Which is the best savings account?

Horasio

We have £430,000 to invest and want to live on the monthly interest - which is the best account to put our money in?

At the moment we have our money in a range of accounts but some are either annual interest or won't let me withdraw without loss of interest.

macgyver

The new Kaupthing Edge gives you 6.5% with drawable instantly
The ICICI pays you 6.41% with drawable instantly

Have a look on the best saving accounts article.
Lots of information there

Steve_xx

If you intend to keep it in the banks then you would be wise to split it into lots of around 33k in case any of the banks go bust. This allows for interest to be added at around 6% in order to bring the total amount up to just shy of 35k (the maximum amount guaranteed if a bank goes bust) after 12 months of compounding of interest.

You should max out your ISA alowances for this tax year, £3k each, £3600 in 2008 - 2009 tax year.

With this amount of money you might want to consider the services of an Independent Financial Advisor, with the emphasis on the "independent" bit. A lot depends on the amount of risk you are prepared to accept and that is something that only you can decide on after being presented with the detail of what's on offer.

Horasio

Thank you

We do need some financial advice as we have a pension due to mature in 4 years time but feel the return is an insult so need to know what to do about that too.

Trouble is - who do I trust? I feel our last advisor hasn't really helped us much.

Steve_xx

CCStar wrote: »

Thank you

We do need some financial advice as we have a pension due to mature in 4 years time but feel the return is an insult so need to know what to do about that too.

Trouble is - who do I trust? I feel our last advisor hasn't really helped us much.

There's a guy on here called Dunstonh who will probably offer some guidance on how you might proceed with sorting out an IFA.

In the meantime you ought to put it into the banks, in the way I described earlier, and then take some advice for the future. Meanwhile your cash is sitting in the bank and earning you some interest and therefore providing some income.

If you go with the advice offered by an IFA you would likely end up with a mix of bank deposits, shares, bonds etc. This is so that you are spreading your risk. But undoubtedly, the banks will be regarded as the safest option and there's no problem with that if that's what you feel happiest with. The other forms of investment are often subject to stockmarket performance and of course this is both risky and volatile.

nicko33

There's probably going to be a lot of "it depends".
From a quick look at some of your other posts, I think you'll need to provide more information about your circumstances, how secure you want the money to be, whether you might want access to the capital, how much income you "need" to get each year, how many years you might need the income for.
If you want to live off the interest long term, then inflation is going to eat away your capital. Your tax position needs to be considered, more so if your OH continues working.

edit:
and what Steve said

Horasio

We want to be able to access it instantly when we buy a place and have the lowest risk. If my OH isn't working, he won't be paying tax.

I have it spread over several savings accounts already but some places are better to deal with than others. I need accounts that don't give a penalty for withdrawing the interest every month and pays monthly interest.

tawse57

IMPO, I would spread it around as many NON-RELATED banks as possible and put no more than 30K in each bank. The only exception to that rule would be Nationwide IMPO as I believe they are the safest of all UK 'banks'. This would mean you would get good rates from some banks - Northern Rock being one - and rubbish rates from others such as HSBC and Lloyds. However, in these uncertain times it is sensible to sacrifice some rates for security.

I personally would/am staying away from Bradford and Bingley, Having said that I have 30K in Alliance & Leics.

It is difficult with that sum of money to find NON-RELATED banks to put 30K at a time in.

IMPO the economy is about to nose dive and in the short term I see the BOE lowering rates but in the longer term inflation is on the rise and I suspect rates to rise by the end of the year. It all depends on how long you wish to keep your money liquid. If you are buying in the next 12 to 18 months then current inflation is not going to be a huge problem IMPO compared to the enormous risks of the stock markets and the housing market.

Steve_xx

CCStar wrote: »

If my OH isn't working, he won't be paying tax.

That's not the case. You will have to pay tax on the income from your investments if you earn enough to breach the tax thresholds each year. Unless of course you go for investments like ISA's which are not taxable or National Savings Index-linked Certificates where the interest earned is non-taxable. If you have £430k in the bank at 6% interest you would earn £25,800 per year and that means that you would have to pay some income tax on it.

Steve_xx

tawse57 wrote: »

IMPO, I would spread it around as many NON-RELATED banks as possible and put no more than 30K in each bank. The only exception to that rule would be Nationwide IMPO as I believe they are the safest of all UK 'banks'. This would mean you would get good rates from some banks - Northern Rock being one - and rubbish rates from others such as HSBC and Lloyds. However, in these uncertain times it is sensible to sacrifice some rates for security.

I personally would/am staying away from Bradford and Bingley, Having said that I have 30K in Alliance & Leics.

It is difficult with that sum of money to find NON-RELATED banks to put 30K at a time in.

IMPO the economy is about to nose dive and in the short term I see the BOE lowering rates but in the longer term inflation is on the rise and I suspect rates to rise by the end of the year. It all depends on how long you wish to keep your money liquid. If you are buying in the next 12 to 18 months then current inflation is not going to be a huge problem IMPO compared to the enormous risks of the stock markets and the housing market.

What does IMPO mean?

Your £30k in A&L is no safer there than it would be if it was in B&B. If either went to the wall then you would get your £30 back, plus any interest it had earned until the day on which it failed.

nicko33

CCStar wrote: »

We want to be able to access it instantly when we buy a place and have the lowest risk. If my OH isn't working, he won't be paying tax.

Will you need ALL of it to buy another place or is there a price range in mind?
i.e. where is your income going to come from after you buy somewhere?