Savings advice required

TDKTDK

Hi

Posting on behalf of a friend.

My friend has circa £600K to invest. At this stage they want to invest it into a savings account / platform. Appreciate this may not be the most lucrative, however, for various reasons, that is what they want right now.

If beneficial, they can lock the funds away for a higher rate. From research online, we've found the platform Prosper offer a rate through one of their partnering financial institutions (Santander) for 90 days at 4.61% AER 90 day fixed rate. A portion of the interest is paid daily and the other portion as follows:

4.05% Gross / 4.13% AER* interest will be paid by Santander International daily into your 90 Day Notice (Base Tracker) account and compounded.

An additional 0.48% Gross / 0.48% AER* boost will be paid by Prosper the week following each anniversary of the account opening and on the closing of the account, to your nominated bank account.

How does this compare to RCI Bank's 4.7% AER 95 day fixed rate - interest on this account is paid monthly or annually.

Which of the two options would be more lucrative?

Or, are there any higher rates available anyone knows of?

My friend appreciates their funds would only be protected up to a maximum of £85K.


Thanks in advance

jimjames

You might want to check the forum re Santander International, it's not the same as Santander UK

TDKTDK

jimjames said:

You might want to check the forum re Santander International, it's not the same as Santander UK

Ok - do you mean a thread someone has posted?

Is the firm to be avoided?

wmb194

TDKTDK said:

Hi

Posting on behalf of a friend.

My friend has circa £600K to invest. At this stage they want to invest it into a savings account / platform. Appreciate this may not be the most lucrative, however, for various reasons, that is what they want right now.

If beneficial, they can lock the funds away for a higher rate. From research online, we've found the platform Prosper offer a rate through one of their partnering financial institutions (Santander) for 90 days at 4.61% AER 90 day fixed rate. A portion of the interest is paid daily and the other portion as follows:

4.05% Gross / 4.13% AER* interest will be paid by Santander International daily into your 90 Day Notice (Base Tracker) account and compounded.

An additional 0.48% Gross / 0.48% AER* boost will be paid by Prosper the week following each anniversary of the account opening and on the closing of the account, to your nominated bank account.

How does this compare to RCI Bank's 4.7% AER 95 day fixed rate - interest on this account is paid monthly or annually.

Which of the two options would be more lucrative?

Or, are there any higher rates available anyone knows of?

My friend appreciates their funds would only be protected up to a maximum of £85K.


Thanks in advance

Careful, with Santander International your deposits will be with either an Isle of Man or Jersey bank and as such won't be covered by the UK's FSCS deposit insurance. Those jurisdictions have their own schemes but I wouldn't rely on them as blindly.

The AERs is how to compare them, higher is better, so RCI Bank.

If you want 100% protection on the whole lot in one place with minimum hassle use NS&I - you're lending direct to the Treasury. The downside is that its rates tend to be less competitive.

Chase (JP Morgan) is offering 5% instant access. App only and you also need to open a current account though.

https://moneyfactscompare.co.uk/savings-accounts/

El_Torro

Another vote here for NS&I. The 3.30% return on a Direct Saver (variable, so will probably drop in the coming months) doesn't sound great, but at least the full amount is protected. If you're going to go with cash rather than investing then at least make sure that your cash is protected should the bank you are saving with goes bust.

If your friend doesn't want to go with NS&I for the whole amount then I would at least put £50k in Premium Bonds. The returns aren't great but the winnings are tax free.

TDKTDK

wmb194 said:

TDKTDK said:

Hi

Posting on behalf of a friend.

My friend has circa £600K to invest. At this stage they want to invest it into a savings account / platform. Appreciate this may not be the most lucrative, however, for various reasons, that is what they want right now.

If beneficial, they can lock the funds away for a higher rate. From research online, we've found the platform Prosper offer a rate through one of their partnering financial institutions (Santander) for 90 days at 4.61% AER 90 day fixed rate. A portion of the interest is paid daily and the other portion as follows:

4.05% Gross / 4.13% AER* interest will be paid by Santander International daily into your 90 Day Notice (Base Tracker) account and compounded.

An additional 0.48% Gross / 0.48% AER* boost will be paid by Prosper the week following each anniversary of the account opening and on the closing of the account, to your nominated bank account.

How does this compare to RCI Bank's 4.7% AER 95 day fixed rate - interest on this account is paid monthly or annually.

Which of the two options would be more lucrative?

Or, are there any higher rates available anyone knows of?

My friend appreciates their funds would only be protected up to a maximum of £85K.


Thanks in advance

Careful, with Santander International your deposits will be with either an Isle of Man or Jersey bank and as such won't be covered by the UK's FSCS deposit insurance. Those jurisdictions have their own schemes but I wouldn't rely on them as blindly.

The AERs is how to compare them, higher is better, so RCI Bank.

If you want 100% protection on the whole lot in one place with minimum hassle use NS&I - you're lending direct to the Treasury. The downside is that its rates tend to be less competitive.

Chase (JP Morgan) is offering 5% instant access. App only and you also need to open a current account though.

Ok thank you - even though the RCI rate is higher, doesn't it also depend when interest is paid as to the best deal / most lucrative?

They want to avoid Chase due to issues with their customer service.

wmb194

TDKTDK said:

wmb194 said:

TDKTDK said:

Hi

Posting on behalf of a friend.

