Where to park my Mum's 250k?

[dontlookdown]

Slightly amazed in view of Covid, but we have just completed the sale of my Mums old house.

She has been living in a sheltered flat for the past two years, and in the medium term she needs to generate a bit of income off the sale proceeds - will be £250k once the debts that have been mounting over that time are taken care of. Not much income fortunately, she has pension and some benefits too. I have LPA for her financial affairs.

So two questions for the PH massive:

1) Where do I safely park £250k for the next month or two while I weigh up options? 3 savings accounts in different banks, so it's all covered by FSCS guarantee?

2) In this world of near zero or even negative interest rates, is there anything that will generate a modest income with as close to zero risk to her capital as possible. It is all she has left in the world so prefer to avoid even moderately risky options if possible.

Yes I know I should have sorted this out already, but until the last week or so it has looked like the sale was going to fall through again. Can still only half believe that it hasn't;)

[moles]

NS&I income bond only 0.7% but backed by government for 1 or 2 million I think. Safest place. Can put £50k into premium bonds as well for a chance of a win also government backed.

[sociopath]

NS&I direct saver is 1%

[dontlookdown]

Cheers. So the most she can expect risk free is 1%? I figured that might be about it. Will have to do the sums and see if that's enough, it migjt just be.

[DSLiverpool]

Premium bonds?

[Skyedriver]

Are there any better fixed rate bonds available anywhere?

[markst]

actually the n s and I income bonds give 1.16%...…...and fully backed by the government...….the best place for your money by a mile.....well certainly for a couple of months..

[moles]

It’s going from 1.16 to 0.7% this month though.

[dontlookdown]

How easy is it get your money out of that NS&I bond? This is the problem - interest rates are only going to fall for the time being, don't want to end up stuck in somerhing that isn't going to do the job for her.

[moles]

I paid money into account via bank debit card and when withdrawn it goes back onto card account within 2 days. Same as internet banking in ease of use just a 1-2 day wait.

[thebraketester]

Buy Cineworld.

[DavidJJ]

Re needing to split it;

https://www.fscs.org.uk/how-we-work/temporary-high...

[anonymous-user]

The regrettable reality is,

• Interest rates c.1% mean losing money. Inflation is typically higher than that. Nothing you can do to avoid this.
• Unless your mum is a significant taxpayer, supposedly "tax free" things like Premium Bonds are a complete waste of time. She will not get anything "free" if she wouldn't be paying tax in the first place.
• She almost certainly needs to be spending capital as well as interest. No big deal.

Suggestion,

• Decide on a cash fund to be used as secure reserve for her living expenses. Put that on deposit at the best rates you can find (and taking care not to exceed the FSCS guarantee level of £85k)
• Start investing the rest straight away into stocks and shares, definitely using her £20k annual ISA allowance. Don't invest it all in at once unless you're feeling brave. Phasing at monthly or quarterly intervals can help suppress risk.

[dontlookdown]

Many thanks chaps. I guess that's the call I have to make - invest or not. Splitting it into spending and investment funds is a good wheeze tks.

[SFV]

moles said:

It’s going from 1.16 to 0.7% this month though.

I believe NS&I cancelled this reduction and the rate will remain at 1.16% for the time being on income bond.

[moles]

Oh did they?, happy days then.

[Thin White Duke]

For low risk and a short term investment I would also recommend NS&I. Put 50k into Premium Bonds and the rest in income bonds.

All 100% backed by the treasury.

[deggles]

Thin White Duke said:

For low risk and a short term investment I would also recommend NS&I. Put 50k into Premium Bonds and the rest in income bonds.

All 100% backed by the treasury.

+1 for this.

You can potentially get 'temporary high balance' FSCS protection elsewhere (i.e. over the normal £85k) but NSandI rate is about the best around at the moment anyway and 100% 'safe' up to £1m.

[cymtriks]

Buy a load of unit trusts. An IFA will suggest a portfolio.

I have all my savings invested in them and they have made 6% a year on average over the last eight years.

You might also want to consider a FTSE tracker fund.

But banks and building societies, no way, even the best accounts pay less than inflation so the reality is they are not investments, they just lose your money a bit slower than doing nothing.

Make sure you spend some of the money on making a bit of time and effort for her.

[Skyedriver]

We've got money from the sale of a in an internet bank, my wife is risk averse, and dislikes Equity based investments having read of and know of folk who's funds have been hit by various crashes (2008/20 etc)

I have money in various funds and shares but to put the rest in would cause great consternation. Wish there was a fixed rate bond at a decent rate.
Oh well....