Monthly Paid Interest Accounts.

NATCHER

My 75 year old Mother is selling her home and down sizing to a 'shared ownership' flat in a sheltered housing scheme.

After settling her equity release fee she hopes to have around £80,000 to £100,000 capital. She plans to put this in an account that pays a monthly interest to help pay her fees on the flat. She recieves both a state and private pension.

Does this sound like a good plan and if so can I find all monthly interests accounts out there on comparision sites or is it better to ring/visit banks and building societies in person.

Any help much appreciated.

opinions4u

Given age, potential tax implications etc, I'd suggest she sees an IFA with that sum.

www.unbiased.co.uk

If not, the links at the top of this page can help her find best buy accounts, or a comparison site like www.moneyfacts.co.uk.

Locking her money away for 3 years or more may give her the highest returns, but she does need to decide if she wants any access or not.

C&G 3 Year Step Bond pays 3.75% in year one, 4.25% in year two and 4.75% in the final year. The rising income might appeal to her. Although you start again after year 3!

NATCHER

Thank you opinions.

Will ring IFA in the morning.

Out of interest (:rotfl:) does the C&G bond you quote pay monthly interest?

xylophone

Don't forget her ISA allowance - can be particularly useful for pensioners because of the fact that the income does not count against their age allowance. http://www.hmrc.gov.uk/rates/it.htm
http://www.thisismoney.co.uk/money/saving/article-1583868/Best-savings-rates-Monthly-income-saving-accounts.html

http://www.cheltglos.co.uk/savings/fixed-rates/ monthly interest details here.

opinions4u

NATCHER wrote: »

Thank you opinions.

Will ring IFA in the morning.

Out of interest (:rotfl:) does the C&G bond you quote pay monthly interest?

Yes. Same AER, slightly lower gross rates.

3.69% > 4.17% > 4.65% rings a bell off the top of my head.

NATCHER

Thanks again for your help.

I think we might visit an IFA.

Is there any in Bristol anyone can recommend?

CLAPTON

although it might be convenient there is no financial reason to restrict yourself to monthly interest accounts
one can simply with draw a little each month equivalent to interest

so e.g. if one had 100,000 at 3% AER, i.e. 3000 per annum, one can simply withdraw about 3000/12 = 250 per month which approximately gives the equivalent result


however, you also need to consider what her attitude to risk is; is she willing to invest in stocks and shares? 75 is relatively a young age if she is healthy
inflation will eat into the capital if left in a saving a/c

if you see a IFA they will also certainly suggest S&S so he prepared and start thinking about inflation; even with inflation at 3% per year that 100,000 will only be worth about 75,000 in 10 years time