Long term investment with standing order option

hansi

My elderly mother-in-law has been told that she will have to be admitted to a care home following a stay in hospital. She has her own house which is regarded as an asset and will have to be sold to fund her care. The house should sell for approx £100000. Where would be the best place to put this dosh where I can arrange a monthly standing order out to the home and which would give me a good rate of interest at the same time?

ED

hansi – It's sad for your mother-in-law. Let's see if MSE can come up with ideas to help maximise interest from the house sale proceeds.

Abbey's eSaver – linked here :
http://www.abbey.com/future/savings/easyr/easyr_esaver.html

This pays 5.20% gross for the first 6 months of a/c opening (0.50% less thereafter) for £50,000 or more. For £100,000+ the rate is even higher. (Minimum balance of £1 earns 5.10% incl bonus.)

Funds could be transferred online from eSaver to Abbey cheque a/c, one banking day before each Standing Order payment is due out.

Perhaps this would be the simplest home for the funds, at least for the first 6 months until the bonus expires.

As you probably know (but methinks you're probably in shock, currently) :

1) CHAPS transfer costs approx £18–£35 but would be worthwhile for a £100,000 transfer from solicitor's a/c upon completion of the house sale. As the £'s move same-day, there is no period of 2–7 days earning nil interest.

2) Some people prefer not to keep more than £35,000 with any one financial institution, just in case it gets into financial difficulty.

For instant access, maximum rate, one alternative to Abbey would be Birmingham Midshires. As mentioned in another thread, today is the final chance to apply for the Online Saver offering 5.40% gross. Tomorrow the offer swaps to Version 2 @ only 5.10%.

6 months hence brings us neatly to the beginning of the new financial year. I have a hunch many tempting high-rate a/c's will be offered around that time. I've noticed some of the best offers in recent months all expire in March.

Perhaps one of our banker, IFA or accountant commentators can enlighten us about the reasoning behind this…

dunstonh

With that sum of money, you ought to be considering investments rather than deposit accounts.

Pal

Agreed. I would speak to an IFA about the advantages of various investments. For example a portfolio of bonds that mature at relevant dates to allow the fees to be met.

payless

PAL-
Try asking 10 high street IFAs what they mean by the term "bonds" , and see if it matches your defination .

dunstonh

do you mean corporate bonds, life bonds, investment bonds, premium bonds or products that use the bond name but arent really bonds?

payless

exactly

think what Pal means is corporate bonds ( direct not in a bond!)

whereas to an IFA the term bond will mean different things- but guess most will think (many whilst rubbing their hands) that the person wants a with profit or income bond

cheerfulcat

It sounds as though this is the exact situation for which immediate needs annuities were created. For a single lump sum payment your mother in law's bills will be paid for as long as necessary.

Rather than an IFA, I would consult Help the Aged in the first instance ( 0500 767476 ).

HTH

Cheerfulcat

dunstonh

It sounds as though this is the exact situation for which immediate needs annuities were created. For a single lump sum payment your mother in law's bills will be paid for as long as necessary.

Rather than an IFA, I would consult Help the Aged in the first instance ( 0500 767476 ).

HTH

Cheerfulcat

Immediate vesting pension would not be appropriate. (i assume you mean IVP rather than any other form of annuity).

cheerfulcat

Hello, DD,

No, I don't mean an immediate vesting pension, I mean an immediate needs annuity, which is intended for just these circumstances ( where an elderly person has to go into a care home ). In return for a lump sum, the insurance company will pay the care home costs for the rest of the annuitant's life, and if the payments are made directly to the care home, they are tax free.

Cheerfulcat

dunstonh

That will teach me to post when i am half asleep. You are correct that it is an option. I just had IVP on my mind at the time and thought not again ;D

With immediate needs annnuity, there are only 4 providers and there is medical underwriting with all 4. You could be looking at four times the fees as the required premium although depending on health, it could be only be double.

On death the annuity stops so that is a big disadvantage. Plus it is not allowed to pay any surplus above the care home fees.