What to do with £40,000 savings?

GlasgowDentist

I currently have around £40,000 sitting in a instant access savings account. I have used up my ISA allowance, I am currently still stuck in the fixed rate period of my mortgage but overpaying it each month by the most I can without incurring fines.

I should have enough saved in 2 years to pay the mortgage off, but what should I do with this spare cash in the meantime?

xylophone

Since you need it in cash you are confined to deposit accounts of one kind or another - if you actually are a dentist then I guess you are a higher rate tax payer which doesn't make life easy.

You are overpaying each month- does your provider allow a lump sum repayment of a certain percentage of the mortgage in each year of the fixed rate? If so, you might consider that.

You might consider regular savings accounts or fixed term bonds. You can use your isa allowance for next tax year and the one after.

Do you have a spouse? Has she used her isa allowance? Does she pay tax at a lower rate?
http://www.thisismoney.co.uk/money/saving/article-1583859/Best-savings-rates-Internet-branch-50s-savings-accounts.html

kidmugsy

Everyone else will mock this suggestion, but you can park £30k in premium bonds.

GlasgowDentist

thanks for your replies. Yes, I am a high rate tax payer. My mortgage allows a maximum repayment of £499.99 per month - No lump sums until outwith the fixed rate period. My partner is also a higher rate tax payer and she also has used her ISA allowance.

With regards to Premium Bonds, the MSE calculator for predicted winnings with premium bonds estimates ~£400 for a one year £30,000 investment. Seems pretty poor to me.

xylophone

thanks for your replies. Yes, I am a high rate tax payer. My mortgage allows a maximum repayment of £499.99 per month - No lump sums until outwith the fixed rate period. My partner is also a higher rate tax payer and she also has used her ISA allowance.

Sadly then it is tiny net returns on deposit or the possibility of "Agent Million" knocking at the door......

Deanb

Buying silver with some would be a good idea.
Silver will boom in the near future due to inflation and it's high industrial demand, and lowering supply.

I would say it's better to get silver than gold, I expect gold to get to about $3000/oz which is about 40% gain, silver can get up to the $100/oz area giving closer to triple the gain.

Also, you can buy 50 oz silver for 1 oz gold.

There are places you can buy gold and silver and they store it in vaults for you (small insurance fee) and you can sell it for CMP any time and get your money with in a day or two, you can also withdraw the metals if you wish.

somethingcorporate

Deanb wrote: »

Buying silver with some would be a good idea.
Silver will boom in the near future due to inflation and it's high industrial demand, and lowering supply.

I would say it's better to get silver than gold, I expect gold to get to about $3000/oz which is about 40% gain, silver can get up to the $100/oz area giving closer to triple the gain.

Also, you can buy 50 oz silver for 1 oz gold.

There are places you can buy gold and silver and they store it in vaults for you (small insurance fee) and you can sell it for CMP any time and get your money with in a day or two, you can also withdraw the metals if you wish.

So you should invest it in a single high risk asset class? What utterly poor advice and you joined just to post it.

And suggesting you should buy silver because you get more of it compared to gold? You get more baked beans compared to silver, surely they should invest there?

OP this is terrible advice, give it the horribly wide berth it deserves for such a high amount of money for the short-term.

Gold and silver could lose 30-50% overnight (unlikely, but you could see £10k+ of your money evaporate if you go down this high-risk option). If you have a look at any gold/silver value trends there are huge swings if you need any more convincing.

grey_gym_sock

GlasgowDentist wrote: »

With regards to Premium Bonds, the MSE calculator for predicted winnings with premium bonds estimates ~£400 for a one year £30,000 investment. Seems pretty poor to me.

the prize fund is equivalent to an interest rate of 1.5%. since some of that goes on a few bigs prizes (which you probably won't win ), you typically get a bit less than 1.5%.

while that is pretty poor, the best instant access deposit rates are now (after some very rapid falls) down to about 2.5%, which is only 1.5% after paying 40% tax. so actually that's very similar to premium bonds.

however, you can get a bit more (c. 3%) if you're prepared to look at 1- or 2-year fixed rates, or notice accounts.

kidmugsy

GlasgowDentist wrote: »

thanks for your replies. Yes, I am a high rate tax payer. My mortgage allows a maximum repayment of £499.99 per month - No lump sums until outwith the fixed rate period. My partner is also a higher rate tax payer and she also has used her ISA allowance.

With regards to Premium Bonds, the MSE calculator for predicted winnings with premium bonds estimates ~£400 for a one year £30,000 investment. Seems pretty poor to me.

On average the holders' get 1.5% pa, which is the equivalent of 2.5% pa to a higher rate tax payer. That's about what savings accounts are paying at the mo'. So it's not "pretty poor" at all.

fiesta04

kidmugsy wrote: »

On average the holders' get 1.5% pa, which is the equivalent of 2.5% pa to a higher rate tax payer. That's about what savings accounts are paying at the mo'. So it's not "pretty poor" at all.

I'm with kidmugsy on this one

F4

G_M

kidmugsy wrote: »

On average the holders' get 1.5% pa, which is the equivalent of 2.5% pa to a higher rate tax payer. That's about what savings accounts are paying at the mo'. So it's not "pretty poor" at all.

+ the excitement at the start of each month finding out if you've won the big one!