Knee deep in current accounts. Go for more, or increase investments?

Temrael

Hi all,

Between my wife and I we have the following...

Joint Account
1 x Santander 123 @ 3%

Sole accounts (Each)
1 x M&S Linked Saver @ 6%
1 x First Direct Linked Saver @ 6%
2 x TSB Classic Plus @ 5%
1 x Lloyds Club @ 4%

We also have a S&S ISA each with Fidelity which is drip feeding Vanguard Lifestrategy 80 Acc.

In total we have about £40k in cash across the Current accounts and about £17k in the S&S ISAs.

I'm being made redundant in a few months and am torn as to where the redundancy money should go as I'm out of Current account capacity. Touch wood, we won't be dipping into our cash while I look for work as DW has a good income that will cover the bills etc. We are mortgage free and live pretty frugally so whilst I could open some more current accounts (maybe getting some joint ones where we have sole currently?) it feels like we might be holding a bit too much in cash?

That said, I don't think anyone is expecting that the ISAs will return very much over the next year or so and obviously that comes with risk. We are also running out of DDs to distribute (though there is the Tesco trick I guess).

I'd be interested in what you guys would do in my position, and why?

Thanks in advance! :beer:

Linton

£40K cash should be far more than enough to cover life's emergencies and assuming there are no planned major expences in the next 5 years at least I would invest the money. It doesnt matter whether returns are expected to be good or bad in the next year, you are investing for the long term.

It could be very worthwhile putting some of the money in your pensions, especially if either of you are higher rate tax payers.

Gurberly

Partly dependant on how much redundancy you are expecting.

I think I would lean more towards the cash holding for the time being whilst your employment situation is a little uncertain.

As you say “touch wood” that you won’t need to dip into the cash, but if you find you do, then it would be a lot easier to manage from cash holdings. As and when you find a new job and have that additional security of another wage, then look to more long term opportunities.


Ian

jimjames

Gurberly wrote: »

Partly dependant on how much redundancy you are expecting.

I think I would lean more towards the cash holding for the time being whilst your employment situation is a little uncertain.

As you say “touch wood” that you won’t need to dip into the cash, but if you find you do, then it would be a lot easier to manage from cash holdings. As and when you find a new job and have that additional security of another wage, then look to more long term opportunities.


Ian

The OP already has £40k cash emergency fund and no mortgage. It would seem to me that they have plenty available as cash to cover eventualities and wouldn't need to access money that was invested above the £40k cash.

Temrael

Thanks guys, I know I need to think longer term now and that pensions and investments should become the focus. It's tricky though when it feels like markets might be set for a big fall fairly soon. It'd feel nice if you knew you were getting in at the bottom rather than the top of the market.

I know... I know... "Time in the market, not timing the market!".

I've just opened a couple of Club Lloyds Regular savers as it doesn't need any DDs and I figure I may as well slowly feed those (4%) from Santander (3%). If nothing else it might keep Santander from capping out for a bit longer.

I really do need to look at something longer term for the redundancy money though.

Thanks again,

Superscrooge

Temrael wrote: »

Thanks guys, I know I need to think longer term now and that pensions and investments should become the focus. It's tricky though when it feels like markets might be set for a big fall fairly soon. It'd feel nice if you knew you were getting in at the bottom rather than the top of the market.

,

You are certainly not getting in at the top of the market! FTSE has already fallen 20% from its peak last year.

None of us know whether the market will drop further or whether with hindsight Feb 2016 will turn out to be the perfect time to invest.

Markets go up more than they go down so delaying investing and trying to time the market doesn't work most of the time.

atush

If your redundancy is over 30K, i'd put the excess in a pension.

If 30K, i'd fill 2x S&S isas.

Consumerist

Know what you mean about being knee-deep in current accounts but why worry?

If you're nervous about the stock market at the moment then stay with cash for the time being. You may get in late for a sudden boom at some future point but you might also avoid a sudden crash somewhat sooner.

Temrael

Thanks again guys, redundancy should be around £30k so we'll probably go a mixture of ISAs and pensions. We are piling a fair amount into both already each month but there's room for more.

I dunno about you guys but can't help but look at the 10 year FTSE All Share charts though, and feel a bit trepidatious just now.

We only started investing about a year ago and I know it all comes good in the end (long before we'll be drawing on them) but it feels an odd time to be chucking big fat gobs of money in - only to see them potentially shrink by half for a few years.

masonic

Temrael wrote: »

I dunno about you guys but can't help but look at the 10 year FTSE All Share charts though, and feel a bit trepidatious just now.

Maybe you should look at a chart that includes income.
http://www.trustnet.com/Tools/Charting.aspx?typeCode=NASX

Consumerist

masonic wrote: »

Maybe you should look at a chart that includes income.
http://www.trustnet.com/Tools/Charting.aspx?typeCode=NASX

Well, I'm no chartist but that looks me as though it topped-out last spring/summer.