will need 21600 gross annual interest. Assuming you get an interest of 4.5% (easy today) you can get to your target it with investing 480.000 pounds.
    The rest of proceedings from your house sale -if necessary- can be put into other longer term investment strategies (funds, bonds, pension or whatever you feel best).

    As for providers that can offer 4.5% or best and monthly payments:
    - FirstDirect (but be careful to thier strange widraw rules!), 5%
    - Cahoot, 4.85%
    - ING, 4.5%

    But also consider some 'flexible' saving account, such as the Nationwide esavings. While they pay interest annually, with them you are free to put money in and out of your saving account (and you can get them in the same day in your a/c to widraw your 1500 pounds). So effectively you can draw from the capital your monthly rent instead that the interest. And the interest will annually reintegrate the capital anyway as it is calculated daily!
    Some thing can also be done with A&L Online Saving account (5.2% but limited to 25k pounds).

    Finally, to save on tax you can use:
    - ISAs (up to 3k cash and 4k funds/shares for each person; so one for you and one for your wife)
    - extra contributions to your pension scheme.

    All other financial investments will attract personal tax (at 20% minimum)
  • I just posted my ICICI experience frrom tonight - I wouldnt touch them - so glad I only put 6.5k with them.....avoid....not sying there's any potential you would lose your money, just that they are hopeless to deal with.

    1 hr and 15 mins later I wanted to screammmm...... :mad:
  • dixi_3
    dixi_3 Posts: 5 Forumite
    I am so pleased to find this thread as this is our similar situation coming up, although not with quite so much funds.. we will have about 120K to look out for while we rent and wait for a suitable renovation/plot of land to come up.

    would the above advice stand for this smaller amount of money?

    e.g. is it still wise for 3 different accounts?

    I am tempted to put it all into our ING account..

    any advice greatly appreciated

    dixi
    FONT=Lucida Sans Unicode]Lesson learned - I'm never going here again[/FONT] :D[/COLOR][/COLOR][/COLOR]
  • michaels
    michaels Posts: 29,223 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    How about new Coventry BS online current A/c paying 5.1%?
    I think....
  • home_alone
    home_alone Posts: 755 Forumite
    cat, I have about the same amount with ing, I can not speak to highly of them, quick, efficient and simple to use.

    gary
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