Opportunity to leave job - what type of account best to stash the cash?

cakeadoodle

Hi, I need to do a bit of research on savings accounts, on first glance it seems a bit of a minefield. I'm hoping someone could point me in the right direction to save me tying myself in knots.

I have the opportunity to apply for early severance from my current job, giving me a bit of a cushion to grow my (currently small) home based business.

I've figured out that between saving hard until the date my employment would end, current savings and my severance pay, I should have around £43,000.

My plan was to put this into a savings account and to take from this around £1,200 per month to live on, while I work on the business. That would give me 3 years to get the business to the stage where it pays me a salary (if I can't get there in that timescale, it's definitely not meant to be!!).

Can anyone advise what types of account(s) I should be looking at? I don't know whether it's better to have it all in one account (I won't need access to the whole amount instantly) or if I should lock away part of it.

There are so many accounts out there, it would be a bit easier if I could narrow my sights a little!

Ifts

Usually id say lock some of it away for a little extra return but in your case if I was you I would just stick with instant access savings account.

For the little extra you will gain by locking some of it away in fixed term accounts may not be worth it if you need the funds sooner especially as you say you will be trying to grow your home based business (unexpected costs, putting the money to better use through your business?).

Totton

As you need all of the money you are very limited to accounts with no risk element. I'd pop 1/3 into a 1yr account and 2/3 into a 2yr account because that way you will definitely have something for years 2 & 3. The remaining 3rd into a simple instant access savings account.

Best Wishes,
ickey

cakeadoodle

Thank you both for your advice. I just realised that savings wise what I'm talking about it small beans compared to some of the posters on here but it's a fortune to me!

If I go ahead, I'll try to stash as much as I can in my ISA and standard instant access savings, and look at the 1 year/2 year accounts to see if there's much of a difference in return for the rest.

Now all I have to do is make a decision...

innovate

If you are prepared to put a bit of initial work into setting up accounts and standing orders, you could look at Regular Savers, specifically the "drip feed technique". First Direct pay 8%, Nationwide 6%. You won't make earth-shattering amounts, but why not make your money work a bit harder.

Also, Halifax pay you a fiver a month if you cycle £1K a month through the account - £60 a year.

The there is the Santander 123 current account with 3% AER. It costs £2/mth but you might be able to get a lot more in cashback and interest.
Plus, you can get £55 via Quidco for a few more days, just for setting u the account.

Lloyds Vantage current accounts have a special offer atm, a nice 4% AER for a year. You can have 3 accounts with £6K each, so that could be a home for £18K for a year.

Lastly, you might qualify for gross interest if your only income for a while is the interest. http://www.hmrc.gov.uk/helpsheets/r85-helpsheet.pdf