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What to do with my 75k savings?

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  • kuratowski
    kuratowski Posts: 1,415 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper Photogenic

     I know :( really not sure what the right thing to do is here 
    For what it's worth, my recommendation would be to go to a mortgage broker and check what you can afford and then go to the estate agent and start viewing!
  • MX5huggy
    MX5huggy Posts: 7,074 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 24 April 2021 at 7:00AM
    You seem quite risk adverse in buying a home, yet considering investing in stocks? 

    You provide little background on your situation which is fine but makes it difficult to advise. For example if you are a secure tenant in a social landlord vs a AST tenant with a flaky BTL landlord who is always chasing the next £50 rent increase and thinks repairs is something that needs doing once a decade. You will have different views on renting.

    You need to get over borrowing £300k plus as a bad thing if it’s if you can afford the payments (that is it is less than your current rent) then It’s OK. 

    To answer your question £50k to Premium Bonds if you are going to not use the money for 2 months plus. (You can access the money at any time but they only go in the monthly draw after they’ve been held for a full calendar month).
  • someone
    someone Posts: 831 Forumite
    Part of the Furniture 500 Posts Name Dropper
    > You seem quite risk adverse in buying a home, yet considering investing in stocks?
    We don't fully know the circumstances of the poster. It is reasonable due to personal circumstances to be hesitant to buy (relationship status, mobility of job, industry of job etc) whilst at the same time investing in stocks been considered.

    ** not a financial advisor - just a few comments about what I would consider in your situation **

    You haven't said what rate of taxpayer you are and/or if you are outside your Personal Saving Allowance (PSA). Anyone with interest > £1,000 as a standard rate taxpayer (20%) or £500 as a higher rate taxpayer (40%) will need to pay tax on some of their savings. This can start to quickly diminish any interest returns from savings either now or in the future.

    Investments outside an ISA are subject to Capital Gains Tax (excluding the allowance given). There has been talk of CGT been increased in the future. ISAs are outside of CGT

    £85k is the protection limit for each bank (including their sub-brands). Your cash savings are approaching this amount and therefore you may want to be aware of this. 

    The longer away/less probable you are to to buy a property then investment is the route you probably should be looking at. Many feel uncomfortable placing a lump sum that size into investments and you may want to pace that. If you pace using the ISA limits (£20k /year) it's going to take nearly 4 years to get that amount in and so you may want to look to complement an ISA with another (taxable) investment account.

    If your more likely to buy in the near future or just completely unsure you might still want to consider a smaller but more regular payment into an investment to act as a later windfall to look forward to.

    If you are not sure what to do PB in the very short term are likely to be a good idea. If you buy before the end of the month you minimise the "dead" time that your money will not qualify for (bonds bought today or on the 1st April qualify for the 1st June draw).
  • someone said:
    > You seem quite risk adverse in buying a home, yet considering investing in stocks?
    We don't fully know the circumstances of the poster. It is reasonable due to personal circumstances to be hesitant to buy (relationship status, mobility of job, industry of job etc) whilst at the same time investing in stocks been considered.

    ** not a financial advisor - just a few comments about what I would consider in your situation **

    You haven't said what rate of taxpayer you are and/or if you are outside your Personal Saving Allowance (PSA). Anyone with interest > £1,000 as a standard rate taxpayer (20%) or £500 as a higher rate taxpayer (40%) will need to pay tax on some of their savings. This can start to quickly diminish any interest returns from savings either now or in the future.

    Investments outside an ISA are subject to Capital Gains Tax (excluding the allowance given). There has been talk of CGT been increased in the future. ISAs are outside of CGT

    £85k is the protection limit for each bank (including their sub-brands). Your cash savings are approaching this amount and therefore you may want to be aware of this. 

    The longer away/less probable you are to to buy a property then investment is the route you probably should be looking at. Many feel uncomfortable placing a lump sum that size into investments and you may want to pace that. If you pace using the ISA limits (£20k /year) it's going to take nearly 4 years to get that amount in and so you may want to look to complement an ISA with another (taxable) investment account.

    If your more likely to buy in the near future or just completely unsure you might still want to consider a smaller but more regular payment into an investment to act as a later windfall to look forward to.

    If you are not sure what to do PB in the very short term are likely to be a good idea. If you buy before the end of the month you minimise the "dead" time that your money will not qualify for (bonds bought today or on the 1st April qualify for the 1st June draw).
    Thank you, some really useful points here that I was not aware of. I’ll definitely look into premium bonds and putting regular payments into a (maybe Vanguard?) index fund stock and shares ISA until I have explored the mortgage option. 
  • MEM62
    MEM62 Posts: 5,112 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    MEM62 said:
    With £75k in your account your bank would have been all over you with offers of financial advice.  The first thing you need to decide is what your long term plan for the money is.  Everything else works from there.   
    I have had various sums of money with my bank over the years and they have never contacted me once . I do not think they are actually allowed to offer any kind of advice unless you specifically request it.
    NatWest and Halifax have contacted me on almost every occasion my account has had substantial sums in it,   

    MEM62 said:
    With £75k in your account your bank would have been all over you with offers of financial advice.  The first thing you need to decide is what your long term plan for the money is.  Everything else works from there.   

    Any "offer" which comes from your bank is usually an attempt to sell you services rather than independent advice. The last time I was invited to a "personal consultation" with my "personal account manager" they just tried selling me home and life insurance.
    That is often the case and it is important to be clear as to what exactly is being offered.  My recent experience with Halifax suggests that they were offering something more comprehensive than just a sales pitch.  Can't say for sure as I didn't pursue it.   

      
  • justwhat
    justwhat Posts: 704 Forumite
    Fourth Anniversary 500 Posts Name Dropper
    MEM62 said:
    With £75k in your account your bank would have been all over you with offers of financial advice.  The first thing you need to decide is what your long term plan for the money is.  Everything else works from there.   
    I have had various sums of money with my bank over the years and they have never contacted me once . I do not think they are actually allowed to offer any kind of advice unless you specifically request it.
    Our bank just happen to ask us to come in for an "account review" anytime we have a large amount of cash in bank  lol
  • MEM62
    MEM62 Posts: 5,112 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    justwhat said:
    MEM62 said:
    With £75k in your account your bank would have been all over you with offers of financial advice.  The first thing you need to decide is what your long term plan for the money is.  Everything else works from there.   
    I have had various sums of money with my bank over the years and they have never contacted me once . I do not think they are actually allowed to offer any kind of advice unless you specifically request it.
    Our bank just happen to ask us to come in for an "account review" anytime we have a large amount of cash in bank  lol
    That is likely to be very much a 'what can we sell them' meeting'  :-)    I have had similar in the past.  They start with the basics, almost at "teaching grandmother sucking eggs" level and go from there.  In my case most of what was 'recommended' I already had in place through other accounts or institutions.        
  • d63
    d63 Posts: 328 Forumite
    Part of the Furniture 100 Posts Name Dropper
    justwhat said:
    MEM62 said:
    With £75k in your account your bank would have been all over you with offers of financial advice.  The first thing you need to decide is what your long term plan for the money is.  Everything else works from there.   
    I have had various sums of money with my bank over the years and they have never contacted me once . I do not think they are actually allowed to offer any kind of advice unless you specifically request it.
    Our bank just happen to ask us to come in for an "account review" anytime we have a large amount of cash in bank  lol
    i really do not like getting those sort of emails from my bank, always put me in mind of the dreaded "see me after" comment scrawled in red ink at the top of ones essay when your homework gets returned.
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