The best place to put £50,000.00

sparkles_2

Hi, I've been trawling through the site trying to work it out, and I'm no wiser.

Here is what I am after.
My mum has £50,000.00. She wants to get the best return from this.
She is currently with Yorkshire bank and got £2,500 interest.
She is 63 and has asked me to help her find the best place to put her money, so it gives her a good return.

Can anyone please advise me on how to help her?

Thank you

Sparkles

dunstonh

Is she in receipt of pension credit?
Is her income likely to be over £20,900 p.a. (including interest, state pension, works pensions, dividends etc)?

£50k put in the wrong place can hit age allowance and pension credit if they are applicable.

Stavros_3

£2,500 net is a good return on that amount with banks offering a pretty reasonable AER rate. There are other options around and I'm sure someone will be along shortly to make suggestions

isofa

Depending on her tax status (how much tax she pays, if any), she could lock the 50K away in a 1 year (or 2, or 3 year) fixed rate bond some are at 6.7 and 6.71% at the moment, gross. so on 50K the gross interest would be £3350, or net £2680.

sparkles_2

THanks for your replies. She doedsn't work as she is long term sick, and doesn't pay tax.

isofa, where would she lock it away?

Can someone suggest, where to put it.
What sort of account should she be looking at?

thanks

alared

Sainsburys Bank

http://www.sainsburysbank.co.uk/savings/sav_savings_zone.shtml

dunstonh

If she puts it in a savings account it will be included in the means test for pension credit. It may be worth looking at investment bonds for some of the money and cash savings for some. Investment bonds are not included in the pension credit means test.

When is she in receipt of a pension and how much will it be when she is?

sparkles_2

dunstonh wrote: »

If she puts it in a savings account it will be included in the means test for pension credit. It may be worth looking at investment bonds for some of the money and cash savings for some. Investment bonds are not included in the pension credit means test.

When is she in receipt of a pension and how much will it be when she is?

I'm not sure about pension, but she doesn't have a private one.
Where do I find info on Investment bonds and how do they work?

dunstonh

Where do I find info on Investment bonds and how do they work?

Google will give you basics.

However, in simple terms they are an invesmtent tax wrapper like ISAs or pensions. So you can invest in unit trust/oeic/sicavs just like you can with other tax wrappers. However, their tax treatment is different and they are treated differently for benefits. Investment bonds do not get included in the pension credit means test or the means test for local authority care.

So, whilst 50k on a savings account would reduce her pension credit, 50k on an investment bond would not. However, it depends if pension credit is an issue here or not.

The key thing here is that you have to do it at least 6 months before you get the pension otherwise it could be treated as deprivation of assets.

sparkles_2

Thank you so much Dunstonh, That explains everything much clearer now.

I will research it and try and see if I can find the right one.
Do you recomend any at alll?

dunstonh

I will research it and try and see if I can find the right one.

Only if it is appropriate to her situation. The taxation within the bond is a little higher than unit trusts. So, if she doesnt need the benefits of the bond, then unit trusts would be better.

Do you recomend any at alll?

Yes. However, that is where I make my living and spend hours doing research. So, I am witholding that information I'm afraid. Plus, the research results would be different as different providers have funds with charges that are better/worse with different risks. i.e. in my opinion the company that offers the best option for low risk investors would be a very poor option for medium/high risk or above investors. The amount you invest would also have an impact as some providers arent interested in small amounts and price themselves uncompetitive in that area whilst a different provider may focus on smaller amounts rather than larger amounts. So, there is no one best provider.