What to do with 'spare' 25k

[ManFromDelmonte]

Long story short, I was about to invest in something but am not any longer. I now have 25k in my current account doing nothing.

I should mention that having access to the money at shortish notice (45 days) is essential and I don't really want to risk the capital decreasing, I pay 40% tax.

I have no ISAs so the obvious thing was to plough 15k of it into a cash ISA and then worry about the other 10. Upon looking at the rates I started having second thoughts as at 2% I'm only going to be looking at a few hundred a year in the first year.

What other options do I have that might offer a better return? I am prepared to gamble on the potential return but not on the capital. i.e. I would happily risk having no return if there was a potential of a larger one.

The only thing that springs to my mind is premium bonds. According to the premium bond calculator, with average luck and 25k invested, I would get a return of £250 in the first year. This is very similar to what a cash ISA would give me for 15k but obviously it would only take a bit of above average luck to beat it.

Has anyone got any other thoughts on a better plan?

To summarise the above ramble:

- 25k to invest
- Needs to be readily accessible (within 45 days)
- 40% tax band
- Don't want to risk capital decreasing
- Happy to gamble on the return

Any thoughts appreciated.

Thanks,

TMFD

[megaphone]

Yes I'd Stick it in premium bonds. Capital is protected, any wins are tax free, average return is pretty poor but you never know! You can get at your cash quite quickly.

Edited by megaphone on Monday 11th August 11:45

[mackay45]

If you don't already have one, perhaps get a Santander 123 Current Account? They pay 3% (before tax) on balances up to £20k - account costs £2 a month. I don't know if there is any requirements to have a certain amount of £ paid in each month/have direct debits coming out etc though.

[GG89]

mackay45 said:

If you don't already have one, perhaps get a Santander 123 Current Account? They pay 3% (before tax) on balances up to £20k - account costs £2 a month. I don't know if there is any requirements to have a certain amount of £ paid in each month/have direct debits coming out etc though.

Minimum 1k per month.

[mackay45]

GG89 said:

Minimum 1k per month.

Yes, there are £ and direct debit requirements it would seem:

http://www.santander.co.uk/uk/current-accounts/123...

If they can be met with relative ease I think this option would get my vote (a standing order between 2 accounts would be enough to meet the funding requirement, as long as the 2nd account was non-Santander).

[Jakg]

Furthering the Santander suggestion, if you want to put a little more effort in:

Nationwide offer 5% on balances up to £2.5k - http://www.nationwide.co.uk/products/current-accou...

TSB offer 5% on balances up to £2k (and you can have 2) - http://www.tsb.co.uk/current_accounts/classic_and_...

Lloyds offer 4% on up to £5k - http://www.moneysavingexpert.com/banking/compare-b...

Should be £460 a year after tax (ex the fee for the 123 account)

[Rick101]

http://www.pistonheads.com/classifieds/used-cars/p...

Life's too short!

[Simpo Two]

The annoying thing with accounts offering a decent rate of interest is that they only allow you to put up to 50p in.

The more you save the higher the interest rate should be! What the heck is happening?

[ringram]

megaphone said:

Yes I'd Stick it in premium bonds. Capital is protected, any wins are tax free, average return is pretty poor but you never know! You can get at your cash quite quickly.

Yep Id do this too. Guaranteed not to lose nominal value.
Bung some in the ISA though only really if you think you can keep some in there longer term. Cash rates suck in there, on average you are probably better off with premium bonds.

[ManFromDelmonte]

Thanks for all the comments. Some of those savings accounts looked quite good but something doesn't seem right about only getting £450 per year from £25k investment although I appreciate that I was looking for a very low risk investment. There was also an element of set-up and management required that I could do without.

I ended up going down the Premium Bond route. I was disappointed when I remembered that they had to be held for a whole calendar month before they became eligible so it looks like it will be at least October until I win the million.

I'm going to keep buying a few thousand a month and will also reinvest all prize money until I hit the 40k max and see how I get on.

It may not be the best way of doing things if you have average luck but I do like a bit of excitement. I suppose I could have gone down the savings account route and gambled the interest on something with a better chance of making decent money, I'll think about that for the future.

Thanks again,

TMFD

[Newc]

I don't want to be Dr Doom, the harbinger of doom (I leave that to Moneyweek), but prepare yourself for not getting anything like the average return on premium bonds, even with the maximum holding. The averages are strongly skewed by the larger prizes, so many people get nil. (Ten people each put in a tenner. 5 is paid out as a 4 and a 1. Average return is 5%, someone gets a jackpot, one person gets a ho-hum, 80% get nothing).

[ManFromDelmonte]

I'm prepared to win very little, it's just a punt.

[rehab71]

Rick101 said:

http://www.pistonheads.com/classifieds/used-cars/p...

Life's too short!

As that was loading up I was thinking 'I bet this will be a 996'

[Grandad7184]

rehab71 said:

Rick101 said:

http://www.pistonheads.com/classifieds/used-cars/p...

Life's too short!

As that was loading up I was thinking 'I bet this will be a 996'

As I loaded it up I even quicker shut it down my gosh that interior and those wheels are horrid IMHO

[gregf40]

If I were you I would invest some in Seedrs (see my profile) - the EIS/SEIS relief means you get a minimum 30%/50% of your investment back as tax relief from HMRC - no capital gains tax when you sell the shares...and also loss relief if the investment fails.

Gamble 5k or so (as you will not have easy access) then keep the rest as cash in an ISA.

I wouldn't put it all in a tracker (for example) for the short/medium term as you could end up taking a hit if you are forced to sell.

[trowelhead]

15k stocks and shares isa invested into low cost index trackers

10k in a ratesetter 1 year bond at 3.5% (or Santander 123 current account at 3%)

Move this 10k into an isa with next years allowance.

Or use the lot on a buy to let deposit

[droopsnoot]

ManFromDelmonte said:

I'm prepared to win very little, it's just a punt.

My real return on Premium Bonds is 0.95% AER. Less than I could get in some savings accounts, but with the (albeit slight) potential for so much more. I wouldn't go for it as a sole place to put money, but alongside other savings and investments it's not so bad.

[fido]

I bought some Apple and Microsoft end of last year. However I cannot recommend that strategy today!

[gregf40]

droopsnoot said:

My real return on Premium Bonds is 0.95% AER. Less than I could get in some savings accounts, but with the (albeit slight) potential for so much more. I wouldn't go for it as a sole place to put money, but alongside other savings and investments it's not so bad.

You are probably better off putting it in a cash ISA and buying lottery tickets with the interest.

[okgo]

I realise this isn't exactly sage advice, but I've got £20k in bonds, and I don't really care if I don't get the 'best' return, even in the best place I would get 400 quid or something, which is fk all, I'd rather be in with a shot of something huge and get half. In these times of st returns wherever you look, I reckon the one with an outside chance and a bit of fun is a good bet...