Best place for approx £60k?

rathernot

I have around £26k sat in a BOS account that was on a fixed rate 5.85% which expires in November this year.

Also have around £33k sat languishing in a Lloyds Current Account due to my own laziness (almost worth the loss of interest to see them desperately trying to lure me in for an "account review").

Question is, what to do?

I have a cash ISA with Aldermore which I usually max out.

I've no mortgage or debts to pay off, so it comes down to where to put it to get the best possible return whilst also being able to access it should I need to - though to be clear, I don't envisage needing to so I'd be happy to have a "loss of interest" penalty should I do so.

Appreciate any suggestions.

D1zzy

rathernot wrote: »

Also have around £33k sat languishing in a Lloyds Current Account due to my own laziness (almost worth the loss of interest to see them desperately trying to lure me in for an "account review").
Appreciate any suggestions.

How come you haven't at least put £21K of this into 3 x LLoyds classic vantage accounts @ 4%...............................................
maybe you do need a financial review :rolleyes:

rathernot

Laziness quite frankly, not quite sure what you want me to say as there are hardly any good reasons for it, not much of an excuse but there you go

One thing I don't want to be having to do is "drip feed" or muck about looking after lots of accounts for a small gain, and the Vantage appears to have a £7k limit and I don't want to have three additional accounts to look after.

I noticed Lloyds do an "Incentive" saver at 3% which isn't the best, but the best seems to be around 3.2% so it's not as if it's that far off.

amcluesent

>muck about looking after lots of accounts for a small gain<

Investec High 5?

My investment thinking is now to minimise taxation and expect inflation, so NS&I index linked for the medium term

>I've no mortgage or debts to pay off<

Maybe your risk profile would allow more than just savings, perhaps putting a small amount in Zopa?

D1zzy

rathernot wrote: »

Laziness quite frankly, not quite sure what you want me to say as there are hardly any good reasons for it, not much of an excuse but there you go
One thing I don't want to be having to do is "drip feed" or muck about looking after lots of accounts for a small gain, and the Vantage appears to have a £7k limit and I don't want to have three additional accounts to look after.

I thought that once but there really is no "looking after" to do - open the accounts put 7k in each and then either by standing order or manually ( takes 30 secs on a single login once a month) move £1000 ACC1> ACC2>ACC3>ACC1. Collect approx £60 net:D

jamesd

amcluesent wrote: »

Maybe your risk profile would allow more than just savings, perhaps putting a small amount in Zopa?

Not likely to be worthwhile when it's possible to get 5.2% for term deposit accounts with FSCS guarantee for five years from Yorkshire Building Society or 4.7% for three years from Barnsley Building Society.

Average rates at Zopa for the A* 3 year market were 6.7% last week before fees and bad debt allowance. Fee is 1% before tax, bad debt allowance is 0.5% after tax. That's 4.06% after basic rate tax and bad debt allowance via Zopa compared to 3.76% from BBS. After higher rate tax it's 2.92% vs 2.82%. A difference of 0.3% for basic rate, 0.1% for higher rate doesn't seem high enough for the uncertainty and lack of FSCS guarantee.

Average rates at Zopa for the A* 5 year market were 8.3% last week before fees and bad debt allowance. Fee is 1% before tax, bad debt allowance is 0.4% after tax. For basic rate that's 5.44% via Zopa compared to 4.16% from YBS. For higher rate that's 3.98 via Zopa vs 3.12% via YBS. Those differences might make it worthwhile for five year lending, provided losing the FSCS guarantee is acceptable.

As the bad debt allowances rise for higher risk markets the Zopa lending option becomes increasingly bad due to the bad debt being taken after tax, that is, not deductible from income at all.

For both Zopa cases it's also probably not going to be able to achieve those rates for the whole term because the money gets paid back and can't be relent for the remainder of the term, so it would presumably end up in an instant access savings account. This may be enough to eliminate the potential gain, because instant access accounts pay less than term deposit accounts.

There are times when rates achievable via Zopa have a greater difference than this and are much more likely to provide a worthwhile margin for losing the FSCS guarantee and having to do a lot more work. Now isn't one of those times, though.

Disclosure of interests: I'm a borrower and former lender via Zopa. It's unlikely that I'll be doing borrowing or lending via there at the moment.

soulsaver

3year saga fix 4.65%, 90day loss of interest on amount withdrawn.
I year fix NS&I 3.95%?

Gorgeous_George

Hi

jamesd seems to have issues with Zopa.

A quick look at my loanbook shows 330 x loans in the 36 months market at an average rate of 7.94%. That's 6.94% after fees. If my bad debt is less than 0.44% I will achieve at least 6.5%. 234 are to A* borrowers and a further 73 to A rated borrowers.

I have 56 x loans with a 60 months term averaging 10%. These are more likely to default IMHO but I should achieve around 8% after fees and bad debt.

Feel free to pm me if you have any questions about my Zopa experience.

GG

zaphod_beeblebrox_2

ING DIRECT, 3.2% APR interest paid monthly, I have a shed load in this and very happy

Little_Vics

massively off topic for which I sincerely apologise, but was drawn here by one thing - Zaphod BeebleBrox! FAB FAB FAB user name! Apologies to OP for slight diversion in discussion.

jamesd

Note the requirement "whilst also being able to access it should I need to". Zopa is unsuitable for this purpose because the money is tied up until it has been repaid by the borrowers.

Gorgeous_George wrote: »

jamesd seems to have issues with Zopa.

Correct. Zopa ignores taxation of bad debt when it reports the rates after fee and bad debt allowance in the lender screens, so lenders end up with less bad debt provision than Zopa tells them to expect unless they are a zero percent tax payer. Zopa's lending FAQ still says that up to 10% of the loan will be purchased by the debt collection agency if a borrower defaults and that hasn't been true since April. As with the taxation of bad debt, Zopa didn't mention this to investors until after lenders found out about it via discussions among themselves.

Gorgeous_George wrote: »

A quick look at my loanbook shows 330 x loans in the 36 months market at an average rate of 7.94%. That's 6.94% after fees. If my bad debt is less than 0.44% I will achieve at least 6.5%. 234 are to A* borrowers and a further 73 to A rated borrowers.

I have 56 x loans with a 60 months term averaging 10%. These are more likely to default IMHO but I should achieve around 8% after fees and bad debt

You replied with your returns including times when rates were higher than they are now. I'm quoting current rates when telling people that now is not the right time to be putting money into Zopa, so people have a better idea of what to expect if they put their money in now.

My own past performance on initial lending from 8/8/2008 to 9/7/2009 was 14.52% before Zopa fee and bad debt allowance and 11.65% after Zopa fee and bad debt allowance, ignoring tax on bad debt. If we limit the comparison to A* and A markets my initial lending during the same period was at an average of 11.35% before fee and bad debt allowance, 10.16% after. Do note that these returns are not possible for those lending at the moment.

With all due respect, our relative performance on both returns and disclosing risks makes it clear which of us is giving the best guidance on what's most likely to achieve good results. A key factor is choosing to lend at the times when rates are favourable and they simply aren't right now, so it's better to wait until they are.

Still, if anyone does want to ignore market conditions and invest there at a bad time, I'll pay all of any referral fee I receive from Zopa to any lender who uses (referral link removed, offer withdrawn now) and who sends me a PM mentioning this offer and their Zopa account name. Payment will be by faster payments to a bank account, so don't use this link unless you're willing to accept payment in that way.