property proceeds, what to invest?

rudedog_2

Hi Moneysavers,

we are selling are flat in Edinburgh this summer and will not be using the proceeds for between 3-6 months after.

We will have around £200,000 to invest for this period. We are not looking for a high risk investment but are looking to work this money harder than in a regular savings account. As this money will be used to then buy another home, we will not need instant access to it. (max 1 month access)

What would everyone suggest?

Rudedog

hotwax_2

Funnily enough I was going to ask pretty-much the same question!

After the sale has gone through, we will be renting for a short period while we look for a house in a new location. I was thinking putting the money into the best performing savings account?

I was also wondering on the tax implications as my wife is a lower-rate taxpayer. If we were to put into a savings account, would there be any problem opening in her name and putting it all in there with such a large amount (£200k-ish)?

I was only considering savings accounts, but if anyone has any other low-risk suggestions?

- Perhaps 30k in premium bonds if a high-rate taxpayer?
- Use full ISA limits?

Are my only 2 suggestions i'm afraid

rudedog_2

hotwax wrote:

I was also wondering on the tax implications as my wife is a lower-rate taxpayer.

Both of us are basic rate tax payers, just done very well on the property market to get this £200,000+.... Not sure of the implications on giving your wife the money.

Chrismaths

One at a time!!!

I think this applies to both of you:

We are not looking for a high risk investment but are looking to work this money harder than in a regular savings account.

Afraid it doesn't work that way. If you want more return than the risk-free rate, you have to take some risk. Given you only have 3-6 months to invest, You can't really go past a cash account. I'm sure someone will post the best one around at the moment, not my area of expertise.

If you are prepared to take a little risk - then risk what you can afford. So keep the bulk in cash, save £3k each into mini cash ISAs and invest £4k into mini stocks & shares ISAs for you and your wife and invest that money in a well managed unit trust/oeic/investment trust etc.

Or if you like the premium bonds idea (where essentiallly you gamble with your interest), then at 5% gross per annum, you will earn around £667 of net interest per month. Over 6 months you'll get around £4k interest, so invest this.

Hotwax - there is no problem in putting all the money in your wife's name (assuming you trust her!). Just check that the interest on the account you select is not tiered.

HTH, Chris