Where to put savings of elderly father to get maximum returns?

cluelessnurse

Hello!  I hope someone could guide us.  My elderly father has about £80.000 sitting in a TSB trustee account. He does not intend to use it if he can help it and he is living on his state pension.  He owns his flat in a secure building with a porter, but the service charge is quite high, as is the council tax. He also lives alone, and there is always a possibility he will need to pay for care at some point.  I do help but I work full time.  I'm sure he would be better off putting his savings into an account that gets him a better return.  Could you make any suggestions?  Should he seek legal advice or not?  Like a lot of old people he does not like the idea of someone else getting involved in his 'affairs'. Thanks so much in advance!

elsien

What interest rate is he getting on it? 

He may well be able to get a higher rate on an easy access or notice account elsewhere. Or more short-term fixed rate accounts for some of it if he’s not anticipating using it in the next 12 months.
has he considered setting a power-of-attorney up in case he needs it in the future? He may be resistant like the idea of someone else getting involved in his affairs, but if you sell it to him that if he loses capacity, it’s either you or some random professional he’s not met, then he may consider it. It will save you and him a whole world of pain should the time arrive when he can’t manage to get to the bank or just can’t manage his own affairs. 

Dazed_and_C0nfused

He could fairly easily get £4k/year on that at the moment. 

Rates may edge higher but no one knows for certain so it's a bit of a gamble how long to fix for (assuming he's happy to have a fixed rate account).

He could spread it between accounts with different terms, say £20k in each of 1, 2, 3 & 5 year accounts.

Also he may be liable to tax on some of it, depends how much his State Pension is.  If he is then the tax is likely to increase due to Personal Allowance being frozen but State Pension increasing under the triple lock.

He could use ISA's if tax is an issue but 80% of 5.25% is better than 100% of 4%.

ForumUser7

cluelessnurse said:

Hello!  I hope someone could guide us.  My elderly father has about £80.000 sitting in a TSB trustee account. He does not intend to use it if he can help it and he is living on his state pension.  He owns his flat in a secure building with a porter, but the service charge is quite high, as is the council tax. He also lives alone, and there is always a possibility he will need to pay for care at some point.  I do help but I work full time.  I'm sure he would be better off putting his savings into an account that gets him a better return.  Could you make any suggestions?  Should he seek legal advice or not?  Like a lot of old people he does not like the idea of someone else getting involved in his 'affairs'. Thanks so much in advance!

https://moneyfactscompare.co.uk/savings-accounts/

Make sure you consider your fathers requirements as well as the highest rate - for example does he need access to it at a branch? And then check the provider has a branch near you etc. If you click 'full search' it'll allow you to apply certain filters, which will help narrow the search. Make sure you click rate order too - rather than apply online

Vortigern

You need to get your father to give you lasting power of attorney while he is still mentally fit to do this. You don't need a solicitor to get LPA, he can apply online. Even if you don't need LPA now, you may need it later.

With LPA you can open and operate accounts for him.

Which accounts? - Look for the best instant access - no chat - list on here.

cluelessnurse

Thank you all for your replies.  I am talking with him today to find out the exact details of his current state of afairs.  My brother is his power-of-attorney but he seems to trust me more with this (to change would cause some friction, but I get on with my brother ok, at the moment!). 

He is pretty old, but is very fit and could easily go on to live for another 5-10 years.  However a recent sudden illness that nearly got the better of him, reminded us that you just can't tell at  his age and access to care funds can be immediate. 

He's pretty good online, so going to a branch is not so much of a problem. Need to keep it simple-ish for him though, so several different accounts would not work. 

Dazed-and-COnfused: He could use ISA's if tax is an issue but 80% of 5.25% is better than 100% of 4%. He only gets a basic state pension, and I read (on money heper.org) that  he can earn a maximum of £5,000 in interest from savings tax-free with the starting rate for savings? Is that right? I don't quite understand your comment above - could you explain to the non-expert please!? Should he look at putting some in an ISA? His current account is with Lloyds. 

