Best place to put £650k for the short term

System

This discussion was created from comments split from: Pensions Planning: The NUMBER.

MrsFingersCrossed

Hello everyone. Good to see this thread still going. 

Some of you might remember me and my 'hoping for the best' retirement planning of several years ago. Well it all went pear-shaped when my lovely husband became terminally ill. He died early last year and I have had to re-think everything about my life.

I have just exchanged contracts on the sale of the house and am moving into a rental flat for 6 months in the hope that the right house to buy will come up.

I will have around £650,000 to save in an easy-access savings accounts and am following the interest rates on those closely. I need the interest to be paid monthly to help pay the rent and live. 

My question is, how important is it that I spread the money across several accounts so my savings are protected within the 85K threshold? It would be much easier if I just deposit it in one or two easy access accounts.

Currently they seem to be Cahoots Simple Saver paying 5.12%, and Coventry Access Saver (2) paying 5.15%. So I'd have around 325k in each. Would that really be risky? Life is complicated enough at the moment without having to juggle loads of different accounts.

Thank you in advance. You've always been brilliant.

swindiff

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

bluenose1

MrsFingersCrossed said:

Hello everyone. Good to see this thread still going. 

Some of you might remember me and my 'hoping for the best' retirement planning of several years ago. Well it all went pear-shaped when my lovely husband became terminally ill. He died early last year and I have had to re-think everything about my life.

I have just exchanged contracts on the sale of the house and am moving into a rental flat for 6 months in the hope that the right house to buy will come up.

I will have around £650,000 to save in an easy-access savings accounts and am following the interest rates on those closely. I need the interest to be paid monthly to help pay the rent and live. 

My question is, how important is it that I spread the money across several accounts so my savings are protected within the 85K threshold? It would be much easier if I just deposit it in one or two easy access accounts.

Currently they seem to be Cahoots Simple Saver paying 5.12%, and Coventry Access Saver (2) paying 5.15%. So I'd have around 325k in each. Would that really be risky? Life is complicated enough at the moment without having to juggle loads of different accounts.

Thank you in advance. You've always been brilliant.

So sorry to hear that about your husband, none of us know what is around the corner.
Great link by Swindiff, didn’t realise that you were protected for 6 months.
i hope the perfect house comes up.

MSE_ForumTeam5

We've split this into its own thread

El_Torro

You can put up to £1 million in NS&I Income Bonds which pay interest every month. The interest rate is 3.65% AER, which is less than you can currently get elsewhere. Still your money is all safe, not just the first £85k. 

I am aware of the temporary high balance protection. What if your money is there for longer than 6 months though? If you're looking for some interest and simplicity NS&I aren't a bad choice. 

Regarding the point about the banks going bust. Yes, the likelihood of the banks you have found going bust this year is very small. Still, if it did happen this would be a big issue for you.

xylophone

For utter simplicity, you could use NS&I as above.

Otherwise, 

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

You might wish to use your ISA allowance now and in April.

Example

https://www.marcus.co.uk/uk/en/savings/cash-isa?prd=cisa&chl=msm&schl=msmp&cid=2104cisa&lid=desktop

If you receive over £10,000 per annum in interest from non-isa accounts you will need to advise HMRC.

https://www.gov.uk/apply-tax-free-interest-on-savings

Olinda99

one thing I would love your feedback on in due course is how easy it was to move the 650k (which I assume will be in your current account) into whatever savings accounts you choose

I am referred of course to faster payment daily limits and bank fraud prevemtion measures locking your account when transferring large amounts

did any of this affect you?

badger09

Olinda99 said:

one thing I would love your feedback on in due course is how easy it was to move the 650k (which I assume will be in your current account) into whatever savings accounts you choose

I am referred of course to faster payment daily limits and bank fraud prevemtion measures locking your account when transferring large amounts

did any of this affect you?

For this sort of sum, a CHAPS payment would be well worth the £25 (ish) charge.  

wmb194

badger09 said:

Olinda99 said:

one thing I would love your feedback on in due course is how easy it was to move the 650k (which I assume will be in your current account) into whatever savings accounts you choose

I am referred of course to faster payment daily limits and bank fraud prevemtion measures locking your account when transferring large amounts

did any of this affect you?

For this sort of sum, a CHAPS payment would be well worth the £25 (ish) charge.  

With the right bank you can send Chaps payments for free e.g., Barclays, but there is a fee if you cancel or amend.

Section62

MrsFingersCrossed said:

My question is, how important is it that I spread the money across several accounts so my savings are protected within the 85K threshold? It would be much easier if I just deposit it in one or two easy access accounts.

Sorry for your loss.

One of the things to factor into your decision should be how likely it is to find a house you like and can complete on it within the 6 month timescale.  What if the search drags out to 7, 8, 9 months, or a year?  I wouldn't want to be in a position of needing to move the money around again, or feeling pressure to complete on the purchase quickly, just because the end of the FSCS high balance period is on the horizon.  Buying property is stressful enough already without having to worry whether your funding is safe and accessible.

I would lean towards forgoing the extra interest and deposit (the majority at least) of the money with NS&I.  Knowing the full sum is protected indefinitely and having it in one place is something I'd find less stressful - having the funding in one place also simplifies the 'source of funds' process your conveyancer will need to take you through.

If you don't need the full £650k for the purchase then do consider putting the excess into higher rate accounts though.

If you opt to put the money somewhere other than NS&I then I'd also take into account how easy it is to deal with the organisation in case of problems.  There would be an advantage to using banks and building societies that have a branch in your local area you could go and refuse to leave until they sort the problem out, vs a bank or building society you can only contact by phone or online.  It might sound like I'm contradicting myself here with the NS&I suggestion (as they don't have branches) but it seems very rare for people to have problems getting their money out of NS&I compared to other organisations.

Finally, I would also diarise making a test withdrawal (of several k) from each of the banks/building societies you do use well in advance of needing the bulk of the funds for completion.  If there is going to be a problem with withdrawals you'll want to know in good time, rather than being up against the completion deadline and not knowing whether the funds will be available in time.

Hope it all works out well for you, whatever you decide.