What to do with savings

funkey_monkey

Hi,

I've got approx £200k in savings - as much in ISA's as I could and then rest sitting in savings accounts.

I have this in near-cash as I intend to buy a house soon. In my location I intend to spend no more than £165k on the house.

The problem (not really a problem - I'm lucky) is that I don't know the best way to finance the purchase or how to make my money work harder/smarter for me.

One option i have is to lay down a deposit on the house and then move savings eqiuvalent to the difference into an offset mortgage. This should mean no interest is payable and I think I would earn interest on the savings.

Would my savings be protected in this instance if it was over the £85k FSA limit?

Am I right to be wary of approaching an IFA for advice on this? I got my fingers burnt almost 20yrs ago when I started work with a £5k investment which to this day has just about broke even and has not even match inflation. Ever since, I managed my finances myself just opting for saving accounts with the best interest rates.

I just feel that it could be doing more for me, but I don't like investing in shares or suchlike as I don't understand them (I don't know if stockbrokers really do either).

What are my options?


Thanks.

bigadaj

Well your options are paying cash for the house or getting a mortgage and if so how much.

The best mortgage rates are typically around 60% ltv so may be best to put down a 40% deposit which would take around a. Third of your savings.

You probably want say £10k in cash as an emergency fund, maybe more the best rates are now in current accounts at 3-5% plus there are house purchase costs so that's another £15-£20k in total.

This still leaves you with over £100k.

Do you have a pension, if not probably worth getting one or contributing for the tax relief and potentially employer contributions.

You could put £23k into shares isas in the next couple of months, general funds like vanguard lifestrategy or black rock consensus might be good if you do to want too much research though it's value will go up and down you should profit over time. There's a thread on brokers on this forum so have a look, companies like cavendish, charles stanley direct and iii generally offer low costs.

The remainder of a little under £100k could be split between the above options, maybe part cash, increased deposit, more shares funds and more pension.

Ifts

funkey_monkey wrote: »

I just feel that it could be doing more for me, but I don't like investing in shares or suchlike as I don't understand them (I don't know if stockbrokers really do either).

If you have saved up the money for a house purchase soon then it is best left in savings, you should not be investing money that you may need anytime soon to pay for a house purchase.

Buying the house outright or getting a mortgage is a question only you can answer depending how comfortable you would feel trying to beat the mortgage rate via investing the money.

Or maybe buy the house outright (for your peace of mind if nothing else) and read up and learn how investments work and start off investing small amounts using some of the money you will have left over (after you set aside 3-6 months rainy day fund).

You could read up on investing, start with the basics and see if you can get your head around it, you don't have to dive in straight away buying individual shares, you could spread the risk investing via funds etc to start with -

There are some easy to understand investment articles and guides over on the Monevator blog:

http://monevator.com/category/investing/passive-investing-investing/

Investing Basics over on the Motley Fool website:

http://www.fool.co.uk/investing-basics/

atush

At todays rates, I would get a 40% mtg, keep some in cash, put some into pension, and put some into S&S isas.

If rates rose in future, you could always pay more/all of it off.