Looking for savings advice.

AllusSkint

Hi all, new to the forum so please be gentle.

My wife and I both receive the new state pension and our financial situation has changed recently due to inheritance.

Currently, we own our own house, no mortage and no debt of any kind. We have a second home through the inheritance which is up for sale. Intention is to sell both houses, and put the money to something bigger and better with the idea of leaving it to our daughters, about 250k each. We are maxed out until April with our ISAs, currently 65K and will put another 20k in each come April, so 105k. We also have 50k each in premium bonds, thats recent so the jury is out on whether or not thats a good idea. So far, all tax free. My problem comes with a further 220k that I dont know what to do with, and at this point, I am completely risk averse. With the ISAs, bonds and whatever I do with this latter amount, the profits/interest will go to supplement our pensions. Announced today inflation down, so savings rates are going to take a hit. Apart from being risk averse, Stocks and shares as we know are planned for a longer term. At our ages, its not really viable. Any thoughts more than welcome.

(Removed by Forum Team). I have looked at savings accountsof one type or another but moving money around every 12 months is going to be a pain.

mebu60

If you are 'completely risk averse' then:

Best savings accounts: 4.5% easy access or 4.35% fixed rate

poseidon1

If you are extremely risked averse, and have rightly noted that interest rates on savings will likely reduce as B of E cut bank rates, then you will be looking for fixed rate accounts for as long as you feel comfortable ( up to 5 years).

ISAs will remain important, even as interest rates slowly decline, to protect you from the new 22% savings rate coming into effect on 6 April, so you should still be looking to fill your £40k allowances in the years to come.

However, completely ignoring stocks and shares as interest rates decline maybe a mistake.

You could research the investment area of UK government gilts generating either interest and/or tax free capital gains, as a gentler stockmarket related alternative to bank deposits.

El_Torro

You haven't said how old you and your wife are but since you're both in receipt of the state pension I'm guessing you're not spring chickens 😁

Even so you have over £400k in cash between you. That is a lot. If this money will sustain you for the rest of your lives then fine, you can remain risk averse and not invest. However inflation will eat away at this money as the years go by and you need to be sure you're not going to run short. Something that investing some of the money could potentially solve.

One possible scenario is to use the services of an IFA to manage some of the money, to at least make it grow faster than inflation. Ultimately whether you use an IFA or not with investing comes risk, so there is that hurdle to overcome if you do indeed want to look at investing. From your opening post it's not clear if there is any need to invest though.

mebu60

https://forums.moneysavingexpert.com/discussion/comment/81890029#Comment_81890029

@poseidon1 ISAs will remain important, even as interest rates slowly decline, to protect you from the new 22% savings rate coming into effect on 6 April 2027, so you should still be looking to fill your £40k allowances in the years to come.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81890190#Comment_81890190

OK, so I will comment on your actual post as follows.

You say you are risk averse, but you are going to sell two properties and buy a bigger one. There is a certain amount of risk in doing that, property markets can crash, or just stagnate like now. Also a point that comes up in other threads is that assuming you are 'a certain age', you should look to make your probably final home to be suitable for an older couple, in its layout and location. You do not want to be moving again when you are 80 for example.

 Apart from being risk averse, Stocks and shares as we know are planned for a longer term. At our ages, its not really viable. Any thoughts more than welcome.

You do not say your ages, but there are lots of threads on the forums about derisking as you get older. This is normally seen as a gradual process and the usual advice is to keep a mixture of cash and investments until you are at least 80. Especially as you are wanting to leave a legacy.

LHW99

An alternative option to savings accounts could be an annuity. Rates aren't too bad when you are older, they give you a defined income, which could be index linked or increase at a fixed rate, and you could choose a joint annuity to ensure the survivor retains the benefit of income.

Downsides would be giving up control of the money, and taking it out of your estate (although with the proposed inheritance tax changes that could be helpful).

An IFA could help with that as well as planning how to best save / invest the funds.

dinosaur66

i would follow abermarle`s advice and buy a bungalow for your next bigger property

they have a premium but one floor living is much easier as we get older and they sell easier than a house because of this

investment wise with my own money i have made a lot less than i should have with my savings because i was to cautious

i like the 50k premium bonds in retirement because you get a payout say 10 times of the 12 months and it will top up your pension and you can spend it instead of just rolling it over as i used to do with a yearly payout of a savings account interest

and instead of the 2k you would get in a savings account and taxed on it you get the chance to maybe win a bigger prize and no tax to pay

and treat yourselves to all the things you really really wanted with the 220k while you are still able to do what you both want instead of saving too hard to pass onto your children

your new property house inflation will cover anything you spend

luci

I agree with the others. You should perhaps think about downsizing rather than getting something bigger, maybe to a bungalow. That would be much easier to look after as you get older. We bought a bungalow when we were in our 30's, with no thought about the future. Now that we're older, it was a very good move, even if it wasn't intentional.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81890721#Comment_81890721

The location is also important - perhaps more so than having just a single storey.

Avoid properties on a hill, or with many steps for example. Plus not too far to local facilities, shops etc

kermchem

Work out if you need the money from the inheritance yourselves. You could gift some of it now to your daughters, or you could arrange a Deed of Variation on the inheritance so that the money skips you and goes direct to them.

Do bear in mind that if you are in your 60s then you might live for another 20 to 30 years - someone more knowledgable will be along with the real statistics.