ISA? Premium bonds? Something?

[firemunki]

I've recently been given a fair chunk of money to help with buying my 1st house. I'm not buying now but it could be any time in the next couple years.

I'm not sure at all where to put this money, obviously it can't go in my current account. I've got a stocks & shares ISA which get £150 a month by standing order (started a approx 3 ago) and a cash ISA (at least 5 years old) which gets 80 - 100 per month.

Reading about ISA it read to me that I couldn't pay into more than one a year? Or did that mean start?

I could do with some ideaswhere to put it, do I put it in a bond for a year and lose interest if I move now? Start a new ISA if I can? Shove it in my long term stock ISA? Try premium bonds? Buy a M3 and skip the house?

[anonymous-user]

You can only pay in £15,000 a year into an ISA in this tax year (£15240 in the next one). That can be into existing ISAs (i.e. ones opened in a previous tax year), or you can open a new one, but you can't exceed that figure overall.

It really depends on the amount you have, and how quickly you really think you're going to need to get to it.

The rates are so derisory (even on fixed accounts) that, if you think you're likely to need the money any time soon, you may be best just sticking it in the best instant access account and keeping it handy. Though if you do fix, and then have to withdraw it before the fix period comes to an end, you're unlikely to have earned enough interest for it to be particularly painful (unless you have a really large amount to invest).

If you haven't already, do open a Santander 123 account and max that, as you can keep up to £20,000 in there at a market leading rate and get cashback etc.

One other comment, is, if you haven't already, check the interest rates on your existing cash ISA, if it was opened 5 years ago, then there's a real chance the rate has dropped to naff all.

Edited by anonymous-user on Tuesday 17th February 09:25

[Ginge R]

Max out the cash ISA and keep the balance accessible; the issue is not so much making money, but not losing any in the next two years or so. If that means layering it in fixed interest, short term accounts then so be it - you might not make as much but you won't experience loss through possible volatility either. Do you really want a drop in value, a week before you need to sell your investments? 2 years is probably too short an investment window, and your objective too important to justify investment risk.

[Claudia Skies]

Inkyfingers said:

You can only pay in £15,000 a year into an ISA in this tax year (£15240 in the next one).

In other words, £15k now and £15k in a few weeks time (after 6 April) so that should give you a