£50K Emergency Fund - where best to put it?

villafan81

Hi there,

I have saved a £50k emergency fund, and was wondering where you would recommend to keep this? I am open to splitting this into different “pots”.  It is all currently in an ISA earning around 4.7%.

villafan81

Additionally I have a further 5-8k in a current account.  Where would you recommend putting this if ISA is maxed out and I have no tax allowance 

Alexland

Are you likely to have an emergency that requires instant access to the majority of the £5-8k? If not consider putting some in premium bonds or just wait until the next tax year starts next month when you get a new ISA allowance.

Albermarle

villafan81 said:

Hi there,

I have saved a £50k emergency fund, and was wondering where you would recommend to keep this? I am open to splitting this into different “pots”.  It is all currently in an ISA earning around 4.7%.

4.7% is pretty good, so probably best to just leave it where it is .
Although £50K is a lot for an emergency fund.

Murielson

4.7% under a non tax paying ISA wrapper is pretty good just now so why move it?

Bridlington1

Murielson said:

4.7% under a non tax paying ISA wrapper is pretty good just now so why move it?

Because you can get 5.1% on EA cash ISAs these days. If you transferred the ISA to one paying 5.1%, this would generate an extra £200/yr in extra interest (assuming you maintained a balance of £50k and the interest rates remained the same). For £200 I'd have no hesitation in moving my savings to another account and have moved my money for considerably less before. For a list of the best EA ISAs see:
https://moneyfactscompare.co.uk/isa/easy-access-cash-isas/?quick-links-first=false

@villafan81 I would move that £5-8k out of your current account and into an account paying a decent rate of interest. If you're open to having multiple accounts regular savers could be worth looking at. These allow you to deposit a limited amount per month (usually between £50 and £250) but typically pay a higher rate, with some paying as high as 7%. You could drip-feed some of your savings into these accounts and an advantage of this method is that your money becomes spread out over multiple banks/building societies by default so if you suffer a frozen account or whatever with one bank you've still got access to some savings at another in case of an emergency. Moneyfacts has a list of these accounts. See:
https://moneyfactscompare.co.uk/savings-accounts/regular-savings-accounts/

There's also the Santander Edge Saver which pays 7% on balances of £4k or less, this could be worth grabbing as well as the Skipton Members Bonus Saver at 5.5% (£3k max) if you're eligible.

gravel_2

villafan81 said:

Additionally I have a further 5-8k in a current account.  Where would you recommend putting this if ISA is maxed out and I have no tax allowance 

Your ISA allowance resets in a month. If you are already likely to fill your personal savings allowance in 24/25 then you could consider opening a 5%+ easy access/flexible ISA, transfer your 50k and then top up with the 5-8k you have spare. With that approach you can also keep topping up throughout the year with any spare cash until you hit the 20k limit for the year.

Any easy access account you open will have a variable rate so, if predictions are correct, you can expect the % you open to reduce over the coming year. If you can stomach locking any amount for a year or more you may be able to secure a higher interest rate for longer (whether in ISA or normal account).

elkiedee

If you want to split your ISA savings between different "pots"/accounts - say instant access/limited access (3 or 4 withdrawals within a year) at variable rates, you might need to wait to transfer it until the start of the new financial year in April - then if you find an ISA with a better rate that accepts transfers, but with restrictions/conditions, you can make partial transfers of your £50K emergency fund once it becomes last year's money. Then you can add new savings from your current account or other source/income once you've sorted out the transfer(s), or open a completely new ISA for 2024/2025, so keeping further savings separate from this £50K.

elkiedee

For your current account £5-8K, if you think you might need it, and/or have other plans for your ISA allowance, you could just put it into an instant/easy account earning some interest in the same place as your current account, as this makes it easier to move money back and forth.

amanda1024

I’d open the virgin money 5.25% 1 year ISA (after opening one of their current accounts if necessary), and transfer the ISA money into that, to protect against any fall in interest rates over the coming year. Then potentially add most of the rest next tax year, depending on a realistic estimate of the amount of cash for any likely emergency (for ISAs you can always access the money even in fixed term accounts, albeit with an interest penalty)

villafan81

Thanks everybody, really appreciate the advice, will read through and let you know my thoughts, and what i do.