Maturing 25k ISA... I'm clueless! Where to put the money?

esuhl

My mum was a genius with money and so I was happy to let her do whatever she thought was best with my savings. Unfortunately she died a few months ago, and an ISA I have is due to mature on 30 December and I have no idea what to do with it (or much about how ISAs work, etc.).

I was going to withdraw the lot (~£25k) and stick it in a current account (at 2% interest) while I get my head round dealing with her estate, but... am I right in thinking that if I did, I wouldn't then be able to put it all back in an ISA? So even if I choose the worst possible ISA, it would be better than withdrawing it and losing the tax exemption?

The money's with Nationwide at the moment, and they offer a fixed-rate 3yr ISA paying 3.40%. Does that sound like a good deal?

I really don't have the faintest idea how to begin to decide what to do with the money, but I need to send the form off so it arrives by December 30th!

Is there anything other than an ISA I should consider? (Until I get my head round how to manage this much money, something low-risk and low-maintenance would be preferable.)

Can anyone offer any (simple!) advice?

P.S. Thanks for reading such a long post!

Mikeyorks

esuhl wrote: »

Can anyone offer any (simple!) advice?

Put it into a variable rate ISA (at least 3%) while you get your head round it - and deal with the Estate. If you take it out of the ISA - you can only replace to the maximum of your annual allowance (£5340). Which isn't a sound step if you're a taxpayer (or potential).

I take it the ISA is in your name - as you mention 'the estate' in close proximity.

PS

Just looked at Nationwide. The 3 year fix isn't good. Their instant access ..... pathetic. If you're pressed for time etc - consider their 1 year fix at 3%. Or hold it in their E-ISA (1.75%?) for a short time before transferring it elsewhere .... but you need a further (card) account with them to hold the E-ISA?

Nine_Lives

If you can't yet get your head around an ISA, then i wouldn't even contemplate investing just yet.

My advice - keep your money in an ISA. You're correct, if you withdraw it you wont be able to put any into this years cash ISA if it's fully subscribed. If it's not, you'll only be allowed to put £5340 back in, but what's the point?

If you stay instant access ISA (you can touch it whenever you like) then it's just like a current account in a way, except it's earning more interest). The key thing here is you're not paying tax on the ISA. You will be on a current account, unless you're a non tax payer.

As it's clearly some old money in there from previous tax years, i would find the highest paying ISA that allows transfers in from previous tax years (was Halifax at the time i did this paying 3.2% for Halifax customers) and put it in that.

Look at it like this, you're considering NOT having your ISA in a 3% (roughly) saver, earning interest tax free, and instead putting it in a current account paying 2% interest and ALSO getting TAXED on that.

Now ask yourself the question again once you've read that. Which sounds the better option to you?

And you wouldn't choose the worst possible ISA anyway, because people on here will advise you otherwise.

Nine_Lives

http://www.moneysavingexpert.com/savings/best-cash-isa There you go, have a gander at that. The top paying ISA there is 3.05% & also allows transfers in.

We're also dealing with my dads estate after he died at the end of Sept.
My advice is don't make any rash decisions, certainly not regarding money.
Don't make any decisions on a topic you don't understand. It'll end in tears.

Keep asking questions here on MSE until you do understand. It's free & the people are helpful.

esuhl

Thank you all so much for your comments.

Mikeyorks wrote: »

Put it into a variable rate ISA (at least 3%) while you get your head round it - and deal with the Estate.

Can I ask why a variable-rate ISA would be best? Is it because you think interest rates likely to increase in future?

Mikeyorks wrote: »

I take it the ISA is in your name - as you mention 'the estate' in close proximity.

The ISA was originally a joint a/c I had with my mum, but it got transferred into my sole name when she died. So half the money is really mine, while half needs to go to the estate. My sister and I are the only benefactors, and she is happy for the money to be "tied up" in an ISA in my name for now (we get on really well, so there's no problem there).

Mikeyorks wrote: »

Just looked at Nationwide. The 3 year fix isn't good. Their instant access ..... pathetic. If you're pressed for time etc - consider their 1 year fix at 3%. Or hold it in their E-ISA (1.75%?) for a short time before transferring it elsewhere .... but you need a further (card) account with them to hold the E-ISA?

Unfortunately I don't have a card to get Nationwide's online instant access ISA, but I didn't realise you could transfer between instant access ISAs at any time without losing the tax-free allowance on the whole lot. If I do nothing, the money will be transferred to an instant access ISA anyway. It'll be a terrible interest rate, but at least that buys me a bit of time to decide what to do. Phew! Panic over!

K_P83 wrote: »

My advice - keep your money in an ISA. You're correct, if you withdraw it you wont be able to put any into this years cash ISA if it's fully subscribed. If it's not, you'll only be allowed to put £5340 back in, but what's the point?

That's great - thanks for confirming that. Wow! I was close to making a stupid decision - I guess it's time to accept that looking after my money is my job now... I worked hard enough to earn it and I don't want to throw it away!

