Mum and Dads savings

threlfaw

Hello,

I am just after some advice.

My mum and dad have a lump of cash in a savings account that they use the interest off to bolster their pension.

They want to know if they should be getting a better return on it.
The amount is approx. £100k and they are getting about £150/month in interest.

Should this be better and if so what is the best way to invest the cash without spending it.


Thanks.

le_loup

Start here:
Top of the page Banking/Saving.

Loughton_Monkey

threlfaw wrote: »

They want to know if they should be getting a better return on it.
The amount is approx. £100k and they are getting about £150/month in interest. Should this be better

If higher rate tax payers, then that's 3%. Good.
If basic tax payers, that's 2.25%. Not very good.
If non tax payers, that's 1.8%. Disasterous.

So as already suggested. Use this web site to find alternative(s).

threlfaw wrote: »

and if so what is the best way to invest the cash without spending it.

Don't understand. By investing it, surely you have invested it as opposed to spent it. If you mean 'avoid the temptation to dip into it....' then fixed term bonds usually prevent this, at least until maturity. Otherwise, it is more a matter of self control.

D1zzy

Some things to consider:
What's their Tax status - non payer; basic rate payer, or higher rate payer?
Do you want to consider "investing" (stocks & shares etc) or do they just want it in a savings account paying monthly interest?
Would they like to lock some of it up for (1-5 years) - to get a better rate & if so would they still want monthly interest on that bit.

If you can provide us with that info - you may get some helpful options

threlfaw

Thanks for the reply's people.

My mum and dad are both retired and claiming their pension.
The money is currently in savings and they take the interest off it monthly, they want to carry on doing this.

D1zzy

threlfaw wrote: »

Thanks for the reply's people.

My mum and dad are both retired and claiming their pension.
The money is currently in savings and they take the interest off it monthly, they want to carry on doing this.

How old are they & do they pay Tax?
If their individual income (including state pension + savings interest + any other pension +any other income) exceeds the figures below then they will pay tax, and that can affect their options.

Allowances
2009-10
Personal allowance (age under 65)
£6,475
-

Personal allowance (age 65-74)
£9,490
-

Personal allowance (age 75 and over)
£9,640
-

jennifernil

I think they almost certainly could do better.

At the moment I have 50k in a 1 year bond earning 4%, so £2000 for the year, another 21k in Lloyds also earning 4%, we have almost 50k in ISAs earning 3.25% plus 10k earning 3% and 10k going in over 12 months earning 4%.

As a non-taxpayer, all my interest is gross.

We also have £30 per month coming in from Halifax Rewards.

I know it will probably be tricky to get as good returns next year, but hope not to drop too much.

Even after tax the Lloyds Vantage is over 3%, so will get OH to open 3 accounts.

Also planning to open the Lloyds 5% regular saver.

Mikeyorks

threlfaw wrote: »

The money is currently in savings and they take the interest off it monthly, they want to carry on doing this.

They're not really getting any net benefit from the interest ...... as the £100k capital is being eroded by inflation at a faster rate than it's growing? Mainly because it's not growing at all - as they're creaming the interest off!

With £100k they should have it invested in a manner that protects the value of the capital - whilst giving them some income. Worth consulting an IFA for advice (but go nowhere near any Bank advisers)

Loughton_Monkey

An ICICI savings bond, 2 years fixed, at 3.5%. Split 50% each to avoid £50K limit.

Would pay £291.67 per month, subject to tax at a rate we have not yet established.

You could get more for 3 year period, but that (and the 2 year to a smaller extent) runs the risk that better deals may becvome available later in the period.

opinions4u

They really should see an IFA.

www.unbiased.co.uk.

They have a large sum of cash, in an environment where inflation is eroding its value faster than it can earn interest.

There's a lot more out there than bank accounts, and time spent with an IFA will help them to access what's best for their circumstances.