not sure where to put 20k gift

kmb500

Hi, last week a family member gave me £21000. I don't really have any savings to speak of and want to invest it sensibly. I am trying to find good bank accounts with the best interest rates but struggling so far.

I'm looking at MSE's savings accounts guide and it seems the ones with the best rates are fixed term ones, which is fine as I will not be needing to spend it soon. The two banks that MSE lists as high rates are Atom Bank and Paragon Bank, neither of which I have ever heard of and seems they are new banks. Can I trust my money to be put in there?

My bank account is TSB and I get 3% up to £1500. I can see there is an NS&I 3 year fixed term account that has 2.2% rate but only up to £3000. I'm comfortable putting £3000 there, but I'm really unsure what to do with the rest of it.

If anyone can give me any advice would be appreciated.

Also where can I go to look at investing i.e. not saving but risking money. I thought it may be worth puting a small amount of the money into investing but dont know how any of that works. Is the only way to do it buying shares? (something I don't understand therefore do not want to do) or are there investment places I can go to who will invest money for me, similar to banks ?
This is all new to me.

Thanks for any advice.

xylophone

I don't really have any savings to speak of and want to invest it sensibly.

How much would you like to have as an emergency fund?

You might consider opening a Nationwide Flexdirect current account which would give you 5% on £2500 for a year and access to the Flexclusive regular saver in which you can save £250 a month at 5%.

You need to cycle in/out £1000 a month into the current account to get the 5%.

If you have three/six DDS, one or two Tesco current accounts would be worth considering - you need to cycle in/out £750 a month to each account.

http://www.tescobank.com/current-accounts/

After you have done some reading and research, you might consider a stocks and shares ISA provided that you are looking at a ten year (at least) + time scale.

http://monevator.com/investing-for-beginners-the-global-stock-market/

http://monevator.com/tag/global-tracker/

http://monevator.com/how-to-chooose-total-world-equity-trackers/

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa?cmpgn=PS0617UKPABIS0001&gclid=EAIaIQobChMIxr7GnO3o1gIVUhgbCh3_BweuEAAYASAAEgJ6RvD_BwE

kmb500

xylophone wrote: »

How much would you like to have as an emergency fund?

You might consider opening a Nationwide Flexdirect current account which would give you 5% on £2500 for a year and access to the Flexclusive regular saver in which you can save £250 a month at 5%.

You need to cycle in/out £1000 a month into the current account to get the 5%.

If you have three/six DDS, one or two Tesco current accounts would be worth considering - you need to cycle in/out £750 a month to each account.

http://www.tescobank.com/current-accounts/

After you have done some reading and research, you might consider a stocks and shares ISA provided that you are looking at a ten year (at least) + time scale.

http://monevator.com/investing-for-beginners-the-global-stock-market/

http://monevator.com/tag/global-tracker/

http://monevator.com/how-to-chooose-total-world-equity-trackers/

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa?cmpgn=PS0617UKPABIS0001&gclid=EAIaIQobChMIxr7GnO3o1gIVUhgbCh3_BweuEAAYASAAEgJ6RvD_BwE

Thanks. I'm aware there are good interest rates with current accounts, but I already have a current account with TSB and I'm very happy with them, don't want to switch. In terms of paying in the money every month - can you literally transfer £1000 across then transfer it back? (If I kept £2500 in that account to rack up the interest, for instance)

It gets complicated with Direct Debits.. I only have a few of them and if I'm setting up multiple bank accounts, I would have to create direct debits and not sure how to magic them out of thin air! No point setting up a £10/month DD if that's more than the interest rate I'd be getting lol.

Thrugelmir

Longer term what do you propose to use the money for?

kmb500

Thrugelmir wrote: »

Longer term what do you propose to use the money for?

Well the only major expense that will come that I plan for would be a deposit on a house. But that would be in like 10 years time and married etc.

I've been looking at various accounts today and I reckon I can get, at least on the following 12 months if not longer, £512 interest which seems pretty great to me. I am hoping that it can grow over time.

xylophone

You don't have to switch to open a Nationwide account.

There is no reason why you should not have more than one current account.

You could transfer the £1000 from TSB to Nationwide and back again within a minute or two using FP.

Or set up a SO from TSB to NW and from NW to TSB for the same day each month.

If you have at least 3 DDs you could open a Tesco current account, switch the DDs to it, cycle in out £750 a month and earn 3% on £3000.

xylophone

deposit on a house. But that would be in like 10 years time

And are you eligible for a LISA?

https://www.moneysavingexpert.com/savings/lifetime-ISAs

kmb500

xylophone wrote: »

You don't have to switch to open a Nationwide account.

There is no reason why you should not have more than one current account.

You could transfer the £1000 from TSB to Nationwide and back again within a minute or two using FP.

Or set up a SO from TSB to NW and from NW to TSB for the same day each month.

If you have at least 3 DDs you could open a Tesco current account, switch the DDs to it, cycle in out £750 a month and earn 3% on £300.

thanks, that is useful to know. I've just applied for the nationwide account.

as for the lifetime ISA, I don't know if I will ever be able to buy a house so don't want to lock myself into that. The money could still be used if needed even if I don't know what that is yet.

Alexland

+1 for opening a Nationwide Flex Direct account and using the regular saver in addition to your main bank account.

The nice thing about putting £4k in a LISA is that even if you do not use it towards a house you can withdraw it with the £1k bonus tax free (and all the capital growth) at 60 and, under current rules, then put the same money into a pension between the age 60 and 75 to get a further bonus.

If you are at least 10 years away then consider a funds based stocks and shares LISA if you can cope with the volatility. The good thing about funds is that they are collective investments which can contain hundreds of shares and bonds so you are reducing the risks inherent in picking stocks.

Thrugelmir

xylophone wrote: »

And are you eligible for a LISA?

https://www.moneysavingexpert.com/savings/lifetime-ISAs

+1

Best place for raising a deposit. Difficult to beat the bonus that's added.

kmb500

Alexland wrote: »

+1 for opening a Nationwide Flex Direct account and using the regular saver in addition to your main bank account.

The nice thing about putting £4k in a LISA is that even if you do not use it towards a house you can withdraw it with the £1k bonus tax free (and all the capital growth) at 60 and, under current rules, then put the same money into a pension between the age 60 and 75 to get a further bonus.

If you are at least 10 years away then consider a funds based stocks and shares LISA if you can cope with the volatility. The good thing about funds is that they are collective investments which can contain hundreds of shares and bonds so you are reducing the risks inherent in picking stocks.

I'm 21. 60 is a bit far away from me. :P