40k in the wrong savings account? Advice needed please.

passion8

I'm sooo embarrassed about posting this, but it's time to bite the bullet and ask another stupid question. It's a question that I was saving for an IFA that I'd made an appointment with, but circumstances have changed, and the need for an IFA is no longer as important as it was a month ago. My pending retirement has been postponed.

I've got 40k in a Halifax Saver Reward, and I know, thanks to reading this site, that it's not making as much money as it should be. This is my fault btw. My monthly salary of £900, is paid into this account, which is why I've accumulated so much. I'm also paid £100 per week, which I don't actually put anywhere ......!

So, for the embarrassing question.

Can anyone please advise me what I should do with regard to moving it into a better account - and how?

For instance: do I move the whole lot into a better regular savings account a.s.a.p. as a lump sum? And if I do, does it need to be moved each year?

I've read Martin's articles about savings and drip feeding etc, and many posts here, but I'll have be honest, admit defeat, and say that it's too confusing for me to take in.

Since joining this site, I've stuck 3k into a NS&I ISA, and beyond that, nothing! (Apart from buying some Premium Bonds - another loss-maker).

As I don't intend using this money for anything like paying off a mortgage, and as I'm expected to move from the lower rate tax bracket to the higher one this year, what can I do with it?

I'm not sure I trust myself with internet banking, but I'm willing to learn if I have to.

So, any suggestions/advice will be much appreciated. Thanks in advance.

Aegis

Ok, so you have a lump sum of 40k and from what I can gather from your post, you want to maximise your capital growth, correct? If this is the case, and since you're moving up into the higher tax band, the best bet would be to try maximising your exposure either to growth investments or tax-free savings. I'm also assuming for the moment that your interest rate is low (i.e. less than 6% at the moment!) and that there is no penalty for you leaving the account.

You've already made an excellent first step with the NS&I cash ISA, as that's a tax-free account with an excellent interest rate. Believe it or not, the Premium Bonds are likely to be more appropriate for you than for most people because of your pending rise to the higher rate income tax band. You could also consider looking into NS&I's index linked savings certificates.

If you have anything you don't mind putting at some level of capital risk in exchange for better growth prospects, you could use your Stocks and Shares ISA allowance to get into anything from a fairly low-risk investment in gilts and corporate bonds to a high-risk portfolio designed to maximise your growth potential at the expense of stability. You can also invest outside this mini ISA and transfer across your allowance each year.

You might want to consider seeing that IFA anyway. The initial appointment should be free, and he might be able to suggest a strategy that works to build your capital in preparation for your eventual retirement, at a risk level that matches your own needs and attitude.

chesky369

Why do you think the poster is moving into a higher tax bracket? The £40k seems to have been saved over the years, not put in in just one lump and their income of £900 per month certainly doesn't suggest a higher bracket.

robp

"As I don't intend using this money for anything like paying off a mortgage, and as I'm expected to move from the lower rate tax bracket to the higher one this year, what can I do with it? "

Their statement says they expect to move tax bracket.
They could be confused though.....can the OP expain further please?

passion8

Many thanks for your reply Aegis. It's well under 6% I think (but I'll pop back later and reply a bit more clearly later - I can't find the interest rate )

chesky369 and robp - thanks for the questions. I didn't make myself very clear.

Because of profits made (in our company) in the last year, both myself and my husband, are expected to move into the higher rate bracket. Hope that helps?

chesky369

no, my fault, I didn't read down far enough - too early in the morning.

Aegis

chesky369 wrote: »

no, my fault, I didn't read down far enough - too early in the morning.

Any time before about 3pm is too early in the morning for me to read things properly, so I know how you feel

chesky369

(Now I've read to the end properly) I definitely agree you DO need to see an IFA. If you've gone in a short time from thinking you're going to retire to then probably having a much larger income instead, then you have to re-set your mind and an IFA will help you do this. And you really must get over the allergy to on-line accounts - if you can manage posting here, you can manage banking on-line, I promise.

passion8

Hi Aegis and all

I waffled so much I think I confused myself, let alone other posters.

As soon as I realised that this money was probably in the wrong account, my first thought was to ask on the board for help in finding a better place to park it. A bit of a 'quick fix' to minimise the stupidity I felt - but since yesterday, things have changed yet again.

Because of this, and because it makes my savings seem insignificant, we've decided that the need for an IFA is of importance, so I'll take yours, and chesky369's helpful advice and see one - sooner rather than later.

chesky369, hi and thanks for the reassurance re online banking. Instead of reading Martin's articles, (I'm not knocking them btw, far from it - they're just confusing me ), I'm going to sit down and learn. Preferably with some of this money that's in the wrong account.

Aegis again After reading about gilts and corporate bonds etc, and the ensuing brain failure , I'm now certain that we need that IFA, but thanks once again for all the comprehensive advice that was offered.

(The site was still recovering from its attack when I tried to post this last night, so apologies for the late response.)

Aegis

Good luck with it all! The first steps into really managing your savings and investments are difficult, but rewarding in the long run. And I don't JUST mean financially, though obviously that's a big part of it!

passion8

Could someone do me a big favour please?

I was playing about on Martin's new calculator, and had to check the interest rate on the Saver Reward.

Have I got this wrong, or is Halifax only paying 2.91% gross on £25,000 + with no withdrawals?

Thanks in advance

P.S. chesky369 - I've started the ball rolling and awaiting a password for online banking

http://www.halifax.co.uk/savings/personalrates.asp#Hx_saver_reward