My friend has circa £600K to invest. At this stage they want to invest it into a savings account / platform. Appreciate this may not be the most lucrative, however, for various reasons, that is what they want right now.

If beneficial, they can lock the funds away for a higher rate. From research online, we've found the platform Prosper offer a rate through one of their partnering financial institutions (Santander) for 90 days at 4.61% AER 90 day fixed rate. A portion of the interest is paid daily and the other portion as follows:

4.05% Gross / 4.13% AER* interest will be paid by Santander International daily into your 90 Day Notice (Base Tracker) account and compounded.

An additional 0.48% Gross / 0.48% AER* boost will be paid by Prosper the week following each anniversary of the account opening and on the closing of the account, to your nominated bank account.

How does this compare to RCI Bank's 4.7% AER 95 day fixed rate - interest on this account is paid monthly or annually.

Which of the two options would be more lucrative?

Or, are there any higher rates available anyone knows of?

My friend appreciates their funds would only be protected up to a maximum of £85K.


Thanks in advance

Careful, with Santander International your deposits will be with either an Isle of Man or Jersey bank and as such won't be covered by the UK's FSCS deposit insurance. Those jurisdictions have their own schemes but I wouldn't rely on them as blindly.

The AERs is how to compare them, higher is better, so RCI Bank.

If you want 100% protection on the whole lot in one place with minimum hassle use NS&I - you're lending direct to the Treasury. The downside is that its rates tend to be less competitive.

Chase (JP Morgan) is offering 5% instant access. App only and you also need to open a current account though.

Ok thank you - even though the RCI rate is higher, doesn't it also depend when interest is paid as to the best deal / most lucrative?

They want to avoid Chase due to issues with their customer service.

No, the AER takes account of that.

Which other banks have they already discounted?

lr1277

Another thing to be mindful of is tax, how the interest is reported to HMRC and whether the account holder will have access to this interest.

Is your friend liable to tax?

Whilst I know you have not mentioned fixed rate bonds that have a duration of more than a year, you have to be careful with these.

Say you find a fixed rate bond that pays 5% every year for 2 years. After the 1st year, the financial institution MAY reports to HMRC the account holderr has made so much interest, which is taxable. However the account holder cannot get hold of it. In the 2nd year, the financial institution again reports the interest gained, but at the end of the term, all the interest and principal are available. So if interest is due on the 1st year's interest it is not available to pay HMRC.

Monthly interest or yearly interest only matters if your friend is going to spend the monthly interest (assuming he receives it in a usable form i.e. into his current account). If your friend doesn't need the interest, they may as well get the interest yearly.

DRS1

Has your friend considered Gilts?  Like NS&I that is a loan to the Govt.

Here is a thread about one paying over 5%

5.375% Treasury Gilt 2056 — MoneySavingExpert Forum

Maybe worth a read.

It is not the sort of gilt to buy outside an ISA (because the coupon will be subject to income tax) but there are low coupon ones which may be better held outside an ISA.  The thing with low coupon gilts is that a lot of the return is gain (between the price you buy the gilt at and the price paid on maturity) and that gain is free from CGT.

A drawback is that you only get the known price (£1 for £1 nominal) on maturity; if you sell before then you may get more or less than you paid for it.  And obviously you want to check the clean price when you buy is less than £1 otherwise you make a loss on maturity.

VXman

You do realise you will get taxed quite a bit on the interest on 600K of savings.

TDKTDK

wmb194 said:

TDKTDK said:

wmb194 said:

TDKTDK said:

Hi

Posting on behalf of a friend.

My friend has circa £600K to invest. At this stage they want to invest it into a savings account / platform. Appreciate this may not be the most lucrative, however, for various reasons, that is what they want right now.

If beneficial, they can lock the funds away for a higher rate. From research online, we've found the platform Prosper offer a rate through one of their partnering financial institutions (Santander) for 90 days at 4.61% AER 90 day fixed rate. A portion of the interest is paid daily and the other portion as follows:

4.05% Gross / 4.13% AER* interest will be paid by Santander International daily into your 90 Day Notice (Base Tracker) account and compounded.

An additional 0.48% Gross / 0.48% AER* boost will be paid by Prosper the week following each anniversary of the account opening and on the closing of the account, to your nominated bank account.

How does this compare to RCI Bank's 4.7% AER 95 day fixed rate - interest on this account is paid monthly or annually.

Which of the two options would be more lucrative?

Or, are there any higher rates available anyone knows of?

My friend appreciates their funds would only be protected up to a maximum of £85K.


Thanks in advance

Careful, with Santander International your deposits will be with either an Isle of Man or Jersey bank and as such won't be covered by the UK's FSCS deposit insurance. Those jurisdictions have their own schemes but I wouldn't rely on them as blindly.

The AERs is how to compare them, higher is better, so RCI Bank.

If you want 100% protection on the whole lot in one place with minimum hassle use NS&I - you're lending direct to the Treasury. The downside is that its rates tend to be less competitive.

Chase (JP Morgan) is offering 5% instant access. App only and you also need to open a current account though.

Ok thank you - even though the RCI rate is higher, doesn't it also depend when interest is paid as to the best deal / most lucrative?

They want to avoid Chase due to issues with their customer service.

No, the AER takes account of that.

Which other banks have they already discounted?

I see.

No other banks - though Flagstone as a platform (also had a poor experience with them)