Redundancy money to invest

TheUmpteenth

Hi folks.
I'm trying a few avenues, this is just one, I've also reached out using Unbiased, who have put me in touch with a restricted FA. Anyway, here's the skinny.

I'm in Scotland, and I'm in my 40s. I don't own any property.

I was made redundant last year but quickly lined up a new, better-paid job. I now have the redundancy money, shares in the company that made me redundant and a monthly surplus. It's more money than I've ever seen, but it's not enough to turn the head of any IFA, from what I can tell.

I don't know what to do, and if it sits in my current account, it'll burn a hole in my pocket, slowly dwindle, or lose value because some oil Barron farts or we get Liz Trussed again.

It's too much for most of the savings accounts I've seen - with their £2k limits, and I'm too old for the worthwhile ISA (If I understand that correctly).

I honestly don't even know what to search for at this point. Can anyone help?

Johnjdc

What savings accounts are you seeing with a £2k limit?

You may be too old for a lifetime ISA but you can still have a regular ISA.

Or if you don't need it any time soon put it in a stocks and shares ISA or a pension.

TheUmpteenth

Johnjdc said:

What savings accounts are you seeing with a £2k limit?

In a previous thread I was told about Fixed Rate Bonds and Regular Savers, I may have misunderstood the limits for these.

Johnjdc said:
You may be too old for a lifetime ISA but you can still have a regular ISA.

I had also understood that the benefit of an ISA was the tax relief, but the interest was too low

Johnjdc said:
Or if you don't need it any time soon put it in a stocks and shares ISA or a pension.

Ideally, I'll get to the point where I can put a deposit down and buy a house that'll see us through retirement. We're on the verge of having just enough, but that'll lead us to having ridiculous repayments, so if we saved a bit more it would be better (unless we can't save at the speed of house price increases...)


I think what you've done here is highlight my ignorance. This is why I need to seek advice, even if it is restricted.

artyboy

So if the plan is to put this money towards a house deposit in the not too distant future, there are plenty of instant access or fixed rate (or even notice) cash accounts listed on the MSE savings pages that will pay you 5%+ 

Anything under at least a 5 year timeframe isn't really suitable for investing in stocks and shares - therefore keeping it in cash might be best.

Whatever you do, please don't go for non-independent advice! Not that you really need it if it's going to stay as cash savings - they only thing you really need to consider is how soon you might need access to it.

gravel_2

Regular savers have restricted monthly deposits. If you're looking to earn interest on a lump then regular savers should be low down on your list. Most easy access and fixed accounts have essentially unlimited deposits (often up to 250k or more).

ISA interest rates right now are roughly on par with non-ISA accounts. Not sure what you mean when you say interest was too low. With rates basically the same you can earn interest without risk of additional income tax and, year over year, you can accumulate a nice amount within the ISA wrapper that will remain outside HMRC's grasp.

El_Torro

Premium Bonds are also an option since you don't pay tax on any winnings. Winnings aren't guaranteed though and the average return isn't amazing, only really worth it if you would be paying 40% tax on interest. 

Your pension might need a boost (we don't know since you haven't said) so it might be worth putting some there. If you're saving up for a deposit on a property then Cash ISAs / savings accounts / Premium Bonds are probably the way to go for most of your money. 

eskbanker

TheUmpteenth said:

It's more money than I've ever seen, but it's not enough to turn the head of any IFA, from what I can tell.

No need to be coy, so if you share more information about how much it is then you may get more meaningful guidance - for some, £5K is unimaginable riches, whereas others may not blink about £500K!

The Flowchart - UKPersonalFinance Wiki is a potentially useful structured way of considering what to do with your finances....

xylophone

Previous thread

https://forums.moneysavingexpert.com/discussion/6406852/best-savings-account-for-over-40s-to-save-mortgage-deposit



 It seems that you changed jobs in late November 2022 and thus increased your salary by a substantial amount.

You were asking about saving £800 a month, not about an account suitable for a lump sum.

You have now been made redundant  (after around 18 months) from this company and have received a redundancy lump sum and

shares in this company?


You now want an easy access account/accounts where you can hold the redundancy money pending buying a house?

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

TheUmpteenth

No need to be coy, so if you share more information about how much it is then you may get more meaningful guidance - for some, £5K is unimaginable riches, whereas others may not blink about £500K!

I'm not very anonymous on the internet, so I'm scared to say. It's low 5 figures

TheUmpteenth

xylophone said:

Previous thread

https://forums.moneysavingexpert.com/discussion/6406852/best-savings-account-for-over-40s-to-save-mortgage-deposit

Yeah, I know, I didn't act on the last thread. I think it's partly because I'm risk averse and don't have enough information, and partly because I work full-time and don't have time/energy to get the information. Will I act this time? I plan to...

 It seems that you changed jobs in late November 2022 and thus increased your salary by a substantial amount.

You were asking about saving £800 a month, not about an account suitable for a lump sum.

 The £800 extra is still kind of there (though prices have gone up), on top of a further increase, as I changed jobs again. The volatility of my sector is one reason I want to save and buy a home.

You have now been made redundant  (after around 18 months) from this company and have received a redundancy lump sum and

shares in this company?

shares in the same company that made me redundant, and they're falling, but the advice it 'hold', which I'm not sure about. They're held by an American wealth management firm, but not invested.

You now want an easy access account/accounts where you can hold the redundancy money pending buying a house?

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

The real advice I'm looking for is what kind of savings I should be considering. What I'm taking from this is

Shares - only if I'm investing for 5 years or I'm an aggressive risk taker
ISA - this gets me £20k tax free, which if the interest rate is good is the best short term option
Regular Savers - these are taxed, I'm in the "Higher" rate bracket, so this is fairly significant. Still, this seems to be the second best option
Premium Bonds - This is basically a lottery. There's a low average return.

The FA who called was practically a salesperson. I was aware that this was a likelihood, though.

Thanks. I certainly know more now than I did before.

ColdIron

TheUmpteenth said:

I'm in the "Higher" rate bracket, so this is fairly significant.

Pension contribution might be worth considering for some of the money. Higher rate tax relief is hard to ignore, especially in Scotland