Many thanks again - this site has helped me so much over the years. It's great!  However, If he did want some financial adivce about this from someone who actaully knows what they are doing, (i.e. not me) what would you suggest?  He's worried that they will steal his money somehow (again very typical for his age), so it has to be something very trustworthy, they seem to have a service on money helper.org but don't say what the rates would be. 

Dazed_and_C0nfused

If he has no company pension then chances are his State Pension is much larger than the standard "basic" State Pension of £156.20/week.

Do you know how much his is?  Either the weekly or 4 weekly amount (it can't be paid monthly)?

If his State Pension is say £256/week then he would be able to earn £5,258 in interest before paying tax (using a mix of the savings starter rate band and savings nil rate band (aka Personal Savings Allowance)).

There is a good guide to tax on interest here.  But if tax isn't an issue then ISA's are unlikely to be the best option.

Even if tax is an issue you need to consider the overall return.  5.25% less 20% tax is 4.2% after tax.  So still better than 4.0% from an ISA.

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/savings-and-tax

Albermarle

Many thanks again - this site has helped me so much over the years. It's great!  However, If he did want some financial adivce about this from someone who actaully knows what they are doing, (i.e. not me) what would you suggest?  He's worried that they will steal his money somehow (again very typical for his age), so it has to be something very trustworthy, they seem to have a service on money helper.org but don't say what the rates would be. 

Financial advice is mainly geared towards investments, pensions etc , although you can also get advice on things like inheritance tax and other tax matters.

However if you are only looking at cash savings it is not really necessary as the choices are quite simple.

Best savings accounts: 3.85% easy access or 5.35% fixed rates (moneysavingexpert.com)

Bigwheels1111

cluelessnurse said:

Thank you all for your replies.  I am talking with him today to find out the exact details of his current state of afairs.  My brother is his power-of-attorney but he seems to trust me more with this (to change would cause some friction, but I get on with my brother ok, at the moment!). 

He is pretty old, but is very fit and could easily go on to live for another 5-10 years.  However a recent sudden illness that nearly got the better of him, reminded us that you just can't tell at  his age and access to care funds can be immediate. 

He's pretty good online, so going to a branch is not so much of a problem. Need to keep it simple-ish for him though, so several different accounts would not work. 

Dazed-and-COnfused: He could use ISA's if tax is an issue but 80% of 5.25% is better than 100% of 4%. He only gets a basic state pension, and I read (on money heper.org) that  he can earn a maximum of £5,000 in interest from savings tax-free with the starting rate for savings? Is that right? I don't quite understand your comment above - could you explain to the non-expert please!? Should he look at putting some in an ISA? His current account is with Lloyds. 

Many thanks again - this site has helped me so much over the years. It's great!  However, If he did want some financial adivce about this from someone who actaully knows what they are doing, (i.e. not me) what would you suggest?  He's worried that they will steal his money somehow (again very typical for his age), so it has to be something very trustworthy, they seem to have a service on money helper.org but don't say what the rates would be. 

Earning, ie pension + interest = £18570 without tax.
£12,570 tax free, made up of earnings and interest.
£ 5,000 starter savings rate
£ 1,000 personal savings rate.

State pension £10,600.20.
So £7,969.80 of interest tax free.

cluelessnurse

Thank you all and Bigwheels for the breakdown. He's more savvy than I thought!  He has decided to open two buidling society accounts and spread his savings between them, after a period of time, so he can get the best rates. I hope that is the right thing to do. All the best and thanks again.

sevenhills

cluelessnurse said:

Thank you all and Bigwheels for the breakdown. He's more savvy than I thought!  He has decided to open two buidling society accounts and spread his savings between them, after a period of time, so he can get the best rates. I hope that is the right thing to do. All the best and thanks again.

https://www.hsbc.co.uk/investments/what-is-a-stocks-and-shares-isa/