Resolved

peteyh

Resolved  thanks all 

Zuzi

If you need the money in one year I would split into 3 fixed saving accounts (just in case, due to max FSCS protection). Potentially 20K into an ISA if you don't have one, for tax-free interest.

Invested (in funds, stocks etc...) there is no guarantee that you will make any profit after just one year.

Albermarle

Any other general. Investment advice.

Same advice that everybody gets when asking similar questions.

For short term ( < 5 years) best to stay mainly in cash savings . For one year definitely 100% cash savings.

Investing is a long term game, as in the short term fund values can gyrate wildly.

 A certain Madoff I believe has a good one. 

Presume this is supposed to be a joke, as he was one of America's biggest fraudsters ?

Doctor_Who

Indeed, a few minutes looking through the first 10 pages of this board brought up:

https://forums.moneysavingexpert.com/discussion/6456654/where-to-put-700k-house-sale-money/p1

https://forums.moneysavingexpert.com/discussion/6456775/what-should-i-do-with-100k-savings/p1

Is Bernie still around? There never was a more apt surname!

george4064

Normally you wouldn't invest any amount for just one year, however you can invest in a money market fund for a return.

However, it would be much less hassle to just stick it in an easy access or 1 year fix account. £85k in each or a little less than £85k so the interest doesn't take you over.

Not sure if you have other earnings, but becareful of tax liability on the interest earned.

boingy

Don't even think about putting in funds or shares for one year. So ISA and savings is your thing. If you have a spouse you might want to look at giving them some of the money to use up ISA and savings allowances. You could put 50K each in premium bonds and see how lucky you are (tax-free).

You do need to think about tax with that amount of interest. Yearly interest will mean the whole amount of interest will land in one tax year - monthly will allow you to have some in a different tax year. If you earn more than 10K interest in one tax year you have to submit a tax return.

Krakkkers

I may have been unlucky but whenever i have put money into funds over the last 20 plus years i have NEVER made money.

peteyh

OK some very interesting comments. I'm currently working but below the tax threshold savings interest would. Take me approx to 20k earnings thriugh salary and interest 50/50 split 

-Firstly suprised to hear in 20 years someone has never made a profit.. I see some returning big profits. 

Suggested split of 200k then..
-85k 1 year bond @  What I'm hearing is to not risk putting the full amount into. Chartered savings bank which was my preference for effort. (the requirements to set up. Alot of these accounts is very manual ie posting proof of identity etc) but go 85k 
-20k fixed 1 year isa 5.3% is a no brainier I guess as tax free in comparison to a 5.85% taxed at 20%?
-  50k & 45k premium bonds maybe the rest 50k me and 45k partner read the return is approx  3.5-3.6% with £50k in there, which is equivalent to 5.8% for High tax earner? What about for a Low tax earner? 

Thanks all 

spider42

If your salary is around £10k, and isn't likely to change much during this tax year and next tax year, then tax on the interest may not be an issue for you, as long as you time the interest payments carefully.

You can earn up to £18,570 without paying any tax, if the excess above the personal allowance is interest. The personal allowance is £12,570, and then if the first £5,000 of income above the personal allowance is interest, then it is taxed at 0%. You also get the £1,000 savings allowance on top of that, also taxed at 0%.

So if you put some of the cash into accounts which pay interest monthly, you'll get 9 month's worth in this tax year, and 3 month's next year. And if you get one year bonds paying on maturity, you will get all the interest next tax year. So use a combination of monthly and annually, and you should be able to arrange to get about half the interest in this tax year and half in the next tax year.

Salary £10k this year plus half the interest at say 6% would be £6k, and you'll be at £16k in total, so well within the £18,570. Same again next tax year. No tax to pay (provided the £200k is then used for something non-taxable and isn't kept in taxable savings).

peteyh

spider42 said:

If your salary is around £10k, and isn't likely to change much during this tax year and next tax year, then tax on the interest may not be an issue for you, as long as you time the interest payments carefully.

You can earn up to £18,570 without paying any tax, if the excess above the personal allowance is interest. The personal allowance is £12,570, and then the first £5,000 of interest above the personal allowance is taxed at 0%. Then you get the £1,000 savings allowance on top of that, also taxed at 0%.

So if you put some of the cash into accounts which pay interest monthly, you'll get 9 month's worth in this tax year, and 3 month's next year. And if you get one year bonds paying on maturity, you will get all the interest next tax year. So use a combination of monthly and annually, and you should be able to arrange to get about half the interest in this tax year and half in the next tax year.

Salary £10k this year plus half the interest at say 6% would be £6k, and you'll be at £16k in total, so well within the £18,570. Same again next tax year. No tax to pay (provided the £200k is then used for something non-taxable and isn't kept in taxable savings).

Brilliant.. Its this part I was struggling with - couldn't actually find a calculator online for earners below the basic rate of tax, they all only seem to show basic high or additional, so I couidnt physically get a reading of what tax I would end up paying. 

So perfect £18,750 Is my target and as long as you say it's split over more than one year I won't hit it and therefore assume I won't have to do a tax return form either. I great  

So with the above scenario it's not worth really going for a tax fred ISA If any monthly fixes for savings accounts are higher and I don't hit the £18,750

Albermarle

peteyh said:

OK some very interesting comments. I'm currently working but below the tax threshold savings interest would. Take me approx to 20k earnings thriugh salary and interest 50/50 split 

-Firstly suprised to hear in 20 years someone has never made a profit.. I see some returning big profits. 
It is highly unusual, but it all depends on what you invest in. On the other hand BIG profits usually means taking more risk, so the possibility of BIG losses. A more typical medium/medium high diversified fund may return about 3% above inflation in the long term ( just off the top of my head) 

Suggested split of 200k then..
-85k 1 year bond @  What I'm hearing is to not risk putting the full amount into. Chartered savings bank which was my preference for effort. (the requirements to set up. Alot of these accounts is very manual ie posting proof of identity etc) most accounts do not requite proof of identity as they get the required info automatically from public sources. However if an issue is flagged up they will do further checks. but go 85k . Ideally needs to be a bit less than £85K as the interest will count as well.
-20k fixed 1 year isa 5.3% is a no brainier I guess as tax free in comparison to a 5.85% taxed at 20%? Yes
-  50k & 45k premium bonds maybe the rest 50k me and 45k partner read the return is approx  3.5-3.6% with £50k in there, which is equivalent to 5.8% for High tax earner? What about for a Low tax earner? 4.5% approx assuming you would be actually paying tax on any savings interest.

Thanks all 

See comments in bold.