Modest Sized saving for those with tax free status?

DBTurbo

Hello there,

I was looking for some advice on where to put my parents money!

My father is 80 years old and my mother 59.

Neither is in best of health, and both have tax-free status.

Over years of being frugal and tucking cash under pillows, they actually have managed to amass a fair bit of money. (although small compared to bigshots on here)

Its a shame I just realised, as they have indeed missed out on a lot of basic interest/inflation.

My Father has around £4000 and my mother £10,000 sitting and doing nothing.

I was thinking of putting it in the post office as it close and convenient for them, as well as there accounts being online accessible - so I could sort out payments etc for them easily.

I was just a little confused on what post office (or other) accounts might be best for their tax free situation, and also have best access considering their state.

As my father being quite old, doesnt necessarily have 5 years guaranteed to wait for some return. I want him just to spend it on some laughs, he would rather have us spend it on a mixture of weddings & funerals! :rotfl:

So I was thinking an instant saver account might be best for him, so we could take it out again if we could convince him to spend it whilst getting a reasonable amount of interest.

And with my mother, perhaps something with higher returns and a little more committment.

Although she also has intentions of eventually getting it all out to spend on weddings

also I was worried about what might happen if one of them were to pass away, where would the money go? Would it be better for them to have a joint account?


Any advice would be greatly appreciatted, especially regarding the post office accounts as they seem the most convenient.

Thanks.

turbobob

Have you looked through the available National Savings products? For example they do an easy access savings account (withdrawals and paying in can be done through the Post Office). The interest is paid gross by default. However, the interest rates on this are not particularly good compared to what's available elsewhere. AFAIK most accounts with other providers will be able to pay gross interest to non tax payers if they fill in an R85 form.

For something without instant access which offers better rates NS&I do Index Linked Savings Certificates which are fixed term savings (3 or 5 year) although you can gain access without losing interest after a year. Index linked means the interest is linked to the retail prices index. Again, you can get better rates elsewhere but they can take their money out through the PO.

[Deleted User]

According to:

http://www.postoffice.co.uk/portal/po/content1?catId=23200510&mediaId=66400710

"Who can open a Post Office® Instant Saver account?
An Instant Saver can be opened by anyone aged 11 or over, who is resident or ordinarily resident for tax purposes in the UK, either individually or jointly with one other person"

Their rate is 5.75% however that includes a 1.5% gross introductory bonus for new Instant Saver Customers only, for 12 months from account opening.

The Bank of England rate currently stands at 5.0%

Some of the best rates in the instant access savings account market come from Kaupthing Edge - 6.50% AER - interest rate at least 0.30% (gross) higher than the Bank of England rate until 1st February 2012 - minimum 1k deposit, or Birmingham Midshires - 6.50% AER, £1 deposit.

On a longer term I'd recommend fixed short term fixed rate bonds (money tied up for 6 months, 1 year etc, guaranteed rate of return), for example:

Icesave 7.01% AER, 1 Year Bond, min £1,000 deposit - meaning the money is tied up for 1 year in this bond but you're guaranteed 7.01%AER.

http://www.icesave.co.uk/fixed-rate-savings.html

Or http://www.thisismoney.co.uk/saving-and-banking/best-savings-rate/article.html?in_article_id=431812&in_page_id=50

sixtytwo

Just wondered if any one can recommend this bank (Kaupthing Edge ).

isofa

You need to think about the convenience of local building societies, over and above using web accounts like IceSave and Kaupthing Edge (both which are great and there are many others, check out http://moneyfacts.co.uk/savings/bestbuys/internet-savings-accounts.aspx), anything online I assume you are going to have to manage for them, unless they are clued up silver surfers! If that's fine, you'll get the best rates with Internet only accounts.

You need to keep some for emergencies and rainy days, so I'd probably put it together and split it 50:50. 50% in a high rate fixed bond (Birmingham Midshires have a good one at present) and the remaining 50% in a top paying instant access account. Make sure you fill in the forms so they receive gross, non-taxed interest too.

For the best paying accounts in general look at the tables at: http://moneyfacts.co.uk/savings/bestbuys/default.aspx and choose the type of saving.

Aegis

I use Kaupthing Edge for some of my savings and have few complaints so far.

DBTurbo

Thankyou everbody for your advice,

I certainly will be looking into those.

Im not greatly clued up with based financial terminology,

and the interest rtes page on knaupthing edge is confusing me.

http://www.kaupthingedge.co.uk/OurProducts/InterestRates.aspx

It states that the gross rate is before deduction of tax, so to me that means all the gross rates listed on the right should be higher than the AER rates which I take to be after tax. Yet some AER's are higher than gross?


Also aside from that, id appreciate any info on the benefits of joint accounts (if any) and what exactly happens if one of the account holders passes away before the end of a fixed term etc?


Many thanks.