Restructuring Finances Following Redundancy

newbieni

Hi All,

I just came through a difficult redundancy after many years with the same firm. I am fortunate to own my home with no mortgage and all debts are cleared. I am also very fortunate to have another job lined up at a slightly increased salary. I am 42 and my pension pot sits at circa £140k.

I want to finally sort out my finances to put myself on the best possible footing. Below is my current setup with what's left of the redundancy money following the clearing of debts etc.

What is my best course of action with this setup?

NatWest Current Account	£21,359.00
NatWest Regular Saver @5 .13%	£912.09
VIDA Saving ISA @4 .23%	£4,998.32
Co-Operative Current	£0.00
Co-Operative Regular Saver @7 %	£1,000.00
Nationwide Current	£0.00
Nationwide Instant Acess 1.25% Matured from a Regular Saver	£921.00
First Direct Regular Saver	£300.00
Premium Bonds	£13,000.00
Vanguard S&S ISA - LifeStrategy® 100% Equity Fund - Accumulation	£36,699.10

masonic

The premium bonds are a bit questionable if you are not likely to be a higher rate taxpayer, so perhaps there is around £35k looking for a better home?

Have you used your ISA allowance for this tax year?

You could consider investing a little more, depending on your job security going forward. For the rest, you should not accept an interest rate less than 4%. You could achieve 5% on most of it using the top savings accounts (see Moneyfacts, MSE guides). I would be inclined not to take out new fixed rate savings products at this time.

Hattie627

I think you should reduce the amount held in your current account earning no interest. You could (for example) find a good instant access account earning around 4% pa to keep the funds you might need quickly, moving funds between that and your main current account (Nat West) on a regular basis, as required. The balance in your current account should not exceed what you need in the next week or so for standing orders, direct debits and everyday spending like food.

newbieni

https://forums.moneysavingexpert.com/discussion/comment/82054992#Comment_82054992

£14k left of my ISA allowance, I pay £350 into my S&S each month.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82055709#Comment_82055709

Sounds like an easy £10k top-up across one or both ISAs, leaving headroom for your monthly drip feed. Then the rest in the best easy access account for now. Perhaps it could be moved into an ISA in the next tax year. There is always an option to expand your collection of regular savers.

Albermarle

What is my best course of action with this setup?

In your position my financial priority would be to make sure the new job goes well.

Of course it is important to make efficient use of your money, but at your age continuing in well paid employment is much more important.

LHW99

And make sure you join the new autoenrollment scheme, and then investigate whether moving the pension from the old company to the new is worth it, or if the old one is best left where it is for now.

Mrs_Z

I would definitely concentrate filling up your ISA allowances instead of premium bonds as a priority.

I would also reduce the amount in your current account - if this is an emergency money - maybe an instant access savings account with high interest?

Keep the regular savers going.

Ensure you join the pension scheme in your new job.

If you find that you have money left over, you could also think about opening a SIPP further down the line, maybe even with a modest amount as you won't be able to access it until 58yrs.

El_Torro

The most important thing for you to do is decide how much cash you should have, i.e. the size of your emergency fund. Everyone needs to decide what is a suitable emergency fund for them, though typically this is about 3 to 6 months worth of expenses. It may be a good idea to wait until you have been in your new job at least 6 months before reducing your cash holdings.

Next step is to invest any money that is not going to stay in cash. This can be either in your Stocks & Shares ISA or your pension. If you are a 20% tax payer and plan to be one in retirement then there isn't a huge benefit in putting more in your pension, though it is still more tax efficient than putting more in your ISA.

newbieni

I think my emergency fund should be around £3k. I have made some incremental changes as illustrated below but it's obviously still wrong. I am not sure what to do with the money in the current accounts.

NatWest Current Account	£13,708.45
NatWest Regular Saver @5 .13%	£1,065.73
VIDA Saving ISA @4 .23% Matures 27.08.26	£5,033.00
Santander Current	£302.82
Santander Regular saver @ 8 %	£200.00
Co-Operative Current	£0.00
Co-Operative Regular Saver @7 %	£1,000.00
Nationwide current (just closed)
Nationwide Instant Acess 1.25% Matured from a Regular Saver	£921.00
First Direct Regular Saver @7 %	£600.00
First Direct Current Account	£323.00
Premium Bonds	£13,000.00
Vanguard S&S ISA - LifeStrategy® 100% Equity Fund - Accumulation	£42,592.00

eskbanker

The most important thing for you to do is decide how much cash you should have, i.e. the size of your emergency fund. Everyone needs to decide what is a suitable emergency fund for them, though typically this is about 3 to 6 months worth of expenses

I think my emergency fund should be around £3k

That sounds like a significantly different assessment from the one being put forward in the previous post (unless you really do live very frugally and/or have other ways of dealing with substantial unexpected lump sum expenditure), can you clarify how you've reached that conclusion?