£360k over 6 months (help) 😊

Laurence____

Hi.  We have recently completed on the sale of our home but there has been a minimum 6 month delay in the construction / completion of our onwards property.  This has left us in an unusual position of being left with a large sum of money in our account (£370k to be precise).   I am hoping someone can advise if there is any wise, low risk short term investments I can be doing to make the most of this situation?  The best I have thought is me and my wife both investing the maximum (£50k) into premium bonds although the article posted here seems to suggest this is unlikely to yield any return.  Please help.  Many thanks, Laurence.  

AnotherJoe

Given you need something literally safe as houses then PB's aren't a bad idea. How about £100k in PB's and the rest in a 6 or 9 month (you say "at least 6 months") fixed term account? 

Do you have some leeway in the date when you have to pay the money out since any fixed term saving like this is obviously slightly inflexible. 

The other thing would be cash ISAs each, that's another £40k total. 

lhsecons

In 6 months you should get some return on the premium bonds and as a risk free and tax free way of saving it’s probably the best thing to do as you’ll have access when you want it. If you haven’t used your ISA allowances this year you could put another £40000 (£20000 each ) into a cash ISA although the best rates on instant access at the moment are only about 1% with Virgin. With the rest for 6 months I would just put it into NS&I bonds paying 1.16 %. Your money is fully protected, although the interest is taxable.

Stubod

Simples....when all rates are at an all time low it actually makes this sort of decision easier (IMHO), I would go with Premium bonds for £100k, and NSI monthly income for the balance.

kinger101

You don't need low risk, you need no risk.

Agree with the above.  Shelter £140K with the ISA/Premium bonds then find a good short notice interest bearing account for the rest.

Bear in mind, you'll need to make sure you have no more than £85,000 per bank (£170K if joint) to get FSCS guarantee.  There is a temporary higher balance of £1M for sale proceeds of houses, but this expires after six months.  NS&I is the exception which is fully protected, so sticking the rest there makes a lot of sense as it's one of the best interest rates there is anyway.  The interest on the remaining £230K would amount to around £220-225 per month, but you'll got £500 or £1000 interest tax free pa (each) anyway depending on whether you pay HR or BR tax.  

In fact, if you're both BR taxpayers, then the £1,000 tax free interest negates the need for the ISA altogether if you don't have other interest income that pushes you over the limit, so just stick with NSI in that case.

Laurence____

Hi everyone - thank you so much for this advice, it really is appreciated.  So I think based on what you are saying it is a no brainer to put £100k in premium bonds to start.  I should then use my maximum ISA allowance to put it into a cash account which pays interest monthly and use the balance into a NS&I monthly income with the balance?   Thanks again 😊

AnotherJoe

kinger101 said:

In fact, if you're both BR taxpayers, then the £1,000 tax free interest negates the need for the ISA altogether so just stick with NSI.

Depends what other interest bearing accounts they have ?

kinger101

AnotherJoe said:

kinger101 said:

In fact, if you're both BR taxpayers, then the £1,000 tax free interest negates the need for the ISA altogether so just stick with NSI.

Depends what other interest bearing accounts they have ?

Was just editing that as you posted.  Thanks

kinger101

Laurence____ said:

Hi everyone - thank you so much for this advice, it really is appreciated.  So I think based on what you are saying it is a no brainer to put £100k in premium bonds to start.  I should then use my maximum ISA allowance to put it into a cash account which pays interest monthly and use the balance into a NS&I monthly income with the balance?   Thanks again 😊

Working out you tax position re. interest first before deciding on the ISA.  As a couple, you can get between £1,000 and £2,000 a year of interest without pay tax.  If you both pay tax at basic rate and don't have much other interest income (who does these days?) then ISA might not be the best option.  Banks tend to offer poorer interest rates on ISAs than non sheltered products.

Laurence____

Hi and thanks again for the advice - Both myself and my wife are in higher rate tax bracket and we have no other interest income.  Therefore would it make sense to open an ISA to get some tax relief on the £40k or keep it simple and just put the whole balance (after premium bonds) in a monthly bond and accept the additional tax?

planteria

PBs sound like a good idea to me too, and you never know..
there are lots of investments that could grow significantly during the coming 6 months, but from what you've described it's not really money you can put at risk.