Many Questions

Ques

Hi,


I'm a little early in posting this but figure I need some advice.


To keep it as simple as possible, I currently have a basic current account, a couple of savings accounts with a bit but not much in them, a couple of credit cards which get paid off in full, I'm a private tenant and have a permanent fulltime job. All pretty standard there.


However... In about a month from now I expect to receive around about £100k, then in another 6 months time, I expect to be made redundant and receive a further £50k.


In many ways this is obviously great news, however I need an action plan as to what to do with the cash.


I have many ideas and half-ideas regarding what I might do next after redundancy but to be honest I'm really not sure. As a worst cast scenario, I'd imagine I'd want to keep 'easy access' to c. £20k which if worst came to the worst, would see me through the first 12months or so.


Potentially pertinent points are that I might move area (still in England), I might think of buying a house, I might try to find permanent work, I might go self employed, I might do contracting... genuinely all these and many more are options in my mind.


So...the question(s)... what should I do with £100k in a month from now and another £50k in 6months which will allow me short term living expenses (£20k max over 12 mths), give me the option to buy a house in 1-2yrs time if I end up settling somewhere and will also give me 'reasonable' interest in the meantime?


I'm reasonably financially knowledgeable, but to be honest, every time I try and work it out I find myself going round in circles in my head then giving up!


So far I've got as far as deciding that opening a 123 account seems like a good idea for the first £20k... any thoughts beyond that?


All suggestions gratefully received...

xylophone

If you need to keep the money liquid and easily accessible, it seems to be a case of making the most of the interest available on the various current accounts on offer. You could have a couple of TSB Classic Plus, three BOS Vantage, a Club LLoyds, a Nationwide Flexdirect - after that it's pretty slim pickings.....

http://www.nsandi.com/savings

http://www.thisismoney.co.uk/money/saving/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

Ques

Thanks for your reply.


By my reckoning that means:


2x TSB = £4,000 @ 5% = 200
3xBoS = £15,000 @3% = 450
Lloyds = £4,000 @ 4% = 160
Nationwide = £2,500 @5% = 125
Santander = £20,000 @3% = 600


So a total of £1,535(pre tax) interest from £45,500. By opening up 8 new accounts and shuffling money around.


I'll still have another £55,000ish next month which I was looking at Investec 1yr fix at 1.8% so another £990 interest


So all in approx. £2,500 pre tax from £100,000. It seems really poor but I guess going risk free and liquid means poor returns.


On a side note, does anyone have anything positive or negative to say about Investec? Having never had large savings, it's not an organisation I really know much about.

ColdIron

Lloyds = £5,000 @ 4% = 200

I've been using Investec for 3 years or so and only have good things to say about them. Professional, courteous and easy to deal with. They sometimes offer existing customers preferential rates on maturity. Bad timing though, a couple of weeks ago the 1 year fix was 1.95%

Linton

With only a 1-2 year time frame you should not consider anything other than cash deposits and accept the best poor return you can get.

However, it may be worth you asking yourself as to whether you will want to use all your money before 2017. If you have no long term (10+ years) savings could it be sensible to start with say £15K invested in an S&S ISA? This would give you a basis for a future of saving/investing and still leave you with plenty of money for a house deposit in the next 2 years.

You mention a full time job and small cash savings - do you pay into a pension?

Archi_Bald

Your figures are ok for budgeting but consider these:

• current account filled to the brim all year long can't achieve the AER as there is no compounding. You need to use the gross interest rate to calculate your pre-tax return
  
  
• you could dripfeed some regular savings accounts - First Direct 6%, Lloyds 4%, HSBC 4%.
  
  
• apply for all those current accounts now whilst you still have a job and a salary (for the application form). Exploit the switching offers, check Quidco for cashback. Some £400-500odd to get there in total
  
  
• consider adding a Halifax Reward to your list - potential for another £60 a year
  
  
• if the interest will be your only income, you can get it without tax deduction - google R85

Ques

You give with one hand then take away with the other!


Thanks for the info though.


Any other thoughts/advice from anyone.


Another couple of ideas are to use Santander ISA (1.7%) for £15,000 or I did wonder about a couple of largish chunks into 2 different fix rate accounts next month (say £50,000 1yr fix Investec (1.8%) and £50,000 2yr fix somewhere else (maybe around 2.2%)



With this plan I could then wait for 6 months and use the current accounts for the other £50,000 that I'll have then.


Timing wise, the next 6 months I don't need access to anything (still working). After that I'll receive the lump sum of £50,000 and realistically I might need to 'live off' about £20,000 of that. Realistically there's no way I would be looking at buying a house until towards the end of 2016 at the earliest so tying cash up for 2 years isn't a problem. I like the idea of staggering it though.

Archi_Bald

Ques wrote: »

You give with one hand then take away with the other!

I have shown you four additional items to make a lot of extra money.

BTW, all the information is already on the forum.

ColdIron

Ques wrote: »

You give with one hand then take away with the other!

Reminds me of an analysis of one of Gordon Brown's budgets
The Gord giveth and the Gord taketh away

Ques

I was busy replying to ColdIron and rambling on, meanwhile more advise was coming! Thank you to all.


To answer a couple of the further points raised:


Accepting the best, poor return I can get from cash deposits... I guess that's what I'm coming to terms with. It does seem really poor. It also seems like a lot of paperwork/different accounts in order to stretch out what amounts to an extra £500 or so per year by using current account offers rather than 'normal' savings accounts. Then again, £500 for a few hours of form filling would be stupid to turn down.


Long term savings...I have thought of this. I guess in my VERY rough plan in my head, I'm expecting to tread water financially for 18mths while I work out what I want to do (I'm 33, have been following my current career path for 12years but don't really like it so am planning on using the redundancy as an opportunity to try out some different options before settling into permanent work again). I'd then hope maybe mid 2016 to settle into a permanent job and at the end of 2016 think about buying. At that point I'd hope to still have c. £150k so I guess I'd look at using around £100k-£120k as deposit/setup costs and keep the rest in savings/emergency fund so maybe I ought to seriously consider filling some sort of ISA allowance for a couple of years for this long term bit...


Pension - yes, I was a late starter but I do have a pension. It's currently at around £40k or so. While being out of permanent work, I do intend to keep paying into it (probably only minimum amounts to keep the fees low as they increase by 0.5% if it is left dormant)

Ques

Sorry Archi Bald, the previous (joking) comment wasn't aimed at you. I very much appreciate you (and everyone else) taking the time to respond. Please don't take offence. I am also aware the info is available on the forum, the forum is where I have got a lot of the knowledge that I have and is invaluable. I'm just trying to get all my thoughts together and make some decisions on what I'm going to do, hopefully with some added thoughts/advice from the likes of yourself and the others who have replied.


To address the points that you made:


Can't achieve AER... yep, I had thought of this, Realistically I guess there will always be a certain amount of money passing between the accounts too so there will be some 'dead money' at any given time. All in all I guess I should probably knock 0.5 or so off the AER for a better budget estimate.


Regular savings - I hadn't thought of that - My lazy side screams at me 'that's another 4or5 accounts to manage'. My sensible side give me the slap I need and makes a note to work that into the final plan!


Quidco - something I really ought to look at. I'm aware of it but have never used - will do some research


Halifax reward - I currently bank with Halifax, to be honest I really don't like them much and think I will probably move away completely once I get this all sorted


R85 - again something I need to look into. I don't intend to be completely without work for long so hope it won't be relevant but I ought to at least look into it more.


Apply for accounts now while still employed - I had thought this would probably be wise. I will look to start this at the end of this month.


Thanks again for all inputs