Saving large sum advice needed

POA

I am selling mums house as she is in a care home. The proceeds will pay for her care for a few years but once the house is sold where on earth do I put such a large sum of money. Should be in the region of £150,000. Will need to access it to pay the monthly bills but need it to be secure and hopefully earning a little interest. Any advice other than the 0.5% a building society would pay. Thank you

El_Torro

Not a lot of choices unfortunately. If you just want the one account then the easiest option is NS&I Direct Saver with an interest rate of 1%.

If you want to reach the giddy heights of about 1.5% then you can do that without too much effort. See https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess
Just make sure to have no more than £85k in one place.


If you can lock some of the money away for a year or more you can even get 2% or better, as explained in the above link.

londoninvestor

El_Torro wrote: »

Not a lot of choices unfortunately. If you just want the one account then the easiest option is NS&I Direct Saver with an interest rate of 1%.

Or NS&I Income Bonds pay 1.15%, as long as you don't mind the interest being paid out into a separate account. (That might actually suit you quite well if you need to regularly draw from the money to pay bills.)

Just to underscore, with NS&I the entire balance is covered by the government (no £85k maximum) so you could put your £150k all into the one account with complete safety.

talexuser

I covered my Mum's finances in care with POA. The average stay is around two and a half years, which is just shorter than how long my Mum was in care.

You should do some calculations. Depending on which part of the country you are in the cost could be from £40,000 a year. It is too short a time to think about investments now, but it might be worth thinking about keeping a years worth in instant access, and further amounts in 1 year and 2 year fix's to get a higher rate of interest on the larger amounts? Remember the care costs can go up faster than inflation, some of mine were around 7% a year for example.

Also find out about Attendance Allowance which may be able to help with the bills.

POA

Thank you so much, some really good advice. I think I will look at NS&I. Was thinking of taking a chance with £50k and buying Premium Bonds. Never know Mum might just win the big one!


Many thanks talexuser. POA is a huge responsibility isn't it! I will look at some of the fixed 2 year investments, not sure how it will work if we lose mum before the investment matures though, I wouldn't want the capital to reduce. (not being morbid, she is happy in the home but a little frail). Mum had Attendance Allowance at home for a number of years before she was hospitalised last summer. It took 4 months to get her well enough to go into a care home so we are claiming the higher level of attendance allowance, thank you.

AnotherJoe

Savings ladder.
Assuming care home fees are £50k a year
£50k in Marcus at 1.5%
£50k in Atom or similar at 2% or so fixed for one year
£50k in somewhere than gives a bit more than 2% fixed for 2 years.
No need or benefit to use NS&I and lose out on interest, and thinking you'll win big with PB's isa mugs game.

fwor

Agreed - we are in a similar position to you, and we have implemented a savings ladder.

So we have just 1-2 months of money in a current account, 1 years worth of money in a Marcus savings account, and then a 1-year, a 2-year and a 3-year fixed-term savings account, each with 1 years worth of money in. There is a small surplus after those, and this is in a longer term low-medium risk investment fund.

As the years pass we will keep adding on 3-year savings bonds to the ladder from money withdrawn from the longer-term fund, until the money runs out.

wiseonesomeofthetime

AnotherJoe wrote: »

Savings ladder.
Assuming care home fees are £50k a year
£50k in Marcus at 1.5%
£50k in Atom or similar at 2% or so fixed for one year
£50k in somewhere than gives a bit more than 2% fixed for 2 years.
No need or benefit to use NS&I and lose out on interest, and thinking you'll win big with PB's isa mugs game.

And don't forget, the government will start to take their cut of the interest earned (for doing absolutely nothing at all) as the Atom account alone would return the maximum £1,000 tax free interest.

Try scooping £20,000 into an ISA. You may get a fixed rate touching on 2% for a one-year fix if you look around. Rates change quickly though, so timing is something of a gamble.

jamei305

POA wrote: »

Thank you so much, some really good advice. I think I will look at NS&I. Was thinking of taking a chance with £50k and buying Premium Bonds. Never know Mum might just win the big one!

What use would that be to her? Is sacrificing interest for the tiny chance of winning a million really in her best interests? If you genuinely think so, you'd be better off putting it in a higher interest account and using some the interest to buy lottery tickets. :undecided

Dazed_and_confused

And don't forget, the government will start to take their cut of the interest earned (for doing absolutely nothing at all) as the Atom account alone would return the maximum £1,000 tax free interest.

The op hasn't provided sufficient information to know if their mum can even utilise the savings nil rate of tax (aka Personal Savings Allowance).

The PSA is not of any use to lower income individuals but they may be able to make use of the savings starter rate of tax where upto £5,000 of savings interest is taxed at 0%. Or there may even be unused Personal Allowance.

AnotherJoe

Good points about interest the OP needs to investigate that.