Problem having too much money!!

chrissie_jay

I am looking after my mother's finances now that she is in a nursing home. I sold her house for £350,000 and am trying to work out where to put her money. To keep it under the guaranteed amount of £50,000 this means putting it in 7 different banks. This takes a lot of time working out the rates, what sort of account it is and making sure it doesn't go to a bank that is associated to another. Am I the only person that has faced this probelm and spent days and hours researching to know where to put savings.

It may not be a good investment but in the end I put it all in National Savings Income Bond which pays the interest into her current account and it is guaranteed The interest rate is not high and it costs her about £1,500 a month over her income to pay for the Nursing Home.

Banks shouldn't be allowed to keep changing the rules and make it difficult to work out what rates are the best so you have to keep switching it from one account to another it's driven me mad!!

amcluesent

>To keep it under the guaranteed amount of £50,000 this means putting it in 7 different banks<

Th risk of losing savings in a UK bank is minuscule now. HMG will just print more!

Too bad you overlooked the Investec Hi5 (closed now ), as that removes all the hassle of chasing rates.

Biggles

Consider an Immediate Care Needs Annuity, which involves a lump sum that she will easily be able to afford and which will ensure that she never runs out of money. Benefits are paid direct to the care home thus are free of tax. http://www.nhfa.co.uk/

Hungerdunger

Every one percent of extra interest you manage to achieve on the sum will provide you with an extra £2,800 of interest (after tax) each year.

I appreciate this is not your money and that you are only doing it for your mother, but think how many hours you would need to work to earn that amount, and maybe the work involved in finding the best accounts doesn't seem so bad.

Banks don't "keep changing the rules". However they are in business with each other and will change rates or offer new accounts when necessary. If you want to get the best rates you need to play them at their own game.

torchie

Like the previous poster, it is time well spent. My wife and I have ended up using 11 different providers plus Premium Bonds. Get it all onto a simple spread sheet listing the "end-dates" of any introductory bonus offers and the interest rates and take a few minutes each month (as a minimum) to check the rates on the various accounts - if you can do it more frequently, so much the better. Some banks/building societies show your interest rates on your online account home page although I have heard that one or two have stopped that feature which I thought was actually very useful.

You may want to look at a mixture of fixed term and immediate access depending on the needs - I am sure the time spent will be repaid with the knowledge that you have taken the best possible care with your mother's finances.

Mickygg

Defo spread this across various banks. For eg you could lock away for a year at 3.3% with west bromide, aa account at 2.8% with instant access, 2.5% with ing and instant access, 3.2% fixed for 18 months with nationwide.......
It doesn't take that long, and the extra ££££ you would get would be that much more to offset against the nursing home fees.

RayWolfe

Biggles wrote: »

Consider an Immediate Care Needs Annuity /QUOTE]
Excellent suggestion, well worth looking into and will cost nothing to find out about it. PM me if you need any further info.

Aegis

DrDolittle wrote: »

I will soon be in a similar position to the op. I have discounted one of these and want to check that I am thinking along the right lines.

If there is a shortfall of 12k from pension income, even with the currently low interest rates,that should easily be achieved by placing in 50k chunks in various places. Why then gamble on someone's life expectancy and lose initial capital?
Do people agree?

If you have enough to cover the fees from pension and interest without eating into capital, then there's no current need to purchase an annuity. However, with a lot of people it's a case of, say, being able to pay for fees for around 10 years if needed with all capital used up at that stage. An annuity may well be the only sensible option in those circumstances, as the annuitant at least knows that their income is secure at the required levels for the rest of their lives.

Biggles

DrDolittle wrote: »

If there is a shortfall of 12k from pension income, even with the currently low interest rates,that should easily be achieved by placing in 50k chunks in various places. Why then gamble on someone's life expectancy and lose initial capital?

If you can easily cover the fees shortfall without touching the capital, that could indeed be the best option. In our case, we would have needed to gradually reduce the capital, meaning that we would have been gambling that she wouldn't live long enough to run out of money. That wasn't a gamble I'd have been happy taking.

RayWolfe

DrDolittle wrote: »

Why then gamble on someone's life expectancy and lose initial capital?

You can think of it as a gamble. Do you have fire insurance on your house? You do! Is that a gamble?
No, the way we have seen it is to protect a slice of the capital. With a long life, it could all go in fees; a shorter life; break even on the policy; short life, insurance company wins ... but at least we have some certainty.

Biggles

DrDolittle wrote: »

Oh and the other thing that put me off was the possibility of the person having to move to a different home in the future. Are these things portable?

I don't think there's any problem there, the fees just need to go straight to a care home in order to be tax-free. It can be any care home.