Advice please - savings and small investment

Spiggle

Hello all, after years of not posting I'm back needing your eyes, consideration and thoughts on my semi-developed plan.

I'm 58, retired on ill health grounds in 2013, sadly recently widowed, mortgage free since 2013 (thanks MFW), have around £1200 income per month (rqd exp pmth approx. £640), no dependants.

I have been very risk averse as I had to consider my and my OH's health problems and the need to ensure money was available for him should I have died first (it was a real possibility in recent years and he was not at all money savvy so needed to be simple access). I also have some ethical concerns regarding where/industries stocks and shares would be invested. I know I've recently seen posts on VCTs so will check those out again soon but any contribution on those is also welcome here please.

So, I have spent recent years concentrating on interest paying current accounts - Santander123 x2; TSBx2; Halifax (Hx) Reward Ac; Nationwide (NW) Flex Ac (now on to 1% after 12mth); First Direct (FD) Ac - and regular saver accounts though currently only contribute to the NW.

Please be gentle I am still grieving, I know I have not been covering inflation recently but there has been too much to think about other than finance which will be foolish in some views but I knew what I was doing and monitoring accounts ensuring t&c were always covered, etc., was the most I could handle on top of everything else.

My OH's 2 TSB accounts have been closed, the Hx was joint but now in my sole name and Sant123 have kindly allowed me to short term keep both the accounts after the joint was converted to my sole name alongside my original sole account (so paying £10 per month for that privilege as they're the only accounts I pay a fee on but hugely exceeded by interest/cashback received). But it will need to close one soon and this has led me to consider my financial situation now and for the future. I owe £80 on a 0% credit card. In total, I have about £75k in freely available cash savings spread around accounts as above.

Initially my lump sum depositing incomplete plan is to deposit:
£10k minimum in Gatehouse Bank 1yr fixed estimated profit @ 2.1% no fee
£20k in Marcus (from one Sant123 account) @ 1.5% no fee
£20k (average) Sant123 as a feeder account @ 1.45% after fee

Then:
£10k in Vanguard Life Strategy ISA - probably the 40 but could be persuaded by cogent arguments to go to VLS60. This sum would effectively be my bequest to be split equally between my two GDs upon my death. That makes me sound like I'm willing to gamble on behalf of them!

I plan to continue to max deposit with the NW Regular Saver (RS) 5%pa, open a FD RS 5%pa, open a Sant RS 3% which I think, but please correct me if I'm wrong, means an average 4%+pa (or 2% if allowing for the RS method of calculating allowing for balance builds rather than being all in on day 1).

If my health fails then it will be relatively simple for my daughter to deal with should the worst happen. If I stay healthy I can keep an eye on the VLS and perhaps reduce my risk aversion for my own benefit. Or even look at VCTs (which I need to fully understand) as I think then I can be a little more in control of where the investment goes e.g. renewable energy rather than arms trade!

Sorry for such a long post, I genuinely am interested in your opinions, the forums have never failed me in the past. Only my GDs bequest and the need to close one Sant123 shortly are fixed and although it may not appear so I am open to your suggestions. For example, I do read on here threads on investing (though much of it is too involved for me ) but your kind consideration of the 'spread' of my finances particularly in respect of trying desperately to cover off inflation.

Thanks in advance for any and all replies,
Spigs

xylophone

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

Do your granddaughters have CTF/JISA?

Or are they over 18 and eligible for LISA?

You might wish to "Give with warm hands" rather than leave money as a bequest?

You have an occupational pension in your own right and a widow's pension from any provision made by your husband?

Your pensions are index linked?

Had you considered contributing £2880 to a SIPP as here?

https://forums.moneysavingexpert.com/discussion/5580163/paying-2880-into-pension-when-retired

Spiggle

Thanks xylophone for your reply and questions.
No, not recently but did check back in 2013 that I had made all necessary NI to gain full pension currently will be payable at 67 years of age.
Not sure about the younger one but elder one is late teens and I want her to have something later in life when she has a more settled future. I'm considering writing into my will a trust for it to delay benefit until a certain age. Hence why the longer term investment rather than savings seems more justified.
Warm hands what a lovely thought! Though knowing the characters involved now better to delay.
Yes, both are LGPS occupational pensions though not huge I did so many calcs in 2013 to ensure we would be comfortable for rest of our lives. Just didn't get a chance to travel, see sights, enjoy long life with our savings unfortunately.
If I understand you correctly, no not index-linked but get an increase most years though I missed in a couple of years I think.
The GDs are with me now so will look at the thread you linked later, thank you. Though I honestly don't think I need any further pension income but will check this and your first point.
Thanks,
Spigs

xylophone

No, not recently but did check back in 2013 that I had made all necessary NI to gain full pension currently will be payable at 67 years of age

That was pre new state pension so worth checking again.

