6 month investment of £68k?

Newbie32

Hi, I was just wondering if anyone could offer any advice or ideas for investing £68,000 I have inherited following the death of a relative?

My fixed mortgage term ends in August 2014 so with the money I intend to pay off the remainder of our mortgage (the penalty for early repayment is £2500, which is greater than the interest I will pay between now and then so early repayment doesn't make sense).

I was just wondering if anyone had any ideas on how to maximise the interest earned on this £68,00 until next August, I appreciate with rates being so poor at the moment I am not going to earn a lot of interest but I just wondered if there were better options than letting it stagnate in a current account where its value in real-terms will decrease?

I am risk-averse and don't particularly want to get involved in stocks and shares.

Neither my wife or myself has used any of our ISA allowance for this year, is the best option just to put as much as possible in ISA's and leave the remainder in a current account?

Thanks in advance for any advice.

dunstonh

Investing £68k for just 6 months is not a good idea unless you are extremely high risk in nature. An economic cycle is closer to 8-10 years nowadays. The minimum is generally regarded as 5-7 years for investing. So, you should stick to savings accounts.

I am risk-averse and don't particularly want to get involved in stocks and shares.

In this case, sticking to cash is sensible. However, do be aware that for long term, not getting involved in stocks and shares can be more risky than sticking with cash.

eskbanker

If you really want to maximise interest then the best thing to do is to open multiple interest-paying current accounts, see posts like http://forums.moneysavingexpert.com/showpost.php?p=64050219&postcount=15 for listings of accounts paying 3-5%. However, you'll need to open quite a few to cover £68K and arrange various monthly transfers between accounts and shift/open some direct debits - not exactly rocket science but not entirely painless either!

The alternative is to use traditional savings accounts, see http://www.moneysavingexpert.com/savings/savings-accounts-best-interest, which would be less hassle but pay correspondingly less, expect in the region of 1.5%.

You should be able to get roughly £1,088 interest on £68K at 3% (less basic rate tax) for eight months, and therefore half of that if you're on 1.5% interest.

Totton

Consider a short investment in premium bonds, 6-months interest is not much to forgo for the possibility of a big win. I think you can have around £30k in these.

oldsmokie

Options over 8 months are limited.

If you are wholly risk averse, I'd go with premium bonds. You can hold £60k between you. The returns are likely to be small but there are no transaction costs and your capital isn't at risk.

A riskier option would be to use one of the peer to peer lending sites like ratesetter. These are much riskier than premium bonds but probably less risky than shares.

ColdIron

PB returns are very low unless you get lucky, which you probably won't
Don't forget you won't be entered into the draw for the first month so your cash will be doing nothing. If, as you say, you want to maximize the interest earned PBs would be way down my list of suitable places

Have a play with the PB calculator
http://www.moneysavingexpert.com/savings/premium-bonds-calculator/