Where to put £100,000?

Goodish33 · 29 November 2017 at 10:05PM

My partner has £100,000 in an HSBC account paying her a derisory 0.05% interest. We only just had our first chat about finances and I was very shocked!! She doesn't really understand banking. She's primarily saving for a house but that won't be for a couple of years at least and may never happen. She's risk averse, so we're not looking at investments, just savings type accounts.

I'm trying to help her out. I've already told her that we need to split the money so she doesn't have more than £85k in any single institution.

Given the amount, tax on the interest will become a concern. Should she max out her ISA allowance first? Would she be better getting a life time or help to buy ISA, or just a regular one? Would she end up having to do a tax return?

I guess then I should just find the best fixed rate and instant access accounts and divide the money between them depending on what makes sense for how quickly she thinks she might need the money. Would it be best only going for a 1 year fix based the chance that base rate will rise?

I'll also be making sure that she's got the best current account for her with a linked savings paying big interest, even though it will be a small balance.

Many thanks for any help

dividendhero · 29 November 2017 at 10:26PM

Goodish33 wrote: »

. She's risk averse, so we're not looking at investments, just savings type accounts.

No savings account in the country carries an interest rate that beats inflation, a savings account is therefore guaranteed to lose money in real terms...

Goodish33 · 29 November 2017 at 10:31PM

That's true about the inflation rate and interest rates. There's a difference between losing 1% from the different between those rates and taking risks that could lose substantially more?

Is there an alternative?

dividendhero · 29 November 2017 at 10:33PM

Goodish33 wrote: »

Is there an alternative?

Yes, put say 40% in investments and 60% in savings...

bigadaj · 29 November 2017 at 10:37PM

Best risk free returns are with multiple current accounts and regular savers, some hassle to set up and manage but could probably near match inflation on half the amount.

Best savings account paying around 1.2-1.3% which is much better than current situation but still losing out to inflation.

Has she looked at h2b and Lisa, how is her pension provision?

Goodish33 · 29 November 2017 at 10:41PM

What sort of investments would you look at?

Goodish33 · 29 November 2017 at 10:42PM

Pension, I've no idea to be honest, I'll find out. I know she pays into an Italian pension (she's Italian), something she has to do apparently.

I was looking at LISA and H2B. Trying to work out which is best and what the differences are.

Mnd · 29 November 2017 at 11:08PM

If the cash is to be used for a property in the next few years, not a pension as this will be tied up to aged 55 at leasr

Audaxer · 29 November 2017 at 11:16PM

Goodish33 wrote: »

What sort of investments would you look at?

If she is thinking of putting the money towards a house purchase in the next few years, then investments are too risky and she is better at looking at higher interest current/savings accounts. At present at 0.05% she is earning £50 interest per year, but if she split between a few of the higher interest accounts I think she could get at least 1.5% on the £100,000 which is £1,500 interest per year, so worth doing as soon as possible.

Goodish33 · 29 November 2017 at 11:26PM

She's not from Britain and she doesn't understand the British banking system. She had never heard of an ISA until I mentioned it today. The reason I need anyone's advice is because £100,000 is an exceptional sum of money and will have different options and considerations to someone who has a few grand.

Her own decisions so far have led her to keeping the money in an account that is paying her about £50 in interest per year.

She will be making her own decisions. I'll just be helping her along. Perhaps I shouldn't bother and let her lose out on £1,000+ of interest minimum per year.

I'll be helping to find the best deals for her but she'll be the one making the decisions of what to do. As I say, she isn't at all financially savvy from a banking system, what type of accounts there are point of view. It's very different in Italy to the UK. She asked me earlier if she would have to pay to close her current account.

(Text removed by MSE Forum Team)

Goodish33 · 29 November 2017 at 11:30PM

Audaxer wrote: »

If she is thinking of putting the money towards a house purchase in the next few years, then investments are too risky and she is better at looking at higher interest current/savings accounts. At present at 0.05% she is earning £50 interest per year, but if she split between a few of the higher interest accounts I think she could get at least 1.5% on the £100,000 which is £1,500 interest per year, so worth doing as soon as possible.

That's where I was going originally. Possibly with an ISA too. She's looking at buying something probably in two years but then in two years but not fixed on that.

Where to put £100,000?

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