What should I do with 100k savings?

moneysavvy35

hey guys. so have 100k in savings sitting in a account earning 0.5% I have recently opened an Allica account and plan to put £50-60k in a 6month fixed rate account. just wonder if I should just put all of it (or maybe up to 95k) or split the remaining bit up?
This money been sitting there for years not doing anything and wish I learnt about saving and earning interest sooner, but never mind. would eventually like to buy a house so this is why I have seriously started looking at what my money can be doing for me. So what would you do with it? Also higher tax earner so will I am assuming I will have to pay tax on whatever savings is accrued?

Middle_of_the_Road

Depending on your age, and if you've owned a house before, consider a lifetime ISA

Lifetime ISA (LISA): how they work & best buys (moneysavingexpert.com)

jaypers

I would immediately open the best Easy Access you can find and put up to £85k straight into it while you decide. 5 minutes work and you’ll be over £8 a day better off that you are now (based on £85k @4% Vs 0.5%). 

El_Torro

If the whole £100k is earmarked as your deposit for a house (bearing in mind that you should also have some easily accessible cash to act as an emergency fund) then I would just find the best way to earn interest on it. When do you plan to buy a property? If it's in less than 10 years don't invest it, just save it. 

As mentioned a Cash LISA is a great idea, as long as you are happy with the restrictions.

Since you're a higher rate tax payer then I would consider putting some of the money in Premium Bonds. Returns aren't guaranteed, they are tax free though. 

darkcloudi

Is that 100k in an ISA, if not I would open one up, as being a high rate tax payer you will pay tax on any interest earned above £500 for normal savings account.

Bigwheels1111

Never put 85k in one account, yes the 85k is protected but the interest is not.
Chip easy access is 4.21% with instant deposits and withdrawals via open banking.
If you put £81,500 in Chip for a year you would get £3431.15 interest just under 85k FSCS protection.

moneysavvy35

El_Torro said:

If the whole £100k is earmarked as your deposit for a house (bearing in mind that you should also have some easily accessible cash to act as an emergency fund) then I would just find the best way to earn interest on it. When do you plan to buy a property? If it's in less than 10 years don't invest it, just save it. 

As mentioned a Cash LISA is a great idea, as long as you are happy with the restrictions.

Since you're a higher rate tax payer then I would consider putting some of the money in Premium Bonds. Returns aren't guaranteed, they are tax free though. 

thanks for this suggestion as well as from middleoftheroad, but had a quick read up and says you cant draw for a year (if reading correctly) looking to be on housing ladder before this time fingers cross, but maybe not the way the market is at the mo. I may leave back 5k

Never put 85k in one account, yes the 85k is protected but the interest is not.
Chip easy access is 4.21% with instant deposits and withdrawals via open banking.
If you put £81,500 in Chip for a year you would get £3431.15 interest just under 85k FSCS protection.

  nearly 35k in interest only?? thats crazy...i could have literally earnt this last year as i have been dwindling around the 85k mark for a couple of years...such a shame - Im on it now though  

darkcloudi said:

Is that 100k in an ISA, if not I would open one up, as being a high rate tax payer you will pay tax on any interest earned above £500 for normal savings account.

no not in an ISA, i opened up a help to buy ISA as i heard it was coming to an end, but never put anything in it. Will look into the normal ones. So much to learn about saving and getting the most out of your money

iNeed2P

moneysavvy35 said:

El_Torro said:

If the whole £100k is earmarked as your deposit for a house (bearing in mind that you should also have some easily accessible cash to act as an emergency fund) then I would just find the best way to earn interest on it. When do you plan to buy a property? If it's in less than 10 years don't invest it, just save it. 

As mentioned a Cash LISA is a great idea, as long as you are happy with the restrictions.

Since you're a higher rate tax payer then I would consider putting some of the money in Premium Bonds. Returns aren't guaranteed, they are tax free though. 

thanks for this suggestion as well as from middleoftheroad, but had a quick read up and says you cant draw for a year (if reading correctly) looking to be on housing ladder before this time fingers cross, but maybe not the way the market is at the mo. I may leave back 5k

Never put 85k in one account, yes the 85k is protected but the interest is not.
Chip easy access is 4.21% with instant deposits and withdrawals via open banking.
If you put £81,500 in Chip for a year you would get £3431.15 interest just under 85k FSCS protection.

 nearly 35k in interest only?? thats crazy...i could have literally earnt this last year as i have been dwindling around the 85k mark for a couple of years...such a shame - Im on it now though  

darkcloudi said:

Is that 100k in an ISA, if not I would open one up, as being a high rate tax payer you will pay tax on any interest earned above £500 for normal savings account.

no not in an ISA, i opened up a help to buy ISA as i heard it was coming to an end, but never put anything in it. Will look into the normal ones. So much to learn about saving and getting the most out of your money

3,500 not 35,000

CheekyMikey

If ever someone’s username was a misnomer…

Albermarle

 Also higher tax earner

Not sure about your pension situation, but pension contributions are very tax efficient for a 40% tax payer.

Of course it ties the money up until you are older, but could mean a better/earlier retirement.

Appreciate you are saving for a house etc but worth keeping in mind.

cwep2

If this is potentially needed within a year a fixed rate account isn't the best place to put this IMHO.

What I would do if it was me:
1. If you qualify for LISA put as much here as possible. This gets interest free return and if used for your first house purchase gets increased even more.
2. ISA - can put 20k in per tax year, but given this is sheltered from tax on interest will end up better for higher rate tax payers. Choice within ISA of easy access cash ISA or MMF if you are adventurous and do some research!
3. Premium Bonds. Can put in up to £50k. Tax free winnings, good for higher rate tax payers. The prize fund is going up to 4%, you can expect 3.5-3.6% with £50k in there, which is equivalent to 5.8% for higher rate tax payer. Best time to deposit in PBs is just before end of month, best time to withdraw is on second business day of the month. No point putting in until 28th or 31st July right now, so leave in easy access until then. You can withdraw any time (takes a couple of business days to hit your account) but if you withdraw in middle of month you've effectively not earned any 'interest' so better to withdraw on 2nd and put into easy access.
4. Notice accounts 60 or 90 day notice accounts get a bit more interest than easy access, a house purchase takes longer than this so will be fine to park here and give notice when you find somewhere.
5. Easy access - see the best paying accounts on this site.