Best place to put £50K?

Arbitrator

Hi,
Just had a bit of inheritance and would like to tuck some away somewhere where it can earn the best return whilst being safe and accessible.


Just thought I would add, we are 62 years old with no mortgage if that helps.



Thanks for any help.

Paul_DNAP

Depends what exactly you mean by "safe" and "accessible", the safest and most accessible are instant access cash savings accounts, and that really contradicts your requirements for "best returns" as the top ones of those are paying about 1.3%. You can easily beat this rate if you can play the game of opening several higher rate current accounts and sorting out the direct debit requirements etc. Also a note that £50k is the max holding for premium bonds, they are safe and accessible but the return is a lottery, but at that holding you should just about be matching the instant access savings rates.


If you're willing to bend a bit on the "accessible" then you can get fixed term bonds, paying about 2.6% if you lock it away for five years.
If you're willing to bend on the "safe" requirement then you can get better returns on stocks and shares based investments, although you may need to bend on the "accessible" as that's a long term plan.
It also depends on what your intention is for this money, if you want to tuck it away for your own retirement then the investments (S&S ISA) makes sense, or even feeding it into your pension pot.

mhoc

Arbitrator wrote: »

Hi,
Just had a bit of inheritance and would like to tuck some away somewhere where it can earn the best return whilst being safe and accessible.


Just thought I would add, we are 62 years old with no mortgage if that helps.



Thanks for any help.

Are you working? And if so do you think you will continue to work well after the retirement age? Do you have any dependants?

1stly use it to reduce any outgoings - pay off any outstanding credit cards or bank loans.
2nd future proof yourself - is anything going to cost you money eg if your car is on its last legs start researching for a replacement before you start paying out massive garage bills.
If your health is not as good as it might be and you expect it to gradually get worse use some of the money to future proof your house eg accessible bathrooms, laminate floors rather than carpets, downstairs toilet etc.
Or even downsize your house if it means you will be closer to shops, medical centers, pubs, bus routes, train stations etc for a time when you cant drive.

Then put some money into 5 year bonds - that will take you to 67 when again you can re-evaluate if you are still going to continue working or even go part time.

Finally set aside some fun money - nice holiday, new shed, something that brings joy to your heart.

Don't forget you also need to make a will - see a solicitor, some of them give you a free half hour consultation so you can have a general chat firstly before you start the process.

Stubod

NSI bonds or NSI premium bonds (now £50k max allowance), if you don't want to invest....

soulsaver

If you or OH is still working, you could consider making an additional contribution to your pension. 25% tax contribution at BR. And still accessible at your age.

Paul_DNAP

Also, at your age it might be worthwhile checking your national insurance record and if you both qualify for the full state pension, and then topping up with voluntary national insurance contributions if you don't. (Difficult to work out the return on investment without seeing the figures and putting an estimate on your own mortality.)

Arbitrator

Thanks for your responses.
yes, I am still working and probably will be for as long as they will allow me to. Pension isn't worth a light since most of it 'evaporated' in the first Black Monday or Friday or whatever day of the week it was! Between that and the employer making some disastrous plan choices and making us transfer twice, losing loads each time, what is left is frozen, with no live plan running.
My wife is still working too but plans to stop very soon.
Already have a few grand in Premium Bonds so I could top that up. They give about 1.4% or so?
I would dearly love to move house in the near future so I don't want to tie it up in case it's needed.
Bonds and the best current rate I guess.
Thanks all.

bostonerimus

Pay off any debt you have and then put enough for 6 months spending in the bank, then fund a couple of ISAs using a multi-asset fund that matches your risk tolerance.

Arbitrator

bostonerimus wrote: »

Pay off any debt you have and then put enough for 6 months spending in the bank, then fund a couple of ISAs using a multi-asset fund that matches your risk tolerance.

Sorry, i'm not familiar with this idea. is this something I would need a broker for?

bostonerimus

Arbitrator wrote: »

Sorry, i'm not familiar with this idea. is this something I would need a broker for?

Read up about ISAs and then read up about the sort of investments you can have in them. The advantage of the ISA is that your money grows tax free and then can be taken out tax free too. You can open an ISA at most financial institutions; banks, building societies, investment platforms etc.

kidmugsy

bostonerimus wrote: »

... fund a couple of ISAs using a multi-asset fund that matches your risk tolerance.

I think this must have crossed with you: "I would dearly love to move house in the near future so I don't want to tie it up in case it's needed."

@OP: if you put money into a SIPP it will become 6.25% more valuable once the provider receives the tax relief (about a couple of months). Don't remove all of it from the SIPP when you need it without checking the provider's charge for closing a SIPP early. This would probably be a particularly good wheeze for your wife if she's going to retire in 18/19 because she could probably draw (nearly) all her money out again in 19/20 with no tax to pay. Her boost from tax relief would then be 25% rather than 6.25%. Because you'll want the money out for house purchase you wouldn't invest it within your SIPPs, just leave it as cash.

We like Hargreaves Lansdown for our small SIPPs. Here are their charges: you'll see that if you avoid the early closure charge they are nearly free.
http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

ADDED: if this sort of procedure appeals to you, be sure you get the tax implications clear for the tax years when you remove money from the SIPPs.