How best to put £255k in savings

Hughesy84

Would like some advice on where best to put money? I have £255k to invest now (85k x 3 or broken down further….whichever) :j

Im wary that the interest rates could change in 12-18 months and a much better deal could be had so I need to know what where would be the best place to invest for say 2 years?

Im happy to sign up to a 5 year bond, aslong as there are not too many penalties for coming out early and I still therefore get a good rate.

Let me know whats best guys/ girls. :beer:

SilverSix

Whilst you decide plonk it in to some online e-savers, there are 3 all paying around 3.1% AER (Nationwide, ING, Santander). Works out at around 0.2% net per month so you'll receive £500 a month interest whilst you choose where you'd like to tie it in an then it's also covered by the FSCS insurance scheme (£85k). Nationwide gives you 1 free withdrawl per year and the other two are unlimited withdrawls penalty free IRC.

This is what I've done as I needed to put my funds somewhere safe until October

Hughesy84

BennyC wrote: »

Whilst you decide plonk it in to some online e-savers, there are 3 all paying around 3.1% AER (Nationwide, ING, Santander). Works out at around 0.2% net per month so you'll receive £500 a month interest whilst you choose where you'd like to tie it in.

e-saver? Do they have minimum monthly inputs? And is it the full 85k thats earning 3.1%?

Whats the best long term bond which I could take, but get my money out in 2 years or so and still earn a decent interest rate?

gadgetmind

The main MSE site has a savings section that shows the best accounts for instant access, one year, two years, etc.

Are you married? Paying tax? The NS&I index linked certificates could shield up to £60k from tax and inflation if the answer to both of these questions is "yes".

Hughesy84

Its for my mum - Married, but not working so can use the tax allowance for this cash.

Also I can see those on main page but wasnt sure what best option was. Take a 2 year bond or take a 5 year and just take the money out in 2 years or whenever the rates change? Which would work out the best?

gadgetmind

Hughesy84 wrote: »

Its for my mum - Married, but not working so can use the tax allowance for this cash.

If she put the whole lot into a 4% account, the interest on the full amount would exceed her personal allowance by a couple of thousand pounds a year.

However, £60k can go into NS&I index linked certificates, which beat RPI and are tax free. They can do £15k each and hold £15k in trust for each other, so that takes care of £60k. They can then put £5340 each into an ISA, so that's another £10k safe. Only £185k ish to go, but this can go into a 4% account and the interest will be within her personal allowance.

Also I can see those on main page but wasnt sure what best option was. Take a 2 year bond or take a 5 year and just take the money out in 2 years or whenever the rates change? Which would work out the best?

Dunno. I did five year ones but we don't intend to touch the money for at least that long.

Hughesy84

She doesnt intend to touch it either, but with the interest rates surely going to move in a year or two, would it be sensible to tie it up so long?

Also she doesnt want the money in her husbands name....so how else could she get around it? Its basically her allowances only...

gadgetmind

Hughesy84 wrote: »

She doesnt intend to touch it either, but with the interest rates surely going to move in a year or two, would it be sensible to tie it up so long?

That's always the gamble.

Also she doesnt want the money in her husbands name....so how else could she get around it? Its basically her allowances only...

Spreading it around really is the most sensible option. Close to 90% of our money is in my wife's name for tax purposes.

Loughton_Monkey

I tend not to use 5 year fixed rates. It's too long a time - during which there is a danger of rampant interest rate hikes once it ever gets started.

As an early retiree, I have to 'optimise' savings/investments. I choose a fixed proportion of equity funds (in a long standing ISA). But as to the rest (cash) it is really widely spread in things like:

Cash ISA
Regular Savings Account [like First Direct]
2-year fixed rates
1-year fixed rates
NS&I Index Linked
Gimmick Accounts [Halifax Reward, Lloyds Vantage, Santander Current] - although these are dying now.
Investec 'High Five' [Now closed to new investment]
Limited Withdrawal Instant Access [Like Coventry Poppy/Nationwide MySave]
... and a bit in normal Instant Access (for cash flow).

gadgetmind

I guess I'm similar. We have a Coventry Poppy for instant access (was previously a Santander esaver and before that some A&L "high" interest account - we switch once a year), an AA two year account (ends Oct, need something new), and NS&I bonds (maxed out). Between these, we have three years of take home as a cash buffer with various access terms.

Everything else is in equities, bonds and gold in pensions, ISAs, and unwrapped investments.

bpm_2

I still struggle to understand why anyone would invest money in any kind of savings account with the current rates of return?

If the RPI and CPI (Inflation figures) are currently over 4% (and according to the governor of the Bank of England, due to go over 5% soon) then anything lower than this figure means your money is worth less when you invest it at a lower rate.

Its basic maths : if you invest £10,000 in year 1 and a loaf of bread costs £1, then you have 10,000 loaves of bread.
After 1 year at 3% (not including tax deductions) you have approx £10,300 but as inflation is 5% a loaf of bread is £1.05 so you have 9,809 loaves of bread. Thats less than you started with! Invest it for 5 years and youve lost loads.

Any one with a miniscule knowledge of economics knows that inflation is way above 5% due to the way they use a basket of products to measure it, which keeps changing. So youre even worse off.

We live in a time of recession, banks, savings institutions, stocks and bonds are currently the lowest performing assets. Look at history to see how many times this has happened. Invest in a commodity that is increasing in value, not decreasing.

Theres many out there, mostly metals and most people advocate gold due its relationship with the monetary system. Even central banks still hold gold reserves and they have started to increase these over the last few years. Why do you think the largest financial establishments on earth are doing this? Do you think theres something they know that you dont?