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Help for my Mum

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I'm trying to help my mum with a savings question that she has. She is 85, and has around £50,000 in the bank. It's just sitting in an account that isn't giving her much back at all. 

She wants to know how she  can get a better return on it. She ideally would like to put around 30,000 into a savings account of some kind, and she's happy for this to be locked away and will not need immediate access to it. 

Can anyone help me with what is going to be best? She doesn't want to invest it in things, she just wants to put it into an isa or a high returning account. 

Thank you
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  • FrugaiMacDugal
    FrugaiMacDugal Posts: 234 Forumite
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    Hi, have a look here.
  • grumpy_codger
    grumpy_codger Posts: 1,042 Forumite
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    edited 7 March at 4:48PM
    daveb1972 said:
    ... She is 85, and has around £50,000 in the bank. It's just sitting in an account that isn't giving her much back at all. 


    What bank?
  • lr1277
    lr1277 Posts: 2,155 Forumite
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    edited 7 March at 4:55PM
    As an aside my mum was in a similar position. However hers was made worse, because she was earning more than 1k interest, HMRC kept changing her tax code, such she got less after tax income from her widow's pension. It will all be sorted out in the tax return, but it was worrying for her that her after tax income kept reducing because of changes in the tax code.
    So at a conservative 3% on £50k, produces £1500. I am not saying it will happen, and I don't know your mother's circumstances, but there is a chance HMRC will write to any pension provider to change the tax code and hence reduce her after tax income.
    We are putting as much as we can in cash ISA's. If you are quick, you can get £20k in before April 5th and then another £20k in after April 6th.
    The best rates are going to be online. Is your mum ok with that?
    For my mum, we chose an ISA account that pays a pretty good rate of interest (but not market leading) on the basis she already had an account with this building society, and so wouldn't have to go through an application process and she trusts this particular BS. As another aside, even though we provided mum's NI number at the time of the application, the building society wrote to mum a few weeks later asking for it again. No idea why.

    Edited to add: In terms of locking away money, some places offer fixed term fixed rate ISA's. But I found that some easy access ISA's pay a better rate of interest than the fixed term ISA products. For my mum I advised easy access accounts because she won't know when she will need the money.
  • Albermarle
    Albermarle Posts: 28,012 Forumite
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    edited 7 March at 5:21PM
    As an aside my mum was in a similar position. However hers was made worse, because she was earning more than 1k interest, HMRC kept changing her tax code, such she got less after tax income from her widow's pension

    OP- Your Mum's tax position on savings interest depends on her income. If she only has a state pension, she can earn many thousands in interest without paying any tax. However if she has other income, it might be she can only earn £1000 in interest without paying more tax as above. However 5% interest minus 20% tax is better than 1 % interest !!

     In terms of locking away money, some places offer fixed term fixed rate ISA's. But I found that some easy access ISA's pay a better rate of interest than the fixed term ISA products.

    However it is likely that in say two years time the rate fixed todau will be better than the easy access rates then, although nobody knows for sure of course.
  • Yorkie1
    Yorkie1 Posts: 12,046 Forumite
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    My Mum's in a similar position. She has a current account and linked saver with her main bank. And she opened an ISA with Nationwide, which is one of the few firms with a branch still open locally. She also has some premium bonds.

    None of it is eye-catching interest rates, but she prefers simplicity and does not do internet banking. She can manage her main account on the phone and the NW ISA in person.
  • LHW99
    LHW99 Posts: 5,248 Forumite
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    Keep a small amount in her normal bank though, just in case of a need to spend a few hundred on a new washing machine or cooker for example
  • jimjames
    jimjames Posts: 18,697 Forumite
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    daveb1972 said:
    Can anyone help me with what is going to be best? She doesn't want to invest it in things, she just wants to put it into an isa or a high returning account. 

    The ISA limit is £20k per year so you/she have until 5th April to get £20k into an ISA and the remainder can go into the next year. Any reason she doesn't want to earn any interest on the remaining £20k? With an instant access account the money can be available to spend within seconds.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Cisco001
    Cisco001 Posts: 4,146 Forumite
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    Is she comfortable with online/ app only bank?
    Has she used 2024-2025 ISA allowance?
    If it is yes for both, start with some flexible cash isa ASAP. 

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