What to do when fixed rate ISAs come to end

Numandyas

My wife and I are both 73. We own our house and have no debts. We are in reasonable health and anticipate living another 10 years before we need to think about going into care. We have no children. We spend about two thirds of our income. Most of our savings are in cash ISAs and bank accounts. Many of our fixed-rate cash ISAs are coming to an end and the rates offered to renew are very low. We have thought of transferring them into Vanguard LifeStrategy accounts (20 or 40% equities). Is this a good idea or can anyone think of a better. We only want to match RPI, not make a fortune. We are risk averse.

bigadaj

Difficulty is that quality bonds are giving no or negative yields now, so 'low risk' investments may give little better returns than bank deposits and still have  risk for capital loss.  Some cash flow modelling might be useful to determine what sums you might need over what period, but if you are in cash now and are getting older then it's counter intuitive to move up the risk curve. NS&I offer est rates currently but are unlikely to match inflation.

george4064

If are risk adverse then investing is not suitable to you. Inflation is currently circa. 1%, so why not open a Coventry BS 5yr fix Cash ISA @ 1.25%?

https://www.moneysavingexpert.com/savings/best-cash-isa/

Also, how much are we talking about here? 

DiggerUK

Do you have underlying health issues that make care unavoidable. If not, then why are you preparing for something that probably won't happen. There are ways to avoid losing savings and homes when care is needed anyway.

At this stage equities are a bad idea. Move in to NS&I, Premium Bonds with winnings reinvested is one option. They also have other options.

If you have more than you need to live why don't you consider bucket list items, you are allowed to spend your savings..._

Sailtheworld

A couple of ways of looking at this

(1) You only spend two thirds of your income so you could afford to take some additional risk by increasing equity exposure

(2) You only spend two thirds of your income so you don't need to take additional risk by increasing equity exposure.

As all of your savings are in cash it sounds like you're pretty risk averse. Maybe you should just join the merry go round of chasing the best savings rates?

milton1970

At 73 - treat yourselves and spend it ..

Swipe

george4064 said:

If are risk adverse then investing is not suitable to you. Inflation is currently circa. 1%, so why not open a Coventry BS 5yr fix Cash ISA @ 1.25%?

What's the situation if someone's savings go into a 5 year fixed rate account and they then go into a care home shortly after? Does the home have to wait 5 years before it can be paid?

eskbanker

Swipe said:

george4064 said:

If are risk adverse then investing is not suitable to you. Inflation is currently circa. 1%, so why not open a Coventry BS 5yr fix Cash ISA @ 1.25%?

What's the situation if someone's savings go into a 5 year fixed rate account and they then go into a care home shortly after? Does the home have to wait 5 years before it can be paid?

The scheme rules require that it must be possible to withdraw from fixed-term ISAs at any time, although there will typically be penalties for doing so early, but for non-ISAs it usually won't be feasible to access the money prior to maturity, regardless of what it's intended for.  I doubt very much that any care home would be prepared to accept a resident without prompt payment!

Numandyas

Thanks everyone, I've opened a Coventry BS account.