Where Should I put £65,000? Financial Help Please.

fenix26

I am 65yrs on basic retirement pension.(No other income.) I have just downsized to a smaller property (because I am always overdrawn & have been using my scant savings over the last few years.) I will receive approx. £65K from the sale. I also have £13K in a Santander easy access ISA (minimum interest.) I am financially very green!
I would like advice on where to put my monies. I would like easy access/risk free. (My new property will probably need £10K spent on it.)
Any advice would be much appreciated. Many thanks.

Linton

Do you need easy access to all of it or just £10K? You dont have to do the same thing with every £ of the £65K.

If you need easy access to all of it the only way you are going to get more than insignificant interest is to take advantage of some of the special deals such as the Santander 123 account, getting the higher interest would involve transferring money between multiple accounts to meet the Ts&Cs - others will no doubt explain.

If you dont need easy access to all the money there are more options. What do you want the extra money for? Steady extra income? - to take one extreme option an annuity would give you perhaps £3000 per year guaranteed for the rest of your life from £55K but you would lose any access to the lump sum. Emergencies? Long term saving to pay for your extreme old age? Inheritance for the grieving relatives when you die?

Until you decide what you want the money for one cant provide the best way of achieving it.

fenix26

Firstly, thank you Linton for your very helpful reply; it made me do some honest thinking!:o
I think I am only concerned about the next ten years. (As a smoker, I don't imagine an extreme old age!)
I want:
Some steady extra income
Funds for emergencies (Perhaps new teeth!)
Basically enjoying being able to buy some new items (rather than always having to buy second-hand.)
Holidays, coffee in Costa (watching the world go by,) & lunches out. (Not every day!)
Inheritance purposes will not be needed. I have one sibling, who is very financially secure.
The monies I will accrue from downsizing will now amount to approx. £80K.
I am moving from a 2 bedr. house to a much smaller 2 bedr. house. Once the monies run out (& if still alive, ) I intend to move to a 1 bedr. flat; which will afford another small amount to money.
Annuities look like a safe option for guaranteed regular interest; however, I would perhaps like to have a little more to spend perhaps in the next year or two!
I have looked at all these accounts, including Santander 123; whereby you gain 3 - 5% interest by placing £500 a month in. They sound very favourable; albeit, interest is only paid up to £2000. So, it's obviously a matter of placing the bulk in my current account & juggling DD payments to several accounts to afford these good interest rates? & then transferring monies after so many months?
That's what I'm thinking of.
Any more suggestions? Best wishes.......

kidmugsy

Contribute £2880 to a personal pension of some sort. (That's the max you can contribute in one tax year if you have no earnings).

Wait a few weeks while the provider claims £720 for your "pot" from the taxman. Then cash it all in under the "small pots rule". You'll get £900 tax-free lump sum, plus £2700 taxable (less the provider's charges, which at Hargreaves Lansdown for instance would be £120 (as of a week or two ago)). The provider will subtract income tax from the taxable bit, but you fill out a form for the taxman and eventually he'll pay you it back. Therefore in all you'd expect to profit by £600 or so from this wee stunt.

Repeat each subsequent tax year, except you should exploit the new tax laws by not quite closing the account each year in future: leave a tenner behind, say. That way you'll avoid part of the charges. Carry on this merry game until a government one day puts a stop to it. (Don't worry, it's entirely legit and mobs of pensioners and part-time workers will be doing it.)

Your plan of using the loss-leader current accounts that are available at the moment is sound too. Remember to fill out an R85 form so that you get the interest tax-free from your bank or building society.

If you finally use up your annual pension contribution, and fill up the attractive current accounts, there's always Premium Bonds from ns&i, which are a reasonable place to "park" some money until something better comes along. Note too that the govt plans that ns&i offer pensioners a 1 year bond and a 3 year bond in January, paying in the neighbourhood of 2.8% p.a. and 4% p.a. for up to £10 k each. So you might want to keep £20k conveniently available for those.

If you decide that you want some small fraction of your capital invested in shares, the best bet may conceivably be to open a Stocks and Shares ISA since that would avoid your having to report dividend income on a tax return, which might be a ruddy nuisance. Personally in your shoes I'd be in no rush to invest in shares because the stock market looks pretty high in the US, and if Wall St crashes so might much of the rest of the world. But nobody knows!

xylophone

You might consider a Santander 123 account - you should easily be able to meet the conditions. http://www.santander.co.uk/uk/current-accounts/123-current-account

You might look at Lloyds Club account and at a couple of TSB Classic plus and up to three BOS Vantage then a Nationwide Flex direct.

All can be managed on line, so easy to meet pay-in conditions - you should have enough household DDs for Lloyds/Santander.

If you are keeping the cash ISA look for the best paying account accepting transfers http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

Consider stocks and shares for the current tax year's ISA? There are investment trusts paying monthly/quarterly income - http://www.trustnet.com/News/403577/how-to-get-a-monthly-income-from-investment-trusts/

Hargreaves Lansdown has a relatively low charge if you use ITs

http://www.hl.co.uk/

fenix26

Crikey; many thanks for such savvy replies!

Teahfc

Love it if you could quit smoking, then you might live longer and also have a bit more cash from spending it on tobacco.
Either way hope you enjoy your retirement.