Two Year Investment Plan

MSM78

Hi,

I'm looking to maximise a return on a sizeable sum (six figures) over the next two years but keep it as low risk as possible (no stocks, shares etc.).

I'm a higher rate tax payer, my wife is basic rate tax payer and although we both have ISA's presently (mines a Stocks & Shares and her's is a Cash ISA) we haven't put anything into them yet this year, so as I understand it we are both free to open new ones and pay up to £20000 each into these annually.

The plan is to fill the ISA's this year, best rate looks to be 4.73% and put the rest into 1yr fixed savings accounts in my wife's name as her PSA is higher and tax rate would be 20% over my 40%.  

Next year I'll repeat the above, topping up the ISA's and re-investing the interest into the equation.

Best rates to split the remainder over look to be 5.7% and 5.52% presently on 1YR fixed savings accounts, although I'm minded to wait until next week to see what happens to the base rate on Friday.

I think the above is probably as good a strategy as any, but wanted to share in case I'm missing any better options.

Many Thanks

dont_use_vistaprint

I think the best you can get is 5.7% via Raisin all in your wife’s name, maybe a little more after the BoE rate rise. If that’s enough it sounds like the best option, simple & safe.

FireRetire98

Is there a reason why you only have 2 years to put your money away for? Can you do more?

With your current risk tolerance being low, it looks like you’re stuck with savings accounts or cash ISAs. 

However, particularly if you’re near age 55-57 you could put £40k in a pension per year. Since you’re a higher rate tax payer you this is probably the best way to get a ‘risk free’ boost to your savings in 2 years. 

dont_use_vistaprint

FireRetire98 said:

Is there a reason why you only have 2 years to put your money away for? Can you do more?

With your current risk tolerance being low, it looks like you’re stuck with savings accounts or cash ISAs. 

However, particularly if you’re near age 55-57 you could put £40k in a pension per year. Since you’re a higher rate tax payer you this is probably the best way to get a ‘risk free’ boost to your savings in 2 years. 

I was assuming pension maxed out already but if not yes, if happy to risk losses and can avoid paying the tax back later 

MSM78

FireRetire98 said:

Is there a reason why you only have 2 years to put your money away for? Can you do more?

With your current risk tolerance being low, it looks like you’re stuck with savings accounts or cash ISAs. 

However, particularly if you’re near age 55-57 you could put £40k in a pension per year. Since you’re a higher rate tax payer you this is probably the best way to get a ‘risk free’ boost to your savings in 2 years. 

Hi, it will be used to clear my mortgage which has 2yrs left to run on a favourable rate (2.39%) and to avoiding ERC's.  

With the 2yrs worth of payments and the interest bump on top, I'll be free and clear.   

My wife and I fortunate enough to both have respectable pensions in place, so as you say it's probably the savings accounts / ISA route whilst we're waiting for the mortgage deal to end.

Thanks 

Exodi

Thread title is a bit misleading - it's not a two year investment plan if you don't plan on investing, but this is just me being pedantic. I'm upset because I think you're right on the money (given that you said you already have adequate pension provisions) and it looks like you're already aware of the best rates on the market.

Nothing to do except be pedantic. Refreshing to hear you have a good plan for the money.

MSM78

Exodi said:

Thread title is a bit misleading - it's not a two year investment plan if you don't plan on investing, but this is just me being pedantic. I'm upset because I think you're right on the money (given that you said you already have adequate pension provisions) and it looks like you're already aware of the best rates on the market.

Nothing to do except be pedantic. Refreshing to hear you have a good plan for the money.

Hi,

Point taken re the title 

Grateful for the response, I was just seeking to canvass some views before pulling the trigger on locking in for the first year.

Much appreciated!

boingy

You sound pretty clued up and clear about what you want but definitely wait until the likely interest rate changes this week and then see how the sentiment is. Of course, savings rates don't instantly move in response but we might have a better idea of how likely future increases are. 

Just bear in mind that you can pull your money out of fixed rate ISAs at any time during the fix, albeit at a punitive interest penalty but normally fixed rate non-ISA accounts tie you in for the whole time, with the only exception being death and, very rarely, if you can prove extreme poverty. It doesn't sound like it's a problem to you but you need to be aware of that.