Helping my parents - Savings accounts.

TrebzUK

born_again said:

TrebzUK said:

Hi all

I'm trying to help my ageing parents manage their money a little better. They are very old school so I'm struggling. They recently sold their house and moved into a secure rented apartment. They have 100k left over after paying off the remainder of their mortgage. My mother insists on keeping the whole of the 100k in her current account. I'm obviously very uncomfortable with her doing this. I have finally convinced them to put 50k away in something like an ISA and keep 50k in their current account (To keep my mother happy). When I have proven to them that they do not need 100k in their current account I'll try and have them move a further 40k, leaving them with 10k in their current account.

What would be the best course of action do you think? I have an ISA with Virgin myself and I'm happy with their services. Would an ISA be the best way forward or is there a better way to save / invest their 50k.

Thank you in advance for any advice offered. I'm new to the forum so I'm hoping on getting a good solution for them.

Many thanks

Is that one of these retirement villages/blocks. That can have large annual payments for upkeep?

No actually. It's privately owned apartment / flat that they rent off a landlord. Living in their house became a problem due to the stairs etc.

Sarahspangles

Seconding premium bonds. The optimum approach would of course maximise interest without exposing them to more tax. However if they’re not interested in that approach then premium bonds are familiar and have the advantage, (I think?) of not being a particular target for scammers. MIL agreed to have some, she saw any wins as a windfall and would treat herself, which she wouldn’t do with bank interest.

Farway

Would they be happy with using Nationwide? Known & on the High Street

Some "make mum happy" cash in current with linked Nationwide saver for the majority of the rest

One advantage is the saver money can only be transferred to the current, so one stage removed from scammer emptying

DRS1

Can they get to the local high street?  Assuming they can what banks/building societies have a branch there?  Would any of them be familiar to your parents - eg used them in the past?  or wouldn't touch them with a bargepole?

jimjames

TrebzUK said:

eskbanker said:

TrebzUK said:

They recently sold their house and moved into a secure rented apartment. They have 100k left over after paying off the remainder of their mortgage.

Just to pick up on the move from ownership to renting, do they have sufficient monthly income to cover the rental costs or will they need to be using some of their capital for these?

Yes, they have a monthly pension payment which covers their day to day out living costs. The 100k is surplus to requirements really and is just sat there in the current account, not earning any interest for them.

Maybe explaining they're losing £5000 a year by keeping it there, I'm sure that money would be more use to them than the bank - an upgraded holiday or even to pay for holidays.

Keep_pedalling

Premium bonds are certainly old school.

Have they put lasting powers of attorney in place?

TrebzUK

Keep_pedalling said:

Premium bonds are certainly old school.

Have they put lasting powers of attorney in place?

They are in the process of giving power of attorney to me. I'm trying to make sure that they have enough funds available if one of them passes or they need to go into care. I'll be looking at ISA and PRemium Bond options over the weekend I think but I'm still open to suggestions. My father suggested investing some of their money in gold but I'm not sure about that. It looks like a minefield and none of us understand it. I think using a mixture of Virgin ISA's and their own banks ISA's would be a suitable quick win for them.

MCT56

As you have alluded to it’s not a great idea to have £100k in a current account earning no interest. It’s a risk. The old adage of not having all your eggs in one basket will hopefully work. I think having 10k in an easy access, interest paying, savings account would be plenty enough. Also as suggested by others, they / you could put the bulk of the money into premium bonds and cash isas. Locking money into lengthy fixed rates or investing in things they don’t understand would also not be great. This is just my suggestion having been down this road with elderly parents and POA.

penners324

Do they have an IFA? They should seek some advise.

It's possible to invest that money in such away as earn enough income / interest so a good chunk of the rent is covered.

Angelica123

Are your parents comfortable with internet banking?

Open an EA savings account with the same company that their current account is. Money they want to be easily accessible can stay in the easy access account and be transferred into current account within seconds when money is needed. 

20k per parent can go into an ISA (or multiple as long as stay under 20k limit in total). You could also consider fixed term bonds if they are happy to lock some of the money away. 

I would stay clear of investing - it sounds like they are quite twitchy, and don't have.much understanding of it. It also sounds like they may not be happy to keep money in stock and shares long enough to derive any benefits.