Safe temporary home for proceeds of sale of house

Beneficiary

My siblingsand I are the trustees and potential beneficiaries of a discretionary trustwhich currently owns a house. We are selling the house and need to decide whereto put the proceeds of the sale before we either reinvest the money or distributeit to beneficiaries.

The netproceeds will be of the order or £450,000 ie more than the FSCS compensationlimit.

We want themoney to be absolutely safe and, ideally, to earn interest to at least matchinflation. It will probably stay wherever we put it for several months.

We are lookingfor suggestions about where to hold the money. The simplest option might be to leave it in the client account of the solicitor who is handling the conveyancing.

jjlandlord

I think there's no need to worry too much about the compensation limit... If you think this is a risk, you should have your will in order and stop driving, going out, etc. because the risk level of these is much higher.

FireWyrm

Solicitors have been known to run away with such amounts of money...

A safe (as safe as it gets anyway) place is probably in gold with Bullionvault.com. Bullion is held under Bailment which means it is physical and can be delivered to you as bars if necessary. However, if you choose to put your gold into a Swiss Bailment fund it is essentially safe from insurrection, government siezure and wars since Switzerland is famously neutral. Personally, I never considered holdings in London but felt reasonably safe with the Swiss.

dimbo61

I would guess that as soon as you sell the property that most of the beneficiaries will want there money.

mikthe20

You are right to be cautious. However, you should only need 2 bank accounts - isn't the £85k FSCS limit per person named on the account? As you have at least 2 siblings then I believe you are guaranted for £255k per account (85 x 3).

jjlandlord

mikthe20 wrote: »

You are right to be cautious.

Retail banks in the UK go under every other week... Oh wait, no they don't.
Let's not be irrational.

That being said, I do think you are right about the FSCS limit being per person per bank.

As for the suggestion above to buy bullion. This is actually not safe because as a traded commodity in 6 months it may very well be worth less (or more) than today. Moreover, I believe that one would get charge storage fees.
This may only be worth it to hedge against a collapse of the pound, which I'm not convinced is imminent.

mikthe20

jjlandlord wrote: »

Retail banks in the UK go under every other week... Oh wait, no they don't.
Let's not be irrational.

Tell that to the people who were locked out of Northern Rock when it collapsed. Yes they got their money eventually but shows retail banks in this country can indeed go under. Or to those who had accounts with IceSave - took months to get their money and I'm not sure if people who had more than £85k actually did get it all back - pretty sure UK pension funds lost a load with them. Most UK banks are insolvent (otherwise why would we have nationalised some of them and continue to pump taxpayer and QE money in?).

jjlandlord

mikthe20 wrote: »

Tell that to the people who were locked out of Northern Rock when it collapsed. Yes they got their money eventually but shows retail banks in this country can indeed go under.

Ah but it did not go under (at which point the FSCS guarantee would have kicked in) he was nationalised to prevent it.

mikthe20 wrote: »

Or to those who had accounts with IceSave

Which was an Icelandic bank, which could not be bailed by Iceland.

Put your money at RBS/HSBC and friends.
There is 0 chance the government would let a major UK retail bank go under.

CKhalvashi

Bunging into each name, split across banks will take the risk level to 0.

You only need 2 banks (depending on other holdings) each to have no risk there.

CK

lb364

The rate isn't great but put it into NS&I savings account then it will all be backed by the Government http://www.nsandi.com/you-and-your-money-savings-made-simple-important-considerations-how-safe-are-my-savings

FireWyrm

jjlandlord wrote: »

Retail banks in the UK go under every other week... Oh wait, no they don't.
Let's not be irrational.

They do go 'under'. Saying that it'll never happen because it hasnt happened in the last 'x' years is also irrational. It is a risk, however small and some people dont like to take risks.

jjlandlord wrote: »

That being said, I do think you are right about the FSCS limit being per person per bank.

Its per person, per BANKING entity. Which means, if you put some in the parent organisation, you're ok. Howevver, if you inadvertently put some in a sub-entity bank and the parent bank goes, you loose the lot.

jjlandlord wrote: »

As for the suggestion above to buy bullion. This is actually not safe because as a traded commodity in 6 months it may very well be worth less (or more) than today.

Same with a bank. All deposits are assets of the bank and if the bank goes under, so does your money. As I said above, its per person per ENTITY, not bank. RBS would therefore take out NatWest, Ulster and Royal Bank of Scotland. If you had £85K in each, you would only be covered for a total of £85K. Bullion does go up and down the same as all commodities, but the the trend has been up for the last 20 years at least. If you're not after a short term home and want a deposit to sit for say 5 years, it's a perfect place to put it. Bullionvault is also not 'spot' gold, it is physical holdings. This means that it cannot be 'wiped' out by a computer crash, terrorism (short of nuking switzerland) or by a venal government simply seizing it. Before you say, that'll never happen, it has more than once this century.

jjlandlord wrote: »

Moreover, I believe that one would get charge storage fees.

Nominal storage fees only. They make their money from 'trading'. If you dont trade, the storage fees are fair.

jjlandlord wrote: »

This may only be worth it to hedge against a collapse of the pound, which I'm not convinced is imminent.

I'm not worried about the collapse of the pound, I'm more worried about this 'quantative easing' lifting the lid on runaway inflation. Lets face it, the government is holding a tiger by the tail and no-one can predict what will happen in the next few years. We're in for a rocky ride though.

More to the point, this government backed 'guarantee' wont be worth the paper its printed on if more than a few thousand people at once call on it. You can bet your bottom penny, they'll shift the goal posts and pay a proportion in the pound up to a maximum of £85K.