K_P83 wrote: »

http://www.moneysavingexpert.com/savings/best-cash-isa There you go, have a gander at that. The top paying ISA there is 3.05% & also allows transfers in.

Aha! That's a really useful link! I should've searched instead of panicing - I was just expecting total information oveload and didn't know where to begin!

I like the sound of the 2yrs @ 3.8% (post only) deal with BM Savings or the 3yrs @ 3.95% with Natwest/RBS...

Once again, thank you all for your help. I think I know enough now (and have enough thinking time) to look into this a bit further and make a good decision. I shall sleep soundly tonight! :beer:

Nine_Lives

I've never done it myself, but maybe you could TRANSFER (transfer, not withdraw & put in) SOME (i.e. not all) of your £25k into a fixed rate ISA depending on how much you need & how soon.

You could have some in a 4yr fixed, some in a 3yr fixed, 2yr & 1yr with some in an instant access (likely variable) ISA.

It'll all be in the ISA wrapper, so all earning money tax free.

grizzly1911

esuhl wrote: »

Thank you all so much for your comments.



Can I ask why a variable-rate ISA would be best? Is it because you think interest rates likely to increase in future?

Think he really meant an instant access ISA to give you flexibility which by it's nature will be a variable rate product.

The ISA was originally a joint a/c I had with my mum, but it got transferred into my sole name when she died. So half the money is really mine, while half needs to go to the estate. My sister and I are the only benefactors, and she is happy for the money to be "tied up" in an ISA in my name for now (we get on really well, so there's no problem there).

Once you have got your head around the estate and if you decide to split out your sister's share of this account then that bit will not be transferable into another ISA in her name. She would need to start afresh


Unfortunately I don't have a card to get Nationwide's online instant access ISA, but I didn't realise you could transfer between instant access ISAs at any time without losing the tax-free allowance on the whole lot. If I do nothing, the money will be transferred to an instant access ISA anyway. It'll be a terrible interest rate, but at least that buys me a bit of time to decide what to do. Phew! Panic over!


Good for now. Whatever you do don't lose the ISA wrapper by simply taking it out , unless that is what you really want.


That's great - thanks for confirming that. Wow! I was close to making a stupid decision - I guess it's time to accept that looking after my money is my job now... I worked hard enough to earn it and I don't want to throw it away!



Aha! That's a really useful link! I should've searched instead of panicing - I was just expecting total information overload and didn't know where to begin!

I like the sound of the 2yrs @ 3.8% (post only) deal with BM Savings or the 3yrs @ 3.95% with Natwest/RBS...

Once again, thank you all for your help. I think I know enough now (and have enough thinking time) to look into this a bit further and make a good decision. I shall sleep soundly tonight! :beer:

I am also looking at the BM 2 year deal (for a maturing fixed rate ISA of many years) if it is still there in the new year. IMO the 0.15% differential wouldn't be worth it to keep it tied up for another year as I do think interest rates will start to creep up in that timescale.

chewmylegoff

esuhl wrote: »

The ISA was originally a joint a/c I had with my mum, but it got transferred into my sole name when she died. So half the money is really mine, while half needs to go to the estate. My sister and I are the only benefactors, and she is happy for the money to be "tied up" in an ISA in my name for now (we get on really well, so there's no problem there).

are you sure it's definitely an ISA?

it is not possible for an ISA to be held in joint names, so if this was originally a joint account held with your mother, and her name has just been removed, then i don't think it can be an ISA.

esuhl

K_P83 wrote: »

I've never done it myself, but maybe you could TRANSFER (transfer, not withdraw & put in) SOME (i.e. not all) of your £25k into a fixed rate ISA depending on how much you need & how soon.

You could have some in a 4yr fixed, some in a 3yr fixed, 2yr & 1yr with some in an instant access (likely variable) ISA.

Oh! Can you do that? The thought hadn't occurred to me, but that's a great idea.

grizzly1911 wrote: »

I am also looking at the BM 2 year deal (for a maturing fixed rate ISA of many years) if it is still there in the new year. IMO the 0.15% differential wouldn't be worth it to keep it tied up for another year as I do think interest rates will start to creep up in that timescale.

Interesting... the main reason I was considering the 3yrs for just 0.15% more was because the BM deal is post only, whereas Natwest/RBS I can deal with in-branch or on the phone (which might be useful if I need to ask them anything).

Cheers all! :beer:

Alias_Omega

As mentioned above, the key word here is "TRANSFER".

Withdrawal would only allow you to deposit just over £5k per year, leaving you with about £19k on your hands.

Nine_Lives

chewmylegoff wrote: »

are you sure it's definitely an ISA?

it is not possible for an ISA to be held in joint names, so if this was originally a joint account held with your mother, and her name has just been removed, then i don't think it can be an ISA.

Hmm, that's what I get for quick reading at night...i missed that bit.


As above, if this account is in joint names then it's certainly not an ISA & all advice given so far is void.


Your first port of call is discovering EXACTLY what account you are holding (be it ISA, eSaver, some other saver, some current account etc). If it's in joint names then it's certainly not an IndividualSavingsAccount.