If I understand you correctly, no not index-linked but get an increase most years though I missed in a couple of years I think.

LGPS pension is index linked

See

https://www.lgpsmember.org/more/PI-how.php

elder one is late teens and I want her to have something later in life when she has a more settled future.

Consider LISA - https://www.moneysavingexpert.com/savings/lifetime-isas/

Spiggle

Thanks xylophone,

I will do a bit of research on the new state pension, it hadn't even crossed my mind to look at it again.

Oh, my mistake re LGPS and index linking. I thought there was a year where I didn't get an increase but perhaps it was timing or austerity.

She isn't eligible for LISA yet but I wouldn't want her to have that much in one go. She simply wouldn't take the time to calculate the loss on early withdrawal. Time will I'm absolutely sure correct this view of the world. I may consider at a later date 'warm handing' her a smaller amount to open a LISA as encouragement once she's eligible.

I'm not quite as pessimistic as I sound in my OP and I hope I'll be still bothering them in ten years or more but I need to sort some things out now really.

Thanks again,
Spigs

xylophone

I thought there was a year where I didn't get an increase but perhaps it was timing or austerity.

There was no increase in 2010 or 2016 - see

https://www.spfo.org.uk/index.aspx?articleid=15359

Spiggle

Thank you xylophone,
I wasn't in receipt in 2010 but certainly was in 2016. Good to know my grey cells are still working.


Just a quick question to anyone viewing who knows, am I working out the average interest rate on the regular savers correctly please?


Have to be off 'puter for a while now but will check back later f I can.


Thanks,
Spigs

eskbanker

Spiggle wrote: »

Just a quick question to anyone viewing who knows, am I working out the average interest rate on the regular savers correctly please?

As often pointed out on here, regular savers do pay interest at the stated rate on the balance in the account at the time.

As the interest earned is roughly half of the final balance multiplied by the stated rate, people sometimes perceive that as (half the stated interest rate) times (final balance) but it's more realistic to see it as (stated interest rate) times (half the final balance, which is the average over the year).

ColdIron

Spiggle wrote: »

Just a quick question to anyone viewing who knows, am I working out the average interest rate on the regular savers correctly please?

You are trying to work out an average interest rate on your regular savers but this is the wrong way to think about it as they are actually paying a real 5% or 3% just not on the total sum after a year. It's easier and more accurate to think about it as paying the full interest rate on your average balance or about half the full amount

This formula will get you pretty close for a 1 year saver
Monthly contribution * interest rate / 100 * 6.5

So for your Nationwide RS:
250 * 5 / 100 * 6.5 = £81.25

cloud_dog

Spiggle wrote: »

Just a quick question to anyone viewing who knows, am I working out the average interest rate on the regular savers correctly please?

ColdIron has offered one suggestion. For regular savers I tend to come at it from a different approach and (at a simplistic level), an equivalent annual rate would be close to half the advertised rate so, 5% RS equates to 2.5% overall.

Based on your three RS (5%x2 plus 3%) my (simplistic) calculation would give you an overall IR for the three RSs (of the final balance) of 2.1666.%

Spiggle

Thank you xylophone, eskbanker, coldiron and cloud_dog. Sorry its taken a while to reply again.
I need to go back and think on the RS. It seems like I'm losing hand over fist to inflation doing it my way.
Another suggestion made to me is that I look at getting a property on BTL - it seems a lot to take on in terms of getting LL certificate, poss need to get small mortgage and then the redec/refurb and management of said let. Do you have any suggestions please?
Should I be braver? Should I let my fear of losing in S&S guide my decisions if I'm losing anyway keeping large amounts of accessible cash? I read on here about investing but you all seem so knowledgeable and experienced and managing your own S&S that I fear I won't have enough savvy to make the right decisions hence looking at VLS if anything.
Thanks again for your thoughts, calculations and responses,
Spigs