Where to invest 85k - 1 or 2-year Fixed Rate Bonds best?

LobsterMemory

With a maximum holding of £50k, probability is that with average luck you can expect about a 0.8% return.
And it's tax free
And 100% safe (barring some kind of political/economic cataclysm)

Albermarle

https://www.moneysavingexpert.com/savings/premium-bonds/

Peregrina

Hello again everyone,
Many thanks for all your responses. I really appreciate the time you've taken to offer your guidance and suggestions. 
I forgot to mention that I have the maximum Premium Bonds and agree that this is a good option given the current savings panorama (thanks for the clarification on the terminology, vocab has been duly updated!). I'm managing to keep my head above water in terms of day-to-day wherewithal, thanks to various sources of support and goodwill, and also I'm making strenuous efforts to regain a toehold in my freelance work. 
The question is about forecasting over a 1-3 year horizon, and if no one knows about the long-term prognosis, it might be as well to assume the worst and plunge in with a 2-3 year Fixed Rate Deposit account. 
If you have any further thoughts or recommendations, that would be super helpful and very welcome. 
With every good wish to all you fabulous folks!
   

Peregrina

eskbanker said:

Peregrina said:

the interest is currently my sole income

You'll only earn about £70-80 a month from that, which is obviously not enough to survive on, so what else are you living on?  Appreciation of your wider financial circumstances may help with more realistic guidance....

That's a good and logical question to ask - I detailed my situation further in the post just now. Hope that helps. Any further suggestions would be welcome. 

Peregrina

cricidmuslibale said:

My advice would be to put £50,000 in premium bonds, then drip feed up to £10,000 on a monthly basis from a current account or an easy access savings account into as many regular savers as you can reasonably manage (provided the regular savers pay at least 1% if fixed rate, 1.25% if variable rate) and then deposit the remaining £25,000 into a 3-year fixed rate account paying annual interest at 1% (or a little higher if available). Fixed rate accounts of less than 3 years duration all currently appear to be paying under 1% which I personally don't think is enough when your capital will not be available to you until the maturity date.

This is a really interesting idea - I'll certainly look into this further. I guess it all depends on the regular savings account rates and how much extra complication around making payments (and all the associated administrative shenanigans) a potential saver wants to be bothered with. Sounds like you're quite switched on about these things, many thanks! 

cricidmuslibale

Peregrina said:

cricidmuslibale said:

My advice would be to put £50,000 in premium bonds, then drip feed up to £10,000 on a monthly basis from a current account or an easy access savings account into as many regular savers as you can reasonably manage (provided the regular savers pay at least 1% if fixed rate, 1.25% if variable rate) and then deposit the remaining £25,000 into a 3-year fixed rate account paying annual interest at 1% (or a little higher if available). Fixed rate accounts of less than 3 years duration all currently appear to be paying under 1% which I personally don't think is enough when your capital will not be available to you until the maturity date.

This is a really interesting idea - I'll certainly look into this further. I guess it all depends on the regular savings account rates and how much extra complication around making payments (and all the associated administrative shenanigans) a potential saver wants to be bothered with. Sounds like you're quite switched on about these things, many thanks! 

You're very welcome! Tbh until quite recently I hadn't realised quite how useful multiple regular savers can be at this very challenging time of mostly very low savings rates. Until November I had only 2 active regular savings accounts; as of now I have 5 of them and I hope to add one or two more early in 2021. When NS&I slashed their interest rate on their Income Bonds from 1.15% to 0.01% (and also massively reduced interest rates for any renewals of maturing Guaranteed Growth and Guaranteed Income Bonds) I simply had to find another way of getting at least reasonable interest rates for my cash savings.

I would particularly recommend the Coventry Building Society Regular Saver (4) which you can apply for online, by post, by phone or at a branch; this permits a maximum monthly deposit of £500 - you can deposit money up to this total amount on any day of the month - and pays a current annual interest rate of 1.30%. This rate is variable but Coventry only tend to reduce their interest rates for existing savings accounts following a Bank of England base rate reduction unlike too many other savings providers at the moment! I would also highly recommend Principality Building Society's Regular Saver Issue 23 which you can apply for online or at a branch; this permits a maximum monthly deposit of £250 (with a minimum initial deposit of £20) - again you can deposit money gradually during each month if you wish - and pays a fixed annual interest rate of 1.25%. So this rate cannot be reduced even if the Bank of England further reduce the base rate from its present very low level of 0.1%.

Though not suitable for me at the moment, another reasonably good regular saver is available from Furness Building Society (max. £250 per month, min. £1 per month at 1.4% variable for 3 years); the only real downside is this involves posting a completed downloaded application form and copies of ID documents which adds quite a bit of extra time to the application process. And there are a good few more decent regular savers besides these three currently available; the Moneyfacts website lists these in detail and is very regularly updated.