ISA, advice on savings re inheritance

veesharp

Hi All… I’m in the fortunate position of having some money to invest and reading the info on MSE but if anyone has advice to offer I’d be most grateful. I will put £20K into an ISA which I can leave there, then will need to split the rest between 2 separate savings accounts (one instant access) for the £85K protection.  Am I on the right tracks here or has anyone got better advice? It’s all new to me and I’m anxious about making mistakes! Is there a current discussion to look at? 

Open to any advice/options/ideas 🙏🏻

EthicsGradient

It all depends on your circumstances and needs. Are you thinking purely of savings, or do you want to put any in the stock market ("invest" tends to be used for the latter, "save" for the former)? Are you married? If so, you might use your spouse's ISA allowances too. Are you a higher rate tax payer? If so, you might consider using Premium Bonds, which are tax free, and work out well for higher rate payers (or, if married, you might put some savings in your spouses name, since they get a higher 0% savings tax band, and then pay 20% rather than 40%).

Are you happy with your pension provision - or are you approaching (or over) potential retirement age? With the latter, it could be worth putting some into a money market account in a personal pension, since you get tax relief, but it's still about the same risk as savings in a bank.

veesharp

I am open to ALL ideas and options for sure.. I am divorced, just reached pension age, semi-retired/self employed, lower rate tax payer.. 

I DO need to do something with my recently matured PP which isn’t very big (last time I looked). I was thinking of using a financial advisor (?) but a money market account sounds like a great option..! I’d like to know more about that. Is that something I can still do even though I’ve reached pension age?

And definitely thinking of using a portion to try out the stock market but I’m a complete newbie at this point! 

InvesterJones

The main thing is to work out a plan for what you will need, and when. Getting advice (which we as non-qualified people can't give) for your circumstances would seem prudent. Once you have that, then we can certainly help with general recommendations for how to achieve each of those goals. For example, options for the best easy access accounts for your immediate needs, options for mid-term investments, options for longer-term, based on how much risk you would need to take to achieve your goals.

Which is a long-winded way of saying switch your mindset from 'I've got this money, what do I do with it?' to 'I've got these goals, what do I need to do with my wider finances, including this money, to achieve them?'

veesharp

InvesterJones said:

The main thing is to work out a plan for what you will need, and when. Getting advice (which we as non-qualified people can't give) for your circumstances would seem prudent. Once you have that, then we can certainly help with general recommendations for how to achieve each of those goals. For example, options for the best easy access accounts for your immediate needs, options for mid-term investments, options for longer-term, based on how much risk you would need to take to achieve your goals.

Which is a long-winded way of saying switch your mindset from 'I've got this money, what do I do with it?' to 'I've got these goals, what do I need to do with my wider finances, including this money, to achieve them?'

That’s good advice thank you and I do have a plan coming together. 

I have work to do on my house hence an easy access account, and I want a monthly income on top of my pension. The rest I can invest. Thanks for that.. 

my immediate priority is choosing the right ISA asap as interest rates on them seem to be changing daily atm! Right now I’m looking at Plum vs Trading. Am I right in thinking I can put in £20K now, and open another in April with £20K? 

Albermarle

veesharp said:

InvesterJones said:

The main thing is to work out a plan for what you will need, and when. Getting advice (which we as non-qualified people can't give) for your circumstances would seem prudent. Once you have that, then we can certainly help with general recommendations for how to achieve each of those goals. For example, options for the best easy access accounts for your immediate needs, options for mid-term investments, options for longer-term, based on how much risk you would need to take to achieve your goals.

Which is a long-winded way of saying switch your mindset from 'I've got this money, what do I do with it?' to 'I've got these goals, what do I need to do with my wider finances, including this money, to achieve them?'

That’s good advice thank you and I do have a plan coming together. 

I have work to do on my house hence an easy access account, and I want a monthly income on top of my pension. The rest I can invest. Thanks for that.. 

my immediate priority is choosing the right ISA asap as interest rates on them seem to be changing daily atm! Right now I’m looking at Plum vs Trading. Am I right in thinking I can put in £20K now, and open another in April with £20K? 

Yes you can.
FYI, for all ISA related questions ( for cash and stocks and shares ISAs) there is an ISA subforum.
ISAs & tax-free savings — MoneySavingExpert Forum

To improve your knowledge in these areas generally, you could try reading through these forums for half an hour a day.
You will see lots of general guidance for new/inexperienced savers and investors. Plus quite a lot of people who have inherited sums of money and wondering what to do with it.

veesharp

Wonderful! Much appreciated.. 

