What to do with £200k?

Gimmeago

Let me start out by saying I have no real understanding of financial matters, so please excuse my ignorance.

I inherited a lump sum of money last year, and had planned to buy myself somewhere to live rather than keep renting. After 2 failed attempts to buy property, and given the uncertainty in the market right now, I've decided to pause those plans for the next 6 months at least.

At the moment I have a little over £200k just sitting in my current account where it's doing me no good whatsoever, and I need help understanding what I should do with it. Do I just stick it into a savings account and forget about it for a year? I've been looking at the recommended banks on MSE, and it seems that I can get between 2-2.5% with an easy access account. would this be my best bet? I don't want to get locked in for a long period as I may need to access the funds if a suitable property appears in the Spring or Summer.

Another thing I don't quite understand is this FSCS protection. I've read that they will protect your money up to £85k. Should I therefore plan to spread the money around different savings accounts so that none of them are over £85k?

BLUEHEELER

You don't say how old you are, so muddies the water a little.  Getting on the property ladder is probably a good move, but prices are silly at the moment and you may get a bargain if the doom and gloom persists into Jan/Feb. 

At least in the market, some of your funds can be accessed quickly, but it could drop quite a bit further in the short term - espcially with Russia's intentions still unknown.  I wouldn't be in any rush for the next few months.

Daliah

Gimmeago said:

Another thing I don't quite understand is this FSCS protection. I've read that they will protect your money up to £85k. Should I therefore plan to spread the money around different savings accounts so that none of them are over £85k?

Absolutely definitely split your money now. Allow for interest to be added, i.e. don't stuff an entire £85k into a single account. Also make sure your chosen providers don't share their FSCS protection with another provider. 

Stick to easy access and/or Notice accounts. You can find the best ones on https://moneyfacts.co.uk/savings-accounts/

Gimmeago

BLUEHEELER said:

You don't say how old you are, so muddies the water a little.  Getting on the property ladder is probably a good move, but prices are silly at the moment and you may get a bargain if the doom and gloom persists into Jan/Feb. 

At least in the market, some of your funds can be accessed quickly, but it could drop quite a bit further in the short term - espcially with Russia's intentions still unknown.  I wouldn't be in any rush for the next few months.

I didn't realise age was a factor. I'm going to be 50 in a month.

Gimmeago

Daliah said:

Gimmeago said:

Another thing I don't quite understand is this FSCS protection. I've read that they will protect your money up to £85k. Should I therefore plan to spread the money around different savings accounts so that none of them are over £85k?

Absolutely definitely split your money now. Allow for interest to be added, i.e. don't stuff an entire £85k into a single account. Also make sure your chosen providers don't share their FSCS protection with another provider. 

Stick to easy access and/or Notice accounts. You can find the best ones on 

So given that notice accounts seem to sit around the 2.3% margin, and I may need to use all the funds for a property purchase in the next 6-12 months, would it be sensible to split the £200k evenly between 3 accounts?

I've looked through a few of those accounts and many of them seem to allow withdrawals but not early access. Bit confused as to what the difference is. In short, I'm happy to have the money tied up for a while, but if I do end up finding a property to buy then I'd need to be able to use most, if not all, of it probably on 120 days notice.

Should I be looking for a local financial advisor to help me through this?

Albermarle

Gimmeago said:

Daliah said:

Gimmeago said:

Another thing I don't quite understand is this FSCS protection. I've read that they will protect your money up to £85k. Should I therefore plan to spread the money around different savings accounts so that none of them are over £85k?

Absolutely definitely split your money now. Allow for interest to be added, i.e. don't stuff an entire £85k into a single account. Also make sure your chosen providers don't share their FSCS protection with another provider. 

Stick to easy access and/or Notice accounts. You can find the best ones on 

So given that notice accounts seem to sit around the 2.3% margin, and I may need to use all the funds for a property purchase in the next 6-12 months, would it be sensible to split the £200k evenly between 3 accounts?

I've looked through a few of those accounts and many of them seem to allow withdrawals but not early access. Bit confused as to what the difference is. In short, I'm happy to have the money tied up for a while, but if I do end up finding a property to buy then I'd need to be able to use most, if not all, of it probably on 120 days notice.

Should I be looking for a local financial advisor to help me through this?

Yes you should split between three accounts.

An easy/instant access account means you can withdraw some, or all of it, at any time. ( with some may take one working day for it to hit your bank)

You can withdraw from a notice account but only having given the relevant amount of notice. I think it is OK to give notice but not actually then withdraw the money. ( for example if a planned house purchase falls through)

No you do not need a financial advisor for something so simple. They normally deal with investments and pensions, which are more complicated.

