newbie - need advice on cash lump sum

jimjames

pfsfsf wrote: »

I just think the bank will do what is best for them not me

So look at the link at top of page above ---^ that gives you all the best rates and pick the one that has the best features for you.

pfsfsf

brasso wrote: »

How hard is it to Google your bank website? Or give them a call on Monday?


I'm all in favour of people coming on here to ask for information that isn't easy to come by, but really, you must know that there are such things called savings accounts that have advertised interest rates.

You should also know that interest rates are historically low at the moment. If you're lucky, your 40K might just retain its value as the best interest rates are roughly the same as inflation. So you are unlikely to make anything at all by "giving" 40K to your bank.

I'm asking because I have never bothered before due to bouncing around the world fighting in wars for this country....hence I have never had the need to do anything financial..I have a right to say whatever i want here...thankyou

atush

Well you could thank some of us who gave actual advice to at least prove you read it (unlike my last post).

Thank you for your service. but you seem to have a bit of time on your hands nowadays, so click the the best savings rate links on the main page. Wont have to deal with feedback that way.

pfsfsf

I thank you all, just after advice...snd the bank is calling. ....just seems bank rate are poor at the moment..

pfsfsf

kidmugsy wrote: »

1) If your wife doesn't earn enough to pay income tax you might like to gift her some of the money to put into a savings account in her name so that she receives the interest tax-free - or into a joint account so that her half of the interest can be tax-free. In either case the bank/BS can supply an R85 form for her to complete to ensure that no tax is taken off her interest. As others have said, you might both open ISAs this tax year and next.
2) Your mortgage: (i) would it be possible to get a cheaper mortgage by using some capital to arrange that you have a lower LTV (Loan-to-Value ratio)? (ii) Would it be possible to overpay without charge? What's your present interest rate? (iii) Overpaying into a mortgage is particularly attractive if you are allowed to borrow the overpayments back later, because that gives you flexibility if unexpected expenditures arise.

my mortgage renewal is june, this sounds s safe option

atush

Sounds like a good idea.

pfsfsf

csn I set up 2 isa's before apri, max them out and then pay into them through 2013??

innovate

No. You can only pay into 1 ISA in any one tax year.

You are allowed to transfer such an ISA but let's not even go there right now, it would just confuse the issue.

bowlhead99

pfsfsf wrote: »

csn I set up 2 isa's before apri, max them out and then pay into them through 2013??

innovate wrote: »

No. You can only pay into 1 ISA in any one tax year.

innovate is right you can only pay into 1 ISA in a tax year but you and wife can pay into two between you. If you max them before 5 April, you will get another allowance on 6 April 2013 with the new tax year so you can between you put in another two ISA allowance's worth in then. This was what jimjames suggested back in post #2.

Your wife's money doesn't really need to be in an ISA if she is not paying any income tax anyway, but it's probably worth it in case she becomes a taxpayer at some point in the future. If you don't use this year's allowance you lose it forever.

And banks generally offer some of their best rates through ISAs because you are limited to putting only ~5k per tax year in, so the interest bill for them is not going to be very high. Whereas they couldn't afford to give you the same attractive rate on an instant access account with hundreds of thousands in it.

Doshwaster

Linton wrote: »

You say you have no savings so I suggest you put about 6 months living expenses in an instant access deposit account to cover any emergencies.

Beyond that it really depends on your timescales. What do you want the money for and when will you need it? This is key to making a sensible allocation of your money. Also, what is your mortgage interest rate? If its high it may be worth paying off some of that debt. Is it worth putting more money into your pensions? It would probably be sensible to split the money into different tranches: For example:

1) Treats for now: £1K
2) 6 months living expenses/emergencies: £7K
3) Big expenditure in 4 years time:£12K in fixed rate deposit account
4) Pay off some of mortgage: £10K but keep repayment the same.
5) Long term (> 5 years) savings: £20K invested in broadly based funds in 2 X £10K S&S ISAs (his and hers).

Your needs may be very different, so this is just an example.

I came into a similar amount of money to the OP recently due to maturing share options and I pretty much did the same as above and I would echo the advice - a combination of immediate treats, emergency cash fund, pay down mortgage and long term savings.

The first thing you should do is check you mortgage details to see what overpayments are allowed. You then need to decide whether to use £10k or so to reduce your monthly payment or keep the payment the same and reduce the term of the loan. If you can comfortably afford your monthly mortgage bill then I'd recommend the latter.