What to do with the proceeds of a house sale?

youngsod

What to do with the proceeds of a house sale?


Fellow Moneysavers,

I'm in not the worst position of having just sold a house in Scotland so I have a cheque for £50k arriving soonest. I've moved in with my better half in Cambridgeshire, and out current plan is to save for another 6-12 months before selling her house and buying a new one down here. This means that I have to invest £50k for this time period. Given the uncertainty about I automatically turned to good old Martin Lewis and the MoneySaver forums. Now obviously I'm studying Martin's guide intently (http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#spreading) but I thought I'd run this past the forum and see what suggestions arise.

My thought is that as I haven't used my Nationwide Cash ISA this year, I can put £3600 in this before April 6th, then another £3600 after this date. However that still leaves a fair old sum, and one which I'd like to spread about a bit to reduce risk.

Any thoughts?

Cheers

Douglas

cocktail

after the ISA go for Premium Bonds mate. remember you want the capital back in 6-12 months and not less then you invested. also you wount miss the interest

Rafter

Just because you have an existing ISA with nationwide, doesn't mean you have to use them for current year - just go for the best rate.

Don't worry too much about spreading it around - you are under the FSCS £50k guarantee.

Personally I'd steer clear of banks that aren't fully covered by the UK scheme though or ones you have never heard of.

Premium bonds is an idea, but you should be able to get a 6 month bond or simply a best buy savings account offering you at least a 3% return on your money.

A six month investment period is simply too short to recommend any kind of stock market product or other tax efficient product.

Good luck

R.

EalingSaver

Assume you didn't really mean invest, but rather save? As others have said, 6-12 month window is not one to 'invest' over.

Are you a taxpayer, if so higher or lower rate? Is the 6 months a real minimum or might you want access sooner?

Possibly worth really getting your head around whether it could really be 6 months or whether you think a minimum of 12 months additional saving is required. Likely to get a better rate on a 12 month fixed term deposit than 6.

If a taxpayer, makes sense to use your cash ISA allowance for this year and next. Personally I always go for minimum 1 year fixed rate ISAs 'cos providers particularly pay fast and loose with ISA interest rates once they have got your money, but if you want your money in 6 this probably won't be an option.

So really you are simply into checking out best buys for either fixed rate term deposits or instant access - in latter case you may want to consider those with a high 'bonus' add-on to provide some insultation against underlying rate on an account dropping.

There is also the option of 'money market rates'. Most banks offer this i.e. regardless of their 'off the shelf' fixed term rates, if you have a substantial sum (normally I think in excess of £50k) you can actually phone them up and ask them for best rate for a 'custom' fixed term. I know my bank First Direct offers this, though have never used. If you are going to put more than £50k in though, make sure its a real big boy e.g. HSBC, Lloyds etc. DO NOT under any circumstances risk your captial.

If you are a higher rate taxpayer than PBs may be worth considering. Just do it with eyes open i.e. your 'expected' return won't be as high as you can get elsewhere (even after tax), your actual return may well be lower than the 'expected', but you may be one of these who ends up getting a better than average return.

But if you do look to PBs remember to get them at the 'right time' i.e. buy right at the end of the month (best way to do this is to go to the PO as your purchase counts as soon as you hand the form in) and cash in right at the start of a month. This way you max the number of 'draws' they are eligible for. If you purchase naively then you can in effect miss out on 2 months worth of potential returns.

Oh, and the max you can hold in PBs is £30k.

soulsaver

If you ask for money market rates, a 'custom fix':
A) What sort of premium over standard rates are we currently talking about?
Should you accept the MM offer are your funds deemed to be 'on deposit' and protected by the FSCS depositor guarantees; or by investment guarantees?

Mikeyorks

If it's 6-12 months ..... then the Ulster Bank at 3.46% looks your best bet. It's 'easy access' but you're penalised if you withdraw in the first 6 months.

But there aren't really any fixed rates around that are better + less than 12 months.

G_M

Ulster bank is very confusing. There appears to be lost interest when you withdraw whether within or after 6 months: "your money is there when you need it, interest will be lost in any month a withdrawal is made."
Also the rate includes a 6 month bonus, so after 6 months the rate drops.

Try Investec's High Five. You can get a bonus on application too. The rate tracks to top-paying accounts each month. Three months notice required.

Blah99

Have a read of my post here:

http://forums.moneysavingexpert.com/showpost.html?p=19559557&postcount=6