What to do with £110,000.

nortong

Hello

I am 77 years old, have no debts and live in my own home which is mortgage free. In addition to the state pension I have three very small private pensions, which I find adequate to live on.

I have £110,000 in savings which at the moment is accruing minute interest in a NatWest savings account, please advise me on the best way to re-invest this. I would like easy access on, say, £5,000 to £10,000 the rest can be 'tied up' if necessary. I want to compound the interest back into the capital.

Many thanks.

xylophone

re-invest

Do you mean "invest" (usually understood to indicate stocks/shares) or save?

For  current savings rates you could look here

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

ALL SAVINGS TABLES 

Easy access	Fixed rates	Cash Isas	Savings platforms	Monthly income
Phone / postal	Junior Isas / children's	Offshore	National Savings	Premium Bonds

See also

https://www.moneysupermarket.com/savings/protecting-your-savings-guide/

Pompeydave1967

I would say £10k into an app based bank , I use chase and although not top rate now 1.5% still it’s very easy and quick to transfer money. Also 1% cash back on purchases…every little helps.Then the rest into a 1 yr fixed .

Stubod

..as above, do you really mean "invest"??....if so what sort of time scale as it really needs to be 10 years+. Do youu have any long term objectives for the money? If not then maybe worth considering Premium Bonds for £50k which is almost instant access if you need it, then the best fixed term account you can find for the rest?

Brie

certainly at a minimum I would want to split the money into 2 unrelated banks to get the £85k protection.  So not NatWest and RBS etc.  NatWest and Barclays perhaps.  But premium bonds would be a good option given they are upping their payouts.

Pompeydave1967

Premium bonds no guarantee of any wins , op wants to compound interest so still think a couple of fixed 1 yr deals are best for him. £100000k split could pocket £240/ month interest total.

Linton

What do you want the money for?   Why are you wanting the pot to grow? Are you wanting to leave a large inheritance in hopefully 15+ years or may you want to spend the lot in the time available to you?  For example extra help at home or elsewhere? Different timescales lead to different solutions.

One option is...
You could split the money into separate tranches.  Say £35K in cash, perhaps as a "ladder" of fixed term accounts.  Start off with  £10K in your savings account and £5K into each of a 1-year fixed rate account, a 2-year account... and a 5-year account.  After each matures, unless you want to spend the money re-invest it in another 5-year account.  In that way you are getting possible access to a further £5K every year with your money getting interest at something like the highest rate available.  However it may well not keep pace with inflation and much of the money would be tied up for a year or more.

A second tranche could be in cautious investments, say £40K, which can be expected to rise at least as quickly as inflation and unlikely to fall more than a few % in a year.  This could be fairly easy access by selling investments if really needed but not something you would want to use for ongoing expenses.

That would leave £35K to aquirrel away and ignore for the longer term either to provide for your needs in your late 80s-90s or to leave to someone suitably deserving.  If invested largely in a global share fund it could reasonably be expected to comfortably exceed inflation over 10+ years but could vary significantly in value in the meantime..

You should adjust the given split to meet your particular needs.

You would need to adjust the allocations over time as your shorter term cash gets used up for which you may require help at some point.

Just an idea to show what is possible.  It may be too complex.  Perhaps the ladder idea on its own would be sufficient.

inflationbuster

I'm currently earning 1.5% via Chase Bank but you need a smart mobile phone to join it. 

Pompeydave1967

Linton said:

What do you want the money for?   Why are you wanting the pot to grow? Are you wanting to leave a large inheritance in hopefully 15+ years or may you want to spend the lot in the time available to you?  For example extra help at home or elsewhere? Different timescales lead to different solutions.

One option is...
You could split the money into separate tranches.  Say £35K in cash, perhaps as a "ladder" of fixed term accounts.  Start off with  £10K in your savings account and £5K into each of a 1-year fixed rate account, a 2-year account... and a 5-year account.  After each matures, unless you want to spend the money re-invest it in another 5-year account.  In that way you are getting possible access to a further £5K every year with your money getting interest at something like the highest rate available.  However it may well not keep pace with inflation and much of the money would be tied up for a year or more.

A second tranche could be in cautious investments, say £40K, which can be expected to rise at least as quickly as inflation and unlikely to fall more than a few % in a year.  This could be fairly easy access by selling investments if really needed but not something you would want to use for ongoing expenses.

That would leave £35K to aquirrel away and ignore for the longer term either to provide for your needs in your late 80s-90s or to leave to someone suitably deserving.  If invested largely in a global share fund it could reasonably be expected to comfortably exceed inflation over 10+ years but could vary significantly in value in the meantime..

You should adjust the given split to meet your particular needs.

You would need to adjust the allocations over time as your shorter term cash gets used up for which you may require help at some point.

Just an idea to show what is possible.  It may be too complex.  Perhaps the ladder idea on its own would be sufficient.

Extremely well documented Linton , various possibilities for op , just need a bit more info from him/her re investing / savings plan.

nortong

Thank you all so much for your suggestions, I just want the money to grow as much as possible, I have no plans to spend it on myself rather for it to appreciate so that I can pass it on to my children. Having said that I also need to bear in mind that we cannot anticipate what's round the corner.

Rather than stipulating investing or saving I was really meant the best return, whatever the method. Incidentally, is compounded interest which is re-invested treated as income and subject to tax or is tax only levied if the interest is paid out?

Pompeydave1967

Banks will let HMRC know how much interest you have earnt over the year so depending on circumstances will be taxed. My tax code recently went down a small bit due to this. I received too much interest last year so tax code changed accordingly.