Not really with it saver!

spirit

Morning all, a bit of background.

I have just downsized, paid off my mortgage and have £45k to do something with (savings wise). I've opened a FD account. Quick question about that, obviously there is no point me putting more than 2.5k in there, so do I set up some sort of SO to transfer the £1000 in there each month and then swiftly move it out again? How does that work timings wise?

I haven't got any ISAs yet and i'm not especially keen on changing my bank account. I like the idea of the Santander 123 but all my DDs are set up with my Barclays account and it's such a nuisance to change over. Besides, i'm about to put in a mis selling claim on a packaged account and wouldn't move out of there until that's sorted.

So what else should/could I be doing with this money?

colsten

You should read more of the forum as all your questions have been answered multiple times. Like: you don't need to pay £1K into an FD account if you have a normal savings account with them, you don't need to change your current account in order to get a 123 (or any other current account), and extra DDs are very easy to set up.

As to what you should be doing with your extra money depends entirely on when you plan to spend it, what your attitude to risk is, what your pension provisions are, what tax band you are in.

bowlhead99

spirit wrote: »

Morning all, a bit of background.

I have just downsized, paid off my mortgage and have £45k to do something with (savings wise). I've opened a FD account. Quick question about that, obviously there is no poing me putting more than 2.5k in there, so do I set up some sort of SO to transfer the £1000 in there each month and then swiftly move it out again? How does that work timings wise?

You confused me with the reference to FD as First Direct doesn't pay interest on their current account even though they offer a switching bonus. But I guess you mean Nationwide FlexDirect right?

If you want to meet the terms and conditions by putting money in the account each month, put money in the account each month by standing order. If you don't want to have more than £x in the account, take money out of the account by standing order. These can presumably happen same day unless the T&C say that deposited money needs to stick around overnight, which it probably doesn't. If you leave more cash than they pay interest on, it is a bit of a waste. If you take money out leaving less than 2500 in there, it is a bit of a waste. So, aim to cycle the money on the same day or within a day or so.

I haven't got any ISAs yet and i'm not especially keen on changing my bank account.

If you don't want multiple accounts you should probably not have bothered opening an account which only fits one twentieth of your cash pile (nationwide) instead of one that fits almost half your cash pile (santander). Although there's nothing to say you have to 'change' your bank account. You merely need to open and operate the new bank account.

I like the idea of the Santander 123 but all my DDs are set up with my Barclays account and it's such a nuisance to change over.

Santander only need two direct debits and any of your service providers will happily let you change your account details without demanding you close your Barclays account. Changing two direct debits is not a great nuisance. Plus Santander pay cashback. It should be a no brainer to change a couple over. Or set up a new direct debit to pay NSPCC or Red Cross a couple of pounds a month. Your 3% on £20k at Santander is bringing in £600 a year after all. Or open up a savings account at Tesco and go into the settings online and have it pull a pound from Santander every month on a direct debit feed.

Besides, i'm about to put in a mis selling claim on a packaged account and wouldn't move out of there until that's sorted.

Whether or not you are currently paying your electricity bill out of a Barclays account has no bearing on whether or not you were missold a packaged account.

So what else should/could I be doing with this money?

After the Santander account you can look at other high interest paying accounts and Lloyds, TSB etc etc.

However, what rainy day are you saving for and when? When do you need the money? If the answer is not for 10-15-20 years you could put £15k of it in a portfolio of investment funds within a stocks and shares ISA, and you'll still have £30k of cash from the downsize plus whatever other cash you already had. Unlike cash savings, the investments should perform better than inflation over the long term.

spirit

colsten wrote: »

You should read more of the forum as all your questions have been answered multiple times. Like: you don't need to pay £1K into an FD account if you have a normal savings account with them, you don't need to change your current account in order to get a 123 (or any other current account), and extra DDs are very easy to set up.

As to what you should be doing with your extra money depends entirely on when you plan to spend it, what your attitude to risk is, what your pension provisions are, what tax band you are in.

I have been reading the forum and the stickies since I moved, however, people's situations are often different and it's good to get a view on my own from those more knowledgable than me.

I have no plans to spend any of that money in the foreseeable. I am working full time still (will be 58 next month, divorced female with 2 adult children) I have a workplace pension, but could do with adding to that in some way. I am in a company sharesave scheme whereby the company matches each share I buy. I intend to add that to my pension pot whenever I leave work. I am a normal rate taxpayer.

I am slightly nervous about risk, but have read that I might get better returns if I invested some that way.

spirit

bowlhead99 wrote: »

You confused me with the reference to FD as First Direct doesn't pay interest on their current account even though they offer a switching bonus. But I guess you mean Nationwide FlexDirect right? Correct

If you want to meet the terms and conditions by putting money in the account each month, put money in the account each month by standing order. If you don't want to have more than £x in the account, take money out of the account by standing order. These can presumably happen same day unless the T&C say that deposited money needs to stick around overnight, which it probably doesn't. If you leave more cash than they pay interest on, it is a bit of a waste. If you take money out leaving less than 2500 in there, it is a bit of a waste. So, aim to cycle the money on the same day or within a day or so. thank you
If you don't want multiple accounts you should probably not have bothered opening an account which only fits one twentieth of your cash pile (nationwide) instead of one that fits almost half your cash pile (santander). Although there's nothing to say you have to 'change' your bank account. You merely need to open and operate the new bank account. got it, thanks
Santander only need two direct debits and any of your service providers will happily let you change your account details without demanding you close your Barclays account. Changing two direct debits is not a great nuisance. Plus Santander pay cashback. It should be a no brainer to change a couple over. Or set up a new direct debit to pay NSPCC or Red Cross a couple of pounds a month. Your 3% on £20k at Santander is bringing in £600 a year after all. Or open up a savings account at Tesco and go into the settings online and have it pull a pound from Santander every month on a direct debit feed. good advice there, thank you

Whether or not you are currently paying your electricity bill out of a Barclays account has no bearing on whether or not you were missold a packaged account. yes i realise that, my thinking was that if I closed Barclays, they might be less likely to pay my claim than if I still had a sizeable still in there.
After the Santander account you can look at other high interest paying accounts and Lloyds, TSB etc etc.

However, what rainy day are you saving for and when? When do you need the money? If the answer is not for 10-15-20 years you could put £15k of it in a portfolio of investment funds within a stocks and shares ISA, and you'll still have £30k of cash from the downsize plus whatever other cash you already had. Unlike cash savings, the investments should perform better than inflation over the long term.

I'm almost 58 and would love to retire earlier than I can start claiming my NI pension from. I have 2 adult children and guess that one day there might be a wedding or 2 to contribute to.

bowlhead99

£45k cash less the cost of weddings etc won't get you many years of earlier retirement. If you can get more employer contributions into your workplace pension by contrbuting more yourself and they match it, make sure you are doing that.

You are now over the age (55) when private pensions can be taken out and taken as current year income with a small tax free lump sum. If you stopped working before state / workplace pension age, your income for the year would be tiny and your tax rate would effectively be zero on a good chunk of money even after the 'tax free lump sum'.

So if you are considering different investment options it would make sense to pay some money into a pension now and lower your current year tax bill, knowing that some of it would escape tax altogether - rather than use S&S ISAs.