Investment of a large (ish) sum of money

LooRoo

Hi all

Lurked around here for a while but this is the first time i've needed some advice.

My Mother has recently split from her very long term partner and the house has been sold and the moneys divided. She picks up her share of money tomorrow from the solicitors but she's a bit unsure about where to put the money for the next week or so.

We're not exactly sure on the amount but it'll be between £75000-100,000. She's moving to a little house next week which she has brought for £65000. Now obviously she needs this 65k next week to transfer the funds to the person she's buying off.

Would it be worth her while whacking the full amount cheque into her normal bog standard saving account for the next 7 days while the money for the house is sorted or should she open a high interest account so she gets maximum interest from the full amount while she has it (approx 7 days)?

Obviously with the money left over we have a bit more time to work out where to invest it but the house has completed rather quickly so she hadn't even had time to look around or open a higher interest savings account for her share of the money from the house.

Sorry it's a bit rambley...obviously my Mum has never had to deal with this amount of money before and probably won't again so she was a bit unsure what to do!

Thanks in advance for your help :beer:

Penelope_Penguin

Hi, my recent experience of opening savings accounts would suggest that your mum won't be able to just walk into a branch and open an account offering high interest.

Firstly, the highest interest rates these days tend to be on-line, as there are fewer overheads without high street premises. Due to money laundering regulations, to open an account will need at least 2 pieces of identification, possibly countersigned in a similar way to a passport application (I needed a signature of a doctor, teacher or accountant recently). By the time they have been received and checked, your 7 days will be up.

Lower rates of interest are often available on the high street, but I found that an appointment was necessary, and so had to wait a few days.

It is no longer the case that you necessarily get a higher level of interest by giving notice that you want to withdraw money, so instant access accounts are often best buys.

ICICI bank is currently giving chart topping interest rate of 5.15%, but be warned that they are slow to get accounts opened, and many people have had problems. Try reading their thread on this site.

Sorry, but this all seems to be negative for your partiular circumstances.

Best wishes, Penny. x

Mikeyorks

LooRoo wrote:

Now obviously she needs this 65k next week to transfer the funds to the person she's buying off.

Would it be worth her while whacking the full amount cheque into her normal bog standard saving account for the next 7 days while the money for the house is sorted or should she open a high interest account so she gets maximum interest from the full amount while she has it (approx 7 days)?

Short term response only.

First point. No - hopefully she's using a Solicitor and will need cleared funds with the Solicitor at the point of completion - not the vendor. She needs to discuss with her Solicitor how to ensure that happens?

Which dovetails to the second point. Put the money in her standard savings account (provided its not a 'notice' account) until the critical issue of the purchase is resolved. (You don't have time to set up a better rate account - its too short notice for safety.) Then sort out where best to deploy any residue for best interest etc - at relative leisure. If her savings account needs notice to be given (or does not allow £65k to be moved out in a single transaction) - just drop the money into her current account until she's sorted out with her Solicitor how he wants funding for the purchase?

Robert_Sterling

At best this amount of money will earn £10 to £12 per day before tax or £8 to £10 after tax at 20%.

Zwicky

Keep the 65K with current bank, savings account if it's instant access, current account if not.

For the 10-35K she will have left start the process of opening a a savings account paying a higher rate asap because it will take a while to complete. The highest rates are internet online accounts but a lot will depend on how comfortable your mother is with managing an online account (or maybe you could do that for her?).

Firstly, if your mother is a tax payer, put £3000 in mini cash ISA because the rates are good and it's tax free. Try NSI, at 5.05%, telephone or online:

www.nsandi.com

For the rest, if she doesn't like the idea of an online account there are some good rates for postal accounts - a bit slower to access but still nearly instant. IngDirect is currently 4.5% for online, postal or telephone accounts:

www.ingdirect.co.uk

Online try Birmingham Midshires, currently 4.95% with a twelve month bonus of 0.60%. They also have a 5.21% 12 month fixed rate bond if she is happy put some of it away for 12 months:

www.askbm.co.uk

Check with her current bank to see if they have anything better available. If it's HSBC for example, they have a 4.75% account but be aware that although this is easy access the big catch is that there is no interest payable for the whole month if you withdraw even £1! So this account is only for savings that you can leave alone. This same account is also available from First Direct online (FD is part of HSBC):

www.firstdirect.co.uk www.hsbc.co.uk

With all these accounts you cannot open, invest and forget because they all have a tendancy to drop rates sooner or later and so you or your mother will have to keep an eye on the rates and be ready to change accounts from time to time.



Hope this helps.