EthicsGradient

veesharp said:

I am open to ALL ideas and options for sure.. I am divorced, just reached pension age, semi-retired/self employed, lower rate tax payer.. 

I DO need to do something with my recently matured PP which isn’t very big (last time I looked). I was thinking of using a financial advisor (?) but a money market account sounds like a great option..! I’d like to know more about that. Is that something I can still do even though I’ve reached pension age?

And definitely thinking of using a portion to try out the stock market but I’m a complete newbie at this point! 

I ought to have said "money market fund" rather than account. Here is a typical explanation - it's a fund that, rather than investing in shares or long-term government or corporate bonds, invests in things that pay about the same as the current interest rates you get for savings, and which are pretty safe. Here's a chart of what a couple have done over the past five years - as you can see, they've pretty much followed interest rates, and have returned about 5% over the past year. Chart Tool | Trustnet .

They are handy for a low-risk pension. You get tax relief on contributions to a pension (this does not mean you actually have to pay that much tax - eg if your earnings are £9,000, ie below the personal allowance so you pay no tax, you still get tax relief - if you pay £7,200 into a pension, another £1,800 is added by the government), and 25% can be withdrawn tax-free, so you come out ahead. You're limited to gross contributions (ie yours plus the government) of 100% of your earnings, but if you are already drawing a pension, it's possible there's also a £10,000/year limit to contributions - search for "MPAA" to see if applies to you.

veesharp

EthicsGradient said:

veesharp said:

I am open to ALL ideas and options for sure.. I am divorced, just reached pension age, semi-retired/self employed, lower rate tax payer.. 

I DO need to do something with my recently matured PP which isn’t very big (last time I looked). I was thinking of using a financial advisor (?) but a money market account sounds like a great option..! I’d like to know more about that. Is that something I can still do even though I’ve reached pension age?

And definitely thinking of using a portion to try out the stock market but I’m a complete newbie at this point! 

I ought to have said "money market fund" rather than account. Here is a typical explanation - it's a fund that, rather than investing in shares or long-term government or corporate bonds, invests in things that pay about the same as the current interest rates you get for savings, and which are pretty safe. Here's a chart of what a couple have done over the past five years - as you can see, they've pretty much followed interest rates, and have returned about 5% over the past year. Chart Tool | Trustnet .

They are handy for a low-risk pension. You get tax relief on contributions to a pension (this does not mean you actually have to pay that much tax - eg if your earnings are £9,000, ie below the personal allowance so you pay no tax, you still get tax relief - if you pay £7,200 into a pension, another £1,800 is added by the government), and 25% can be withdrawn tax-free, so you come out ahead. You're limited to gross contributions (ie yours plus the government) of 100% of your earnings, but if you are already drawing a pension, it's possible there's also a £10,000/year limit to contributions - search for "MPAA" to see if applies to you.

EthicsGradient said:

veesharp said:

I am open to ALL ideas and options for sure.. I am divorced, just reached pension age, semi-retired/self employed, lower rate tax payer.. 

I DO need to do something with my recently matured PP which isn’t very big (last time I looked). I was thinking of using a financial advisor (?) but a money market account sounds like a great option..! I’d like to know more about that. Is that something I can still do even though I’ve reached pension age?

And definitely thinking of using a portion to try out the stock market but I’m a complete newbie at this point! 

I ought to have said "money market fund" rather than account. Here is a typical explanation - it's a fund that, rather than investing in shares or long-term government or corporate bonds, invests in things that pay about the same as the current interest rates you get for savings, and which are pretty safe. Here's a chart of what a couple have done over the past five years - as you can see, they've pretty much followed interest rates, and have returned about 5% over the past year. Chart Tool | Trustnet .

They are handy for a low-risk pension. You get tax relief on contributions to a pension (this does not mean you actually have to pay that much tax - eg if your earnings are £9,000, ie below the personal allowance so you pay no tax, you still get tax relief - if you pay £7,200 into a pension, another £1,800 is added by the government), and 25% can be withdrawn tax-free, so you come out ahead. You're limited to gross contributions (ie yours plus the government) of 100% of your earnings, but if you are already drawing a pension, it's possible there's also a £10,000/year limit to contributions - search for "MPAA" to see if applies to you.

That’s extremely useful! Thank you 🙏🏻