£35,000 to invest for 6 months, where's best?

vegansaver

Hiya,

I have a friend who has just inherited £35,000

She is planning on buying a property but not for at least 6 months and was going to stick it in a current account at the Halifax.

I realise there are much better places to invest your money for the time being but am unsure what her best option is?

Could someone far more in the know than I am give me some ideas so I can pass on the information to her.

Many thanks.

Reestit_Mutton

vegansaver wrote:

Hiya,

I have a friend who has just inherited £35,000

She is planning on buying a property but not for at least 6 months and was going to stick it in a current account at the Halifax.

I realise there are much better places to invest your money for the time being but am unsure what her best option is?

Could someone far more in the know than I am give me some ideas so I can pass on the information to her.

Many thanks.

ING have a 6 month fixed rate of 6% - as far as I'm aware, it's the best on the market for such a short period of time. You will need to open one of their main savings accounts at 4.75% to be able to access this product but, apart from that, there are no strings attached as you don't actually have to have any more than £1 in the main account to keep it open.

Ignore what Martin said about ING in his weekly email - he was merely hung up on the fact that they have let the rate on their main account lag behind while creating new accounts with decent rates, such as this fixed rate account. Infact, there's currently a debate raging over whether or not Martin was totally fair to ING by solely focussing on their main savings account.

Anyway, as you're going for a fixed rate, you have absolute certainty wrt the rate you will be getting.

What's more, when the fixed rate finishes, there may still be a good instant access websaver account with ING that you can easily shift your money across to (currently 5.65%) assuming that they don't let the rate on that account dwindle also.

HtH
Reestit Mutton

vegansaver

Many thanks Reestit, you've been a real help as that sounds ideal.

That information is just what I was looking for.

masonic

Case in point, Reestit, eh?

kenshaz

Yes the best clean easy six month fixed account on the market ,remember the 90 day loss of interest if you withdraw funds.:money:
https://www.ingdirect.co.uk

ManAtHome

Over 6 months, you'd get an extra £62 (ish) before tax by using the ING fixed rate instead of the variable one but could lose up to £520 (again ish for the loss of 90 days interest) if you need to get the cash early.

With all fixed-term savings, you need to be really really sure...

Reestit_Mutton

ManAtHome wrote:

Over 6 months, you'd get an extra £62 (ish) before tax by using the ING fixed rate instead of the variable one but could lose up to £520 (again ish for the loss of 90 days interest) if you need to get the cash early.

With all fixed-term savings, you need to be really really sure...

Yup, that's absolutely true ManAtHome...However, as the OP said that his friend wasn't going to buy for AT LEAST 6 months, there's relatively little danger of that happening here.

One thing to bear in mind is that the ING fixed rate account allows the saver early access (albeit with a penalty) - not all fixed rate accounts do. If you really must have that property that unexpectedly comes on the market much sooner than you think, it's better to pay an extra £500 in lost interest to get it than not get it at all because of lack of available funds.

regards,
Reestit Mutton

Reestit_Mutton

masonic wrote:

Case in point, Reestit, eh?

Yup...deposits for property purchases and payments on account with the taxman (which fall due every 6 months) are the two most obvious examples of good uses for a 6 month fixed term account like this that I can think of.

Reestit Mutton

ManAtHome

Reestit_Mutton wrote:

Yup, that's absolutely true ManAtHome...However, as the OP said that his friend wasn't going to buy for AT LEAST 6 months, there's relatively little danger of that happening here.

Hoprefully not, but I'm sure we've both heard it before Reesit (never trust "never", always mistrust "always"...).

Anyway, may be another 1/4 percent increase (in BoE at least) in the next couple of months..?

Reestit_Mutton

ManAtHome wrote:

Hoprefully not, but I'm sure we've both heard it before Reesit (never trust "never", always mistrust "always"...).

spot on, that man!

Anyway, may be another 1/4 percent increase (in BoE at least) in the next couple of months..?

problem is...an increase in the BoE base rate

(a) may not be fully passed on in variable savings rates and almost certainly won't be fully passed on in the best variable rate accounts

(b) is unlikely to increase fixed rates...in some cases, longer fixed term rates may come down as little and early often reduces the need for further rises later on.

ciao
Reestit Mutton

ManAtHome

Yes, the longer-term ones tend to react on where they think rates are going. Might get slightly better over the next 3 months, but more likely to be new players rather than market-leaders increasing rates (IMHO of course).

Variable rate accounts will be interesting when we get another BoE rise - I still reckon ING took a hit by leaving their rates on hold, so maybe more likely to pass on part of any increase.

Of course the other advantage of the fixed-term is that you're less likely to dip into it "just this once".