How to invest £130k for approx 12-18 months, need max 2 months access

m4n

Hello everybody

I will have £130k to put into a savings account very shortly. My wife and I are just into the upper tax bracket and we have no dependants/children. We are not looking for a long term plan but one where we can access the money within a two month notice period without a penalty. We are looking to buy a house in late 2009.

Q1-Is it sensible to put it all in one plan or split it to take advantage of the Governments £35k savings protection plan.

Q2-Should we look at opening separate savings accounts as opposed to a joint account to take advantage of the capital gains tax for each of us (do savings interest apply to capital gains tax)

Any guidance and help will be appreciated.

Many thanks in advance

m4n

dunstonh

Forget investing as its only 12-18 months. That is not long enough to use investments. Stick the money in cash based savings products.

Q1-Is it sensible to put it all in one plan or split it to take advantage of the Governments £35k savings protection plan.

Depends on how paranoid you are.

Q2-Should we look at opening separate savings accounts as opposed to a joint account to take advantage of the capital gains tax for each of us (do savings interest apply to capital gains tax)

There is no capital gains tax on savings accounts. Its income tax that you have to be concerned with.

m4n

dunstonh

Thank you for the reply. Apologies to everyone for using (investments) when I should have said "savings"

Which Savings plan would be best for the whole amount?. Are there limits on the total amount.

Regards David

ps: I don't think I am paranoid (now you have got me thinking), just cautious about where this money is placed.

Liz_the_Whizz

m4n wrote: »

Hello everybody


Q1-Is it sensible to put it all in one plan or split it to take advantage of the Governments £35k savings protection plan.

m4n

If you open joint accounts, you can put £70k in with complete confidence as the FSA scheme covers £35k for EACH saver per savings institution.

So you can split your savings two ways, not a bad idea when rates are likely to be falling shortly, as different accounts might offer slightly better rates.

I know you said access at 2 months notice, but if you aren't looking to buy till 2009, couldn't you fix for 6 months or a year?

With drops on variable rates inevitable, NOW (ie this weekend, not next week) would be a very good time to go for a fixed-term bond.

West Bromwich Building Society have a new 6 month e-bond to 31 August 2008 @ 6.75% gross, they are very easy and quick to open on-line.

Might not look much higher than easy access accounts @ 6.5% at present, but having absorbed the last base rate cut, variable rates must surely come down this time.

One year fixes around are Icesave @ 6.7% and ICICI @6.85% but with ICICI at least you must already have an easy access account with them to take out an FTB.