Best place for £22k

jstallan

My parents (late 70's) have £22k and looking for the best place to invest it. Their requirements are that they may wish to access some of to cover unexpected repair bills on the house. Having said this, I very much doubt this will happen as they haven't touched it in the past 5 years (and every room in the house got decorated, new carpets, new windows, new kitchen, new sofa)

What options are available ?

lewt

Lewt's bank is doing a good rate of interest at the mo:D

i'm very interested

dunstonh

What options are available ?

tens of thousands potentially. It needs filtering down more to help as narrow the options.

What is the taxation status? Attitude to risk, guarantee requirements?

jstallan

They don't like risk.... they did do, years ago but after losing a load of money (60k I think), they prefer something that they feel they can trust... What they are looking for is something like ISA or a savings account..


Tax - I understand they are taxpayers (22%)

Sorry, if this isn't much to go on, but they are fairly frugal with they financial info with me. However, they are pretty open with their bank manager!!

ReportInvestor

Two x £3K mini-cash ISAs with NSI @ 5.55% tax free.
£6K in a Lansbanki IceSave account @ 5.45% gross until April 6th 2007 (then into two more mini-cash ISAs.
£16K in a Coventry e-Bond with a fixed interest rate @ 5.8% maturing in January 2008.
Keep the Landsbanki account open so that you can add £6K in Jan 2008 (waiting for the April 2008 ISA season).
Continue this pattern - always adding to the cash ISAs.

If they want something more fiddly they can add 12 month regular saver accounts like Ipswich BS @ 8.25% or Britannia BS @ 7.5%. You could put £1K per month into these (4 lots of £250pm) but you'd need to have an interest paying current account to keep £12K in order to feed the standing orders. So it may not be worth the trouble.

dunstonh

They don't like risk.... they did do, years ago but after losing a load of money (60k I think),

How did they manage to lose money? Its actually quite hard to lose money on the stockmarket over medium to long term when invested in an appropriate way. The only thing I can think of that caused them to lose so much was to invest in tech stocks. That is top end risk investing and even I didnt do much there (and thanks to rebalancing did quite well out of the little I did). Ignoring other investments because they lost money on tech stocks is a bit like saying you arent going to eat anything ever again because you had a vindaloo and didnt like the spicy food.

There are investments which have capital security on death so they could have a dabble with a bit of it and know that if it did go wrong for them, the full amount would be payable on death to the surviving spouse.

Risk also occurs on savings accounts. Just to a much lower level. You have the risk of the interest rate payable after tax being lower than the real inflation level. Inflation for pensioners is quite high.

I doubt you would be able to change their mind given what you say. Their bank manager certainly isnt the best way to go. However, risk is not an on or off situation. Its a sliding scale and there are options at the very low end of the risk scale which arent savings accounts but offer potentially more.

If one of their incomes is close to or just over £20,100 (including state pensions and all savings and income) then having it on deposit will eat away at the age allowance and create an additional tax on top of basic rate.

jstallan

Report Investor - Many thanks...

dunstonh - Many thanks also.. Money was lost in a property venture in the mid 70's

ReportInvestor

dunstonh wrote:

If one of their incomes is close to or just over £20,100 (including state pensions and all savings and income) then having it on deposit will eat away at the age allowance and create an additional tax on top of basic rate.

This is not dh's best ever choice of phrase.

It could mean that there was more tax to pay than otherwise. It would not mean that there would be any tax to pay higher than the base rate.

ReportInvestor

Just seen that the Coventry 5.8% Bond is reported on MSE as closed to new applicants yesterday.

So that leaves Derbyshire BS's 5.75% bond as the best alternative.