£25,000 lump sum, what is the best plan?

ultrarunner

Bit of a longtime reader, first time caller here....

I'm due to receive a legacy of £25,000 shortly, and I'm wondering how my plan sounds to the wise old heads of MSE.

I'm hoping to save it towards buying a bigger property next year, so my plan is to hold it in cash - in a mix of ISA and a Nationwide MySave account.

There is also the possibility of the legacy being doubled in the next year or so, which might mean bringing my movedate forward, so I'd like to keep my funds easy access and not tied in, so I think bonds and the NS&I products may not be suitable.

Any tips or hints?

efutures

While it would be nice to have one set answer to the question, the more serious reality is that it depends on your goals as an investor. How long can you keep your money untouched? How aggressive can you afford to be? What do you know the most about?

I know it may sound generic but if you start with those goals, you can find programs that work. I could advise you of 10 managed futures accounts that could potentially double your money in 2 years and a stock broker might accomplish the same thing in a different way. Of course, both of these may be too risky for your capital and you might rather just get a guaranteed 5-10%.

Aegis

efutures wrote: »

While it would be nice to have one set answer to the question, the more serious reality is that it depends on your goals as an investor. How long can you keep your money untouched? How aggressive can you afford to be? What do you know the most about?

I know it may sound generic but if you start with those goals, you can find programs that work. I could advise you of 10 managed futures accounts that could potentially double your money in 2 years and a stock broker might accomplish the same thing in a different way. Of course, both of these may be too risky for your capital and you might rather just get a guaranteed 5-10%.

Not sure where you're looking, but I haven't seen a guaranteed 10% return for a very long time. It's also fairly irresponsible to recommend a managed futures portfolio for someone who states that their goal is to move house in a couple of years, as that is not in line with their investment objectives and considerably magnifies the risk of an already very risky asset class.

All in all, the OP should stick to cash savings accounts.

OP, bear in mind that the NS&I index-linked certificates pay tax free inflation-proofed returns if you hold them for at least a year, after which you can break them with only a penalty to the amount of interest you receive over and above the inflation level, therefore they may well be suitable. Otherwise, yes, cash ISAs and either 1 year fixed rate accounts or decent easy-access accounts are likely to be your best bet.

shaun_from_Africa

both of these may be too risky for your capital and you might rather just get a guaranteed 5-10%.

I would have thought that any investment offering a "guaranteed 5-10%" must involve a reasonable element of risk.

cslogg

Sorry to jump on your post but I will also have a lump sum of £25000 but I want to save it not invest it.
I can lock it away for 4-5 years.
I am already up to my limit on NS&I certificates and cash isas so cannot put any money away there.
Is there any other form of tax free savings?


cslogg

CLAPTON

ultrarunner wrote: »

Bit of a longtime reader, first time caller here....

I'm due to receive a legacy of £25,000 shortly, and I'm wondering how my plan sounds to the wise old heads of MSE.

I'm hoping to save it towards buying a bigger property next year, so my plan is to hold it in cash - in a mix of ISA and a Nationwide MySave account.

There is also the possibility of the legacy being doubled in the next year or so, which might mean bringing my movedate forward, so I'd like to keep my funds easy access and not tied in, so I think bonds and the NS&I products may not be suitable.

Any tips or hints?

basically only instant access savings a/c suit your requirements; ISA for the some and then the rest in the best interest rate a/c

greenface

efutures i think the OP may have double the amount of money to them rather that doubling their £25k in a short time (although that would be nice too) but good advice & welcome to mse

ultrarunner

Hi all, thanks for the advice, I might look into the NS&I if there is a decent parachute option. Hadn't thought of that. Other than that it seems my options are roughly catered for already.

Cslogg - seems like we're in a similar situation....

Aegis - so I would get the RPI rate as tax-free interest after a year, but would not get the extra 0.5%?

Yes, if there was any confusion, I may be due an extra £25,000 later this year or early next year. And the aim is to keep it risk-free as this sort of opportunity does not come across often.

ses6jwg

cslogg wrote: »

Sorry to jump on your post but I will also have a lump sum of £25000 but I want to save it not invest it.
I can lock it away for 4-5 years.
I am already up to my limit on NS&I certificates and cash isas so cannot put any money away there.
Is there any other form of tax free savings?


cslogg

premium bonds are tax free but they return about 1.5% on average

psychic_teabag

cslogg wrote: »

Sorry to jump on your post but I will also have a lump sum of £25000 but I want to save it not invest it.
I can lock it away for 4-5 years.
I am already up to my limit on NS&I certificates and cash isas so cannot put any money away there.
Is there any other form of tax free savings?

A couple of people on here have mentioned that it's possible to hold extra NS&I certificates in trust for someone else. No idea what it entails, but e.g. seems to be a way for partners to effectively double their allowances.

ultrarunner

Well, the money was paid yesterday, I've bought the NS&I certificates and gone in for the full £15000, diverted some to the ISA and the easy access account. Thanks for the tip on the early get-out Aegis.

Bit weird hoping for inflations to be high so I can get a decent return though...