85k for 18 months

[iain014]

Age old question, always worth asking again to see what the latest thinking is though.

I have £85k left over from my house sale. The plan is to use it for building works on my new house, however this work won't be starting for 18 months or so meaning I need the money to go somewhere where I wont be tempted to spend it.

Happy to put some effort in to make the money work for itself but I don't want to get less than 85k back and it will need to be actually in my hands by April 2021.

Is premium bonds split between myself and partner the only real answer?

The idea of getting 1% in a savings account I just find a bit dull, there must be a better way.

[LeadFarmer]

I'd certainly be putting it into premium bonds, for a bit of fun if noting else. Obvious risk of not earning a penny, but an 18 month opportunity to strike lucky compared with minuscule interest rates from the banks. And you can cash them in almost instantly.

[mikeiow]

iain014 said:

Age old question, always worth asking again to see what the latest thinking is though.

I have £85k left over from my house sale. The plan is to use it for building works on my new house, however this work won't be starting for 18 months or so meaning I need the money to go somewhere where I wont be tempted to spend it.

Happy to put some effort in to make the money work for itself but I don't want to get less than 85k back and it will need to be actually in my hands by April 2021.

Is premium bonds split between myself and partner the only real answer?

The idea of getting 1% in a savings account I just find a bit dull, there must be a better way.

Wot LeadFarmer said!

To your bold piece.....in the low-interest world we live in today, & where you have zero appetite for any capital loss (which makes sense, btw!), then I think you are stuck with either 1.45% (see MSE for a few options!) or Bonds. Given your 1.45% gives you (I think) under £2k....I'd have a punt on the bonds, personally!

[iain014]

Great stuff - I'm not going mad then. I'll bung my full 50k into Premium bonds and then max out the Isa's before and after April with the remaining 35k.

Must
Not
Buy
An
R8

[Fonzey]

I bought a Lotus when I was in a similar position (but lower amounts).

Didn't lose anything on it, didn't gain enough to cover the costs of trackdays/using it/etc but it was considerably more fun than 1.45%

The IFA/Broker we use for pensions was less than amused.

/Get the R8

[NickCQ]

1.76% on £85k guaranteed with Market Harborough building society (180 day notice requirement).
Arithmetically better than premium bonds (1.4% prize rate) assuming you aren't a top rate taxpayer.

https://www.moneysavingexpert.com/savings/savings-...

[mikeiow]

NickCQ said:

1.76% on £85k guaranteed with Market Harborough building society (180 day notice requirement).
Arithmetically better than premium bonds (1.4% prize rate) assuming you aren't a top rate taxpayer.

https://www.moneysavingexpert.com/savings/savings-...

R8 sounds more fun

For my mind...premium bonds are more entertaining....you COULD exceed that 1.76%...potentially by a lot. Sure, chances are you won't, and actually will end up a few hundred worse off....but I'm a gambler!

[RizzoTheRat]

NickCQ said:

1.76% on £85k guaranteed with Market Harborough building society (180 day notice requirement).
Arithmetically better than premium bonds (1.4% prize rate) assuming you aren't a top rate taxpayer.

https://www.moneysavingexpert.com/savings/savings-...

The thing to bear in mind about Premium bonds is that 1.4% is the total fund payout not the average return. If you have £50000 in premium bonds you only have around a 30% chance of making 1.4%, but then again you do have a 1/70000 chance of winning a million which is better than the National Lottery.
Statistically speaking they're only really worth it if you've already hit your tax free savings allowance.

Edited by RizzoTheRat on Thursday 28th November 11:51

[NickCQ]

RizzoTheRat said:

Statistically speaking they're only really worth it if you've already hit your tax free savings allowance.

Agreed.

[iain014]

I just bought a £5k Boxster to stave off the temptation of buying the R8 - which I know is probably a false economy but it does give me an easier life with the other half.

50k is going in to premium bonds, 20k to an ISA and the rest will sit in my 123 account for now.

In the past I might have thought about a classic car, or 5 Rolex's, but this is money that I can't afford to lose at the moment which limits the options massively.

[anonymous-user]

iain014 said:

50k is going in to premium bonds

Compare,

• £50k into Marcus
• Pocket £500 tax free interest
• Spend the other £225 of tax free interest on lottery tickets.

You'll almost certainly come out at least £500 ahead.

[NickCQ]

rockin said:

iain014 said:

50k is going in to premium bonds

Compare,

• £50k into Marcus
• Pocket £500 tax free interest
• Spend the other £225 of tax free interest on lottery tickets.

You'll almost certainly come out at least £500 ahead.

That's not really fair. Over the long run you should make about 1.4% annually (i.e. the prize rate) on premium bonds as long as you have a meaningful holding. Marcus is 1.45% dropping to 1.35% after 12 months... food for thought.

[RizzoTheRat]

NickCQ said:

That's not really fair. Over the long run you should make about 1.4% annually (i.e. the prize rate) on premium bonds as long as you have a meaningful holding. Marcus is 1.45% dropping to 1.35% after 12 months... food for thought.

Have they changed the rate? My Marcus is 1.5% for the first year then drops to 1.35%.


MSE's premium bond calculator reckons for £50k for bonds you have about a 25% chance beating 1.5% return, and an 87% chance of beating 1%, so it looks like you stand a reasonable chance of getting close the 1.5% with enough of them.

[anonymous-user]

"When we compare Premium Bonds against simple top standard savings, you're actually more likely to win with savings than Premium Bonds, if you have average luck."

More detail on this link, https://www.moneysavingexpert.com/savings/premium-...

Savings plus a few lottery tickets probably covers the "lucky dip" ground more effectively. Thos big Prtemium Bonds prizes are won by almost nobody but suppress almost everybody's return well below the 1.4% average.