Where to save house sale money?

RazMan

My 90 year old Mum has just sold her house and has about £400K to save somewhere. Judging from advice on here I should split this up into £85K chunks to keep them safe, but where should I put them? Banks? Bonds? ISAs? etc.
Any advice would be appreciated as I am a complete novice at these sort of figures and want to do the right thing for my Mum.

tebbins

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RazMan said:

My 90 year old Mum has just sold her house and has about £400K to save somewhere. Judging from advice on here I should split this up into £85K chunks to keep them safe, but where should I put them? Banks? Bonds? ISAs? etc.
Any advice would be appreciated as I am a complete novice at these sort of figures and want to do the right thing for my Mum.

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Basically yes, but the FSCS does cover temporary high balances such as following a house sale: https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/
For convenience you could max out NS&I premium bonds (£50k) and put the rest in a NS&I direct saver - this would all be backed by the treasury.
What did she sell the house for, what is the money needed for?

RazMan

She was recently widowed and wanted to move into a care home as she is quite frail these days. The money is not required for anything specific and will eventually be my inheritance so I obviously want to keep it safe.

eskbanker

RazMan said:

She was recently widowed and wanted to move into a care home as she is quite frail these days. The money is not required for anything specific and will eventually be my inheritance so I obviously want to keep it safe.

There's often this potential conflict of interest, but obviously her money needs to be deployed in her best interests rather than anyone else's - how many years of care home fees would £400K cover?  What other assets does she have?

RazMan

Ah now that's difficult to answer. At the moment she is in a warden assisted home (purchased) with a care system available when she needs it. So her pensions just about cover the fees now, but maybe she will have to dip into her savings when her health declines. I have PoA and really want to do the best for her but she insists that she doesn't want to invest and just wants to keep it safe somewhere (and her mattress is not big enough )

tebbins

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RazMan said:

Ah now that's difficult to answer. At the moment she is in a warden assisted home (purchased) with a care system available when she needs it. So her pensions just about cover the fees now, but maybe she will have to dip into her savings when her health declines. I have PoA and really want to do the best for her but she insists that she doesn't want to invest and just wants to keep it safe somewhere (and her mattress is not big enough )

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Unfortunately with inflation and interest rates where they are, there is no magic bullet of keeping your money "safe" and safe from inflation.

Admitting you don't know is the best first step in these matters.

As you don't know, I would suggest seeing a few *Independent* Financial Advisors, telling them about your and your mum's situations, what you want for this money etc, seeing what they suggest and getting some quotes about managing it. The amount is more than enough to interest most IFAs in managing it and due to your specific circumstances - that it's your inheritance, inheritance tax planning, the unknown timescale over which you may be expecting to receive it, whether it may be needed to support your mum's care/other expenses - for all these reasons, my opinion is that you could find an IFA very valuable. We have a few resident IFAs in the forum who are normally very good at answering specific queries about IFA issues, such as when you have some quotes and recommendations and want a 3rd opinion/sense check.
In the mean time, try and make sure to keep it across a few different financial institutions (https://www.moneysavingexpert.com/savings/safe-savings/) but don't worry too much because of the temporary high balances protection (https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/).

eskbanker

If she's strongly against investing, which after all is typically only suitable for long term money, then spreading around savings accounts does seem the most realistic option, plus maxing premium bonds - rates could be optimised by ensuring that there's enough instantly accessible money for a year or two and locking away the rest in a ladder of fixed rate accounts, i.e. some in a one-year fix, some in a two-year, etc.

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Keep_pedalling

RazMan said:

Ah now that's difficult to answer. At the moment she is in a warden assisted home (purchased) with a care system available when she needs it. So her pensions just about cover the fees now, but maybe she will have to dip into her savings when her health declines. I have PoA and really want to do the best for her but she insists that she doesn't want to invest and just wants to keep it safe somewhere (and her mattress is not big enough )

As she has all her mental faculties then it is totally her decision to keep her savings in cash. You could split it up into a mixture of short, medium and long term fixed term saving accounts, plus £50k in premium bonds.

She sounds like a very sensible woman in planning to make her final years as comfortable and secure as possible. 

RazMan

Thanks for all the advice guys. I think that the first £50K will definitely go into Premium Bonds and then spread the remainder into various fixed term savings accounts (short and long) 
Any pointers to some good savings accounts options?

RazMan

Forgot to mention Gilts! I have heard mostly good things about these - any comments?

Linton

RazMan said:

Forgot to mention Gilts! I have heard mostly good things about these - any comments?

Given your mother's situation it would not be sensible to invest in something that may fall in value in the shortish term.  So that means short dated gilts which currently return less than PBs or fixed term accounts.   They certainly wont match inflation.  No, in my view cash is the right answer - PBs, some fixed rate bank accounts possibly and NS&I accounts.