What to do with lump sum?

RebTech

I just converted my SIPP to an annuity + lump sum so I'm looking for advice on what to do with the latter. It's not a fortune, under £20k, I have no other savings and don't own property.

On the other hand I have no offspring and I'm not looking to pass anything on. I expect to be able to live as well as I'm used to on my income (just a bit over the personal allowance), the capital will be for things like cars and holidays but I got a new (to me) car recently and don't often spend much on hols. I believe my life expectancy should be 15-20 years.

I'm no longer interested in investment. Fixed term savings accounts seem to be currently paying less than easy access ones so should I just stick it all in easy access or am I missing something?

Beddie

should I just stick it all in easy access - Yes

or am I missing something? No

There are other options, of course, but this is simple and sensible for your circumstances. I'm sure others will recommend regular savings accounts, or paying £2880 into a SIPP each year. But that's if you want to take the extra time and effort to do these, for quite small gains.

Albermarle

Fixed term savings accounts seem to be currently paying less than easy access ones so should I just stick it all in easy access or am I missing something?

What you can not predict is the future direction of interest rates.
So today you can get 5% in an easy access savings account, but only 4.6% for a three year fix term account.
For the latter you know what rate you will be getting for three years, whilst from the easy access account you could end up with 3% or even 7% , or it might stay around 5% for a long time.

Technowme

I could not leave a post earlier,so just trying now?

RebTech

Albermarle said:

...you know what rate you will be getting for three years...

True. I suppose the other side of that coin is with easy access I can always switch to whatever seems better as and when... But the main thing is that I'm not making a mistake in supposing savings accounts are the way to go. I strongly suspected that anyway but it's nice to have it confirmed.

DRS1

Nobody has mentioned an ISA so I will just in case you have not already got one.

RebTech

DRS1 said:

Nobody has mentioned an ISA so I will just in case you have not already got one.

Thanks but as I understand it the first £1k savings interest is tax free so given my modest capital an ISA is unnecessary.

dingling68

Some flexible ISAs are offering higher variable interest rates than easy access accounts at the moment so could still be worth a look.

The pinned post at the top of the first savings and investments page will give you the latest easy access saver rates available which may be of interest to you

DRS1

RebTech said:

DRS1 said:

Nobody has mentioned an ISA so I will just in case you have not already got one.

Thanks but as I understand it the first £1k savings interest is tax free so given my modest capital an ISA is unnecessary.

Fair enough but if you have £20k in an account paying 5% that is the £1k interest right there.  If it were my £20k I would put it in an easy access cash ISA and then if I got any other money I would not be worried about going over the £1k - though you may get the 5k starter rate as well for all I know.
Just because it is in an ISA doesn't make it any less accessible than if it was in an ordinary savings account.