Where to invest £250K?

House sale proceeds.  This is essentially our retirement pot which we will be drawing straight away, though slowly at first hopefully.

What I want is somewhere safe by that I mean limited to £85K with any one provider, and if possible tax free.

What I don't want and would be totally unpalletable is put it in some investment that may go down.  This pot is won't get replenished, so I don't want to see it drop through bad investment choice or market crash.

The obvious is ISA's for tax free, but rates on offer are not exciting and £20K per person per year.

£100K in premium bonds seems a good bet, (£50K each) am I right the winnings from those are tax free?

RBS are offering over 4% on a 2 year fixed rate, that looks good as rates are falling, obviously interest will be taxable on that.

What other places are people using?
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  • masonic
    masonic Posts: 22,845
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    edited 26 December 2023 at 4:44PM
    Do you want the money to preserve its spending power, or is it just that you don't want to see the nominal value go down? Protecting it from inflation would involve quite a different approach to protecting the number from decreasing.
  • wmb194
    wmb194 Posts: 3,108
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    ProDave said:
    House sale proceeds.  This is essentially our retirement pot which we will be drawing straight away, though slowly at first hopefully.

    What I want is somewhere safe by that I mean limited to £85K with any one provider, and if possible tax free.

    What I don't want and would be totally unpalletable is put it in some investment that may go down.  This pot is won't get replenished, so I don't want to see it drop through bad investment choice or market crash.

    The obvious is ISA's for tax free, but rates on offer are not exciting and £20K per person per year.

    £100K in premium bonds seems a good bet, (£50K each) am I right the winnings from those are tax free?

    RBS are offering over 4% on a 2 year fixed rate, that looks good as rates are falling, obviously interest will be taxable on that.

    What other places are people using?
    It's easy to do better than RBS.

    https://moneyfactscompare.co.uk/savings-accounts/2-year-fixed-rate-bonds/?quick-links-first=false#
  • Albermarle
    Albermarle Posts: 21,094
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    There is a lot of research, historical info, on the best way to use a retirement pot to give a sustainable income for a long retirement. 
    Normally the pot should be something like 50% equity ( shares) 30% bonds, 10% other, 10% cash ( these % will vary quite a lot depending on peoples opinions) In this case as a rule of thumb, you should be able to withdraw around 4% of the pot per year, increasing with inflation, and the chance of running out would be very slim, and you might end up with more than you started. This takes account of regular market downturns ( and recovery) during the withdrawal period.
    If you keep all the pot as cash savings, then if you live to a ripe old age then the pot will almost certainly run out at some point, so it is the most risky option.
  • sevenhills
    sevenhills Posts: 5,796
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    You can get 5.1% at the Leeds BS, but with the November 2023 RPI inflation rate at 5.3% you will be losing 0.2% per year, although inflation is declining.
    I prefer investing in equities myself, where your investment could go up or down.

  • xylophone
    xylophone Posts: 43,837
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    Where to invest £250K?

    Invest  ( more usually associated with stocks/shares) seems a bit of a misnomer if the thought of capital instability is unpalatable.

    Savings rates here

    https://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

    Over 5% is available on a two year fix.

  • masonic
    masonic Posts: 22,845
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    edited 26 December 2023 at 8:56PM
    You can get 5.1% at the Leeds BS, but with the November 2023 RPI inflation rate at 5.3% you will be losing 0.2% per year, although inflation is declining.
    I prefer investing in equities myself, where your investment could go up or down.

    Had the OP saved in an account paying 5.1% in November 2022, then it would have been a 0.2% loss vs RPI inflation in the year to November 2023. If the OP opens a savings account in January 2024, they will need to wait until the January 2025 figure is available before knowing whether the savings kept up with inflation over that year. Likely inflation will be less than 5.2%, but who knows.
  • First things first, 85k FSCS covers 85k as stated.
    But not any interest above that.
    At 5% that’s a kick in the teeth of £4250. Unlikely but it’s a lot to risk.
    Both working or only one. Tax reasons.


    I’m in a similar situation lump sum wise.
    I opted for 5 year fixed and 7 year fixed all with annual payout.
    2 isa’s with low penalty for early closure.
    Plus easy access and as of today 8 regular savers.
    On a low income myself, 4k and £12k interest.
    Total amount is tax free 😎.
    Gives me a nice income every year.
    Enough income for me to never touch the capital well for 5 to 7 years.


  • ProDave
    ProDave Posts: 3,614
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    I may have confused you.  This is not my entire pension.  I have other pensions some in payment already others soon to be.

    This separate pot could be described as our "fun pot"  While our pensions will pay day to day living, they won't do much more than that.  So this pot is what we will draw on as and when needed to ensure our retirement is comfortable, fun and worry free.  So the objective is to protect it, not gamble it.
  • ProDave said:
    I may have confused you.  This is not my entire pension.  I have other pensions some in payment already others soon to be.

    This separate pot could be described as our "fun pot"  While our pensions will pay day to day living, they won't do much more than that.  So this pot is what we will draw on as and when needed to ensure our retirement is comfortable, fun and worry free.  So the objective is to protect it, not gamble it.
    That logic sounds a little backwards to me. Your “fun pot” is where you can take more risk because it isn’t critical to your daily needs.
  • sevenhills
    sevenhills Posts: 5,796
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    ProDave said:
    I may have confused you.  This is not my entire pension.  I have other pensions some in payment already others soon to be.

    This separate pot could be described as our "fun pot"  While our pensions will pay day to day living, they won't do much more than that.  So this pot is what we will draw on as and when needed to ensure our retirement is comfortable, fun and worry free.  So the objective is to protect it, not gamble it.

    So how long will this "fun pot" be invested and not spent?
    Savings accounts are generally used for short-term money.
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