Lump Sum from sale of house

ChristineMac

HI,
This is my first post. I will shortly have a lump sum from the sale of my house because I can't find anything to buy yet. What should I do with it. Saving rates are so low. I've looked at the Santander Account mentioned on here and I have an ISA, so some could go into that . . . I would need easy access (well 30 days notice at most) as I am looking to purchase again. Any suggestions?
I am also thinking of going for a cheaper house that needs work in the hope of making some sort of profit from it in a short turnaround. Having looked at the market in my area there seems to be a lot of house being bought fairly cheaply, renovated and sold for a fair profit . . . but then I think it can't be that easy, can it? Any advice appreciated.

dtsazza

The first question is, what do you plan to do with this money? In particular, how soon do you expect to need it?

If you're planning to spend it soon, on another house for example, then really anywhere you put it is just going to be a holding area, and I'd consider safety and convenience of access more important than comparing interest rates over a short time.

On the other hand, if this is "spare" cash that you're putting aside for a rainy day, then you can afford to lock it up for longer. It might also be more palateable to invest the money, and take the risk that the capital value could fall in exchange for higher expected returns.

And if you're setting it aside for your old age, then you'd almost certainly want to be looking at investments rather than cash. It would also be worth considering holding them in a pension wrapper because of the tax advantages.


As for flipping houses - I can't say I know that much about it, but if it were that easy, wouldn't everyone be doing it? And if it's "obvious" that a house will be worth e.g. £100k tomorrow, wouldn't it be worth £100k today? (Why would someone sell it for less than that rather than wait?)

If you take into account stamp duty and the various fees associated with selling, as well as gazumping and handling chains, I think it's unlikely that this offers a reasonable return on your investment considering the time and risk involved. If you think that property values are going to increase, perhaps you could gain exposure to that growth by investing in a REIT instead?

xylophone

For short term hold, NS&I might suit.http://www.nsandi.com/savings