Where to save?

TheMoney

I have around £500,000 spare to save, but obviously I want my money to work for me. I'm looking for suggestions as to what I can do with it.
I don't require instant access to the money, could probably have it tied up for a long period and just take the monthly return to get me by.
I don't want any risk involved, unless it's property. I am considering buying property to let, especially as the saving market seems pretty pointless, but I won't be handing my money to bankers to invest.
I would prefer something that lasts atleast 3 years, e.g I don't really want to have to change where my money is every year.

Any suggestions appreciated.

matttye

I'd consult an IFA for that amount.

TheMoney

I will be speaking with a financial advisor, I'm just looking for some other opinions too. I like to weight up all my options first and be 100% certain before I make any decision. I've been strongly looking into property, it seems good as the rental market is great at the minute, property prices are low, and you can earn around 5% of your investment per annum, which is better than any non risk savings account that I know of, but there may be other pitfalls in this plan that I haven;t thought of, and really just looking for advice and opinions.

matttye

The only risk free savings account I know of for that amount is an NS&I Direct Saver which pays 1.5% gross interest. Should earn £500 per month. This will protect all of your money and not just £85k as per the other banks.

You'd find a much better return on it if you spread it around though, depositing up to a maximum of £85k in each account so it's fully protected.

You could stick £40k in two Santander 1-2-3 accounts and they'd each pay 3% gross. You need two direct debits on each account and at least £500 going in each month for this to work - but you can take the £500 straight out again.

I have no idea about property or investing, so I'll let others give their opinions about that.

TheMoney

I do agree that spreading it out may work well, but there is a limit to what I'm prepared to do. I don't particularly want like 10 accounts with different banks/building societies etc that I have to continually check (I'm very cautious with fraud being on the rise). I have the Santander account already with just over £30k in. Just to clarify, by 'no risk' i mean no risk of losing money on investments, I'm confident enough to keep any amount in a normal savings account as trust the bank's don't screw up too much

bigadaj

The only safe thing to do is diversify, any other option is higher risk, in cash terms that would be shortfall or inflation risk.

I think property is still over valued, government throwing in money after zero interest rates to artificially sustain the market, but you can get decent yields on rental properties.

I'd want say 30% in property, 60% in shares and 10% cash, though many would recommend bonds there doesn't seem much value there currently. A balanced mix of shares and or funds can give you a better yield than any savings account with the probability of capital increase, but there is risk.

If you are only considering cash and property then a visit to an ifa might be a waste of time,they would be duty bound to recommend shares and funds, can't add any value in cash savings and don't generally deal with property.

Also as you really want a savings account then with the whole sum you'd need six accounts in different institutions to be covered by the Fscs limits.

TheMoney

I plan to see an IFA just to see what their advice is, like I say I'm really just taking opinions and advice at the minute so I can make informed decisions.
My initial plan was to use around £400k to buy properties to let, and keep the other £100k in some form of account with a reasonable return, no risk, and possibly some access incase of emergencies.

The reason I'm looking into this is based on:
I have cash and no forward chain, so I have a fair bit of bargaining power on property prices, and at the minute with savings for a deposit hard to come by, there is less demand for property to buy thus lower prices.
As mentioned, deposits hard to find so more people looking to rent, allowing higher prices to be charged. Then keeping some cash accessible in case there are repairs that need doing on any of the properties.
Through the research I've done, I'm expecting to be able to buy 3 bedroom semi's in a reasonable area, for around £130k, and taking £650 p/m rent which equates to roughly 6% return p/a on each property.
I understand there are further costs involved such as tax, insurance, maintenance etc and it's possible to properties may be empty for a period of time, but I'm also expecting that over the next 10 or so years property prices will increase.
If I was to keep all the money just in a savings account for 10 years, at the minute it's looking around 2 - 3% p/a, but with property I would expect 4%+, and a higher value initial investment in the future.
Property prices will rise with inflation hopefully, but a savings account will remain the same value, just with interest, which right now doesn't even cover inflation therefore devaluing your money every year.

This is what I've come to so far, but I'm by no means an expert. I welcome any constructive criticism and advice as to anything I may have missed out or any other possible options I could take.

noelphobic

TheMoney wrote: »

. I have the Santander account already with just over £30k in.

You only earn interest on amounts up to 20k in the 123 account.

TheMoney

noelphobic wrote: »

You only earn interest on amounts up to 20k in the 123 account.

I've had it for a while, it's pretty much my second main account so I do usually keep a fair balance in there

noelphobic

TheMoney wrote: »

I've had it for a while, it's pretty much my second main account so I do usually keep a fair balance in there

You said in your first comment that you had over 30k in the account. I was just pointing out that you'll only earn interest on the first 20k, just in case you hadn't realised.

TheMoney

I didn't mean it to sound like I was having a go, merely just explaining. At the minute, I have several accounts dotted around with varying balances, but I'm 21, working full time and I'm fairly busy on weekends. I don't really have the time to be constantly making appointments in branches, and with the sums of money in the accounts I prefer speaking to somebody face-to-face. Thats why I'm looking at the best options for larger balances if keeping with 1 - 3 banks, or moving to other options such as property, or possibly investments depending on the associated risks.