£500,000 I want to keep safe - ideas please

ColdIron

With that sort of sum your first priority should be safety in the short term. Something like the NS&I Direct Saver is ideal for this purpose as all of your money is as safe as is possible

You can then, at your leisure, decide what to do with it

You could open up a stack of high interest current accounts but you'll still have the problem of what to do with the bulk of your cash

You really don't want to put it all into easy access savings accounts, even after finding enough places with separate deposit licences though this can be very tempting. The interest rates are not much better and you probably do not need instant access to all of it

You could consider 1 or 2 year fixed savings accounts with the likes of Investec etc for better rates

The biggest problem with cash is that it will, over time, lose out to inflation becoming less valuable

Ultimately your choice may come down to investing or perhaps property. Both have pros and cons but you can pay for advice or learn

The point is that you don't want to rush anything, take a year or more if you want, do it in dribs and drabs if that makes you more comfortable. It's a very useful amount of money and you don't want to mess it up with ill advised decisions

Good luck

puk999

DiggerUK wrote: »

Once you have decided on short term, then there is the question of long term. If you are looking at 5 years plus then it is time you included research on gold.

Surprised you didn't mention stocks, shares and funds alongside the recommendation for gold. What percentage of the half a million quid should the OP put into gold?

CantDecide

I'm definately waiting till I have decided PROPERLY what I want to do.
(NO to stocks and shares) It may well be property (not all of it)

What do all of you think of the bank of england interest rates??
I'm not sure I want to put anything fixed for 2 or more years because I feel that i don't want to be stuck for say 3 years at 3% when in 1 or 2 years time the savings accounts might offer alot more!!!

CantDecide

Oh and by the way
I am certainly going to SPEND some of it
i'm not going to sit on loads of money and not enjoy it - thats for sure
(incase anyone cares!!)

Eco_Miser

Four and a half years ago, people were saying don't put your money in long-term fixed rate deposits because rates will be rising soon. I did anyway, and am still getting 5% on that money.

That's not to say that rates won't improve over the next five years. Look at the total return over 5 years of the best 5-year rate you can find compared with 5 1-year deposits that start at a lower rate but may be higher in years four and five.

If you're willing to take the risks of property, you should be willing to consider stocks and shares and especially funds, which are more certain in their income, and much easier to sell.

DiggerUK

CantDecide wrote: »

.....What do all of you think of the bank of england interest rates....!

There is little or no chance that BOE rates will rise.
The banks are still full of toxic debts that they need to keep controlled. A large enough area of research to keep you busy for a while.
..._

bowlhead99

The bank of england interest rates are at all time lows - they have never been this low for this long in the history of time. Everyone is expecting them to gradually increase from next year onwards, and predict the same for the USA. Rates in Europe are looking rockier and may still drop further.

I agree that this will be gradual rather than massive and quick, because they don't want to destabilise the economy too much. However, it will happen at some point the markets are pricing in this starting to happen over the next year. Digger is probably in a minority in thinking there is little or no chance they will rise if you are looking beyond the next 6 months. The BoE publish their minutes every month - you can literally read the comments and see the vote results - and if the economic recovery keeps its pace or doesn't fall back too much, they will let the rates tick up a bit.

One of the reasons you can get more like 2% than 1% if you commit to a 2year fix, is because the banks expect rates to go up. So some of it is already priced in to the fixed rates on offer. However, once they do go up, they will be pricing in the next rate rise, for new people putting cash away at that time. So generally as rates rise you will slowly be able to get more on cash accounts while if you are locked into a long 4 or 5 year fix you will be missing out. You probably shouldn't expect to keep pace with inflation with any sort of cash accounts, but you will start to make less of a loss if you are putting money away at better rates in due course. So, I would not be locking away any of it in 5 year accounts, if it was me.

Cash savings accounts, due to their inability to keep pace with inflation over the long term if you ever take any money out of them, are generally for rainy day funds and short term savings needs. But once you have decided PROPERLY what to do, you might well decide that 10% or more will stay in cash. So, no harm in opening an account or two which are locked up for a couple of years. You are always going to need some cash, whether it's just for living off, or to cover maintenance on your house or on a property rental business, or to take advantage of lower investment fund prices from time to time. So, having some cash that will come off deposit in 2016 is no bad thing, especially if it gets you a slightly better return than doing a 1-year fix now and then another 12 months at instant-access rates.

I expect when you have looked at what you are PROPERLY going to do, as you say, you will definitely consider stocks-and-shares based investments because it would be bonkers not to, unless you want your entire investment portfolio to be split between a property and an emergency cash fund after you spend the first chunk on some toys and holidays now. You have to have some way of making your money deliver a return and last for the rest of your life (and potentially you have people you might like to pass some of it on to once you're gone?). Stocks and shares and other similar investments are how most people provide for their future income needs, whether structured inside a pension or an ISA or some other investments outside those tax wrappers.

But I would agree you would not be buying stocks and shares based investments, or gold, to just pass the time for this one year or so before you make the assessment of what it is you really plan to do with the money. The value of investment funds or gold are volatile and not suitable for a 1 year time frame which is why everyone is telling you the only real options are cash deposits with a selection of banks and NS&I. After that 1 year or so, decide what you are going to spend on fun now and perhaps a property to live in, and then take some proper professional advice on what to do with the rest to provide for the rest of your days.

CantDecide

Eco_Miser wrote: »

Four and a half years ago, people were saying don't put your money in long-term fixed rate deposits because rates will be rising soon. I did anyway, and am still getting 5% on that money.

So in 6 months will you put it all in for another 5 years???
I bet you won't!!!

Jmanley90

Why no to stock and shares? It seems people are inherently scared of them. I assume this is due to lack of knowledge. They would be the first thing in my mind if I had that sort of money.

Property is something else I'd invest in too.

Do definitely spend some of it though!

xylophone

If you go with NS&I, remember the interest is paid gross - you will need to advise HMRC.

If you receive net interest, you will still need to advise HMRC if the income takes you into a higher band. http://www.hmrc.gov.uk/taxon/bank.htm