Don't be afraid to save with banks that you have never heard of. There are many smaller banks that normally offer better rates than bigger, well known ones. As long as they are covered by the FSCS, then you are safe . All providers listed here are covered with the compensation scheme.
Savings accounts: 2.5% easy access or up to 4.4% fixed (moneysavingexpert.com)

Gimmeago

Albermarle said:

Gimmeago said:

Daliah said:

Gimmeago said:

Another thing I don't quite understand is this FSCS protection. I've read that they will protect your money up to £85k. Should I therefore plan to spread the money around different savings accounts so that none of them are over £85k?

Absolutely definitely split your money now. Allow for interest to be added, i.e. don't stuff an entire £85k into a single account. Also make sure your chosen providers don't share their FSCS protection with another provider. 

Stick to easy access and/or Notice accounts. You can find the best ones on 

So given that notice accounts seem to sit around the 2.3% margin, and I may need to use all the funds for a property purchase in the next 6-12 months, would it be sensible to split the £200k evenly between 3 accounts?

I've looked through a few of those accounts and many of them seem to allow withdrawals but not early access. Bit confused as to what the difference is. In short, I'm happy to have the money tied up for a while, but if I do end up finding a property to buy then I'd need to be able to use most, if not all, of it probably on 120 days notice.

Should I be looking for a local financial advisor to help me through this?

Yes you should split between three accounts.

An easy/instant access account means you can withdraw some, or all of it, at any time. ( with some may take one working day for it to hit your bank)

You can withdraw from a notice account but only having given the relevant amount of notice. I think it is OK to give notice but not actually then withdraw the money. ( for example if a planned house purchase falls through)

No you do not need a financial advisor for something so simple. They normally deal with investments and pensions, which are more complicated.

Don't be afraid to save with banks that you have never heard of. There are many smaller banks that normally offer better rates than bigger, well known ones. As long as they are covered by the FSCS, then you are safe . All providers listed here are covered with the compensation scheme.

Thank you. I'm sorry to sound like such an idiot, but I've never had more than 3 or 4k available in my whole life, and I'm so scared of doing the wrong thing with this. 

Daliah

To add to @Albermarle's comment: one or two savings providers have daily withdrawal limits which can be lower than your balance. For example, the currently leading easy access provider Al Rayan has a £20k per day limit. I don't consider this an issue but it might be worth checking before you deposit any money.

Gimmeago said:

 . In short, I'm happy to have the money tied up for a while, but if I do end up finding a property to buy then I'd need to be able to use most, if not all, of it probably on 120 days notice. 

120 days is 4 months - could be a rather long time if you find a place you want to buy straight away. 30 days notice would be more to my liking - especially as we are in a rising interest rate environment, where you might want to shift your money to a better paying account.

Daliah

Another point to note is that most of the savings providers are not members of the Confirmation of Payee (CoE) scheme, which means your bank cannot confirm the account details and will warn you that it might be a scam. You can safely ignore those warnings. Make a test payment of £1 to each of your savings accounts, and once those test payments have arrived, you can send larger amounts. At many banks, you are limited to £20k - £25k daily, so it might take several days to distribute your £200k (could be automated by setting up respective Standing Orders).

Most banks will also randomly put blocks on large, unusual payments, in an effort to prevent fraudulent payments. Again, nothing to worry about if it happens in your case as your payments are legit but be prepared to have to spend some time on the phone with your bank's fraud department to get the payments released.

Gimmeago

120 days is 4 months - could be a rather long time if you find a place you want to buy straight away. 30 days notice would be more to my liking - especially as we are in a rising interest rate environment, where you might want to shift your money to a better paying account.

Good point. I plucked 120 days out of the air as both places I've tried buying so far have stretched far beyond that timeframe. The first reached 5 months before the seller pulled out, and the last one was pushing towards 6 months. I thought 4 months would be enough to allow for conveyancing, but if you think I should go shorter then I'll certainly look into that.

ColdIron

Gimmeago said:

BLUEHEELER said:

You don't say how old you are, so muddies the water a little.  Getting on the property ladder is probably a good move, but prices are silly at the moment and you may get a bargain if the doom and gloom persists into Jan/Feb. 

At least in the market, some of your funds can be accessed quickly, but it could drop quite a bit further in the short term - espcially with Russia's intentions still unknown.  I wouldn't be in any rush for the next few months.

I didn't realise age was a factor. I'm going to be 50 in a month.

How is your pension provision? At 50 a few contributions could be a very wise decision with part of your money, the tax relief can be very generous