What to do with £200,000

aroominyork

sebtomato said:

aroominyork said:

It is right to worry that with inflation at 10% your £100k will be worth little more than £90k in a year, but like other people have said this is too short a time period for investing in a risk asset. However if, as you think will happen, house prices fall by the time you buy a property, you will be protected from some of that loss.

Even if inflation is 10%, his £100K might still be worth £100K to him...

Inflation at 10% is a very generic concept, where most people will have different circumstances.

Groceries might be worth 10% more in a year's time, but he may not buy £100K of groceries.

Yes, fair point - house price inflation is all that matters to the OP.

sebtomato

aroominyork said:

sebtomato said:

aroominyork said:

It is right to worry that with inflation at 10% your £100k will be worth little more than £90k in a year, but like other people have said this is too short a time period for investing in a risk asset. However if, as you think will happen, house prices fall by the time you buy a property, you will be protected from some of that loss.

Even if inflation is 10%, his £100K might still be worth £100K to him...

Inflation at 10% is a very generic concept, where most people will have different circumstances.

Groceries might be worth 10% more in a year's time, but he may not buy £100K of groceries.

Yes, fair point - house price inflation is all that matters to the OP.

... and I have the feeling house inflation will not be at 10% over the next 12 months, when people are struggling with other rising costs and interest rates are likely to go up significantly, increasing the cost of mortgages.

My bet is that we are heading towards a property market correction too.

InterestedSaver

You are both right…
I want to use my £200,000+ next year to re-enter the housing market. 

I am hoping for a significant housing correction but it may not happen and it may not be significant! 

Thanks for all the comments so far

Sam

eskbanker

InterestedSaver said:

I want to use my £200,000+ next year to re-enter the housing market. 

I am hoping for a significant housing correction but it may not happen and it may not be significant! 

What will you do if there isn't a significant correction?

london21

Just leaving in the bank for now.

Investing does not guarantee upwards result.

 

The property market is crazy now, who knows what next year will be like.

bostonerimus

Money that as will be spent on something specific in the short term, 1 or 2 years, should be kept in the bank or National Savings.
If you have any high interest debt pay it off.
Look into a LISA for some of the money, just stick the rest in the best saving account you can find.

InterestedSaver

eskbanker said:

InterestedSaver said:

I want to use my £200,000+ next year to re-enter the housing market. 

I am hoping for a significant housing correction but it may not happen and it may not be significant! 

What will you do if there isn't a significant correction?

I don’t actually know yet of I am honest, my plans are fairly limited …

InterestedSaver

bostonerimus said:

Money that as will be spent on something specific in the short term, 1 or 2 years, should be kept in the bank or National Savings.
If you have any high interest debt pay it off.
Look into a LISA for some of the money, just stick the rest in the best saving account you can find.

A LISA? How much can I put in and what % return is there? Better than a savings account?
i’ve applied for a shawbrook bank account at 2.15% but should I put all 200,000 in or do I need get multiple accounts with £85,000 in each? 

grumiofoundation

bostonerimus said:

Money that as will be spent on something specific in the short term, 1 or 2 years, should be kept in the bank or National Savings.
If you have any high interest debt pay it off.
Look into a LISA for some of the money, just stick the rest in the best saving account you can find.

The OP has already owned a house so in their case (assuming under 40) the LISA could only be used for retirement (if this is what they are saving for pension may be better) not spent in 1-2 years. 

refluxer

InterestedSaver said:

i’ve applied for a shawbrook bank account at 2.15% but should I put all 200,000 in or do I need get multiple accounts with £85,000 in each? 

As the temporary high balance provision only covers you for 6 months and you're looking at locking your money away for 12 months, you would need to split the money into chunks of £85k (each with different 'financial institutions') to be sure of being covered by the FSCS. (The £85k limit is per institution and not per account).

MSE's guide to FSCS protection is here - be sure to enter any banks or building societies you're interested in into the 'which banks are linked' checker, as some are linked to others in which case the £85k limit would be shared between them. 

Lastly, you won't be able to access the money that you put into a Fixed Rate account at all until the end of the fixed rate period, so make sure you don't lock anything away that there's a chance you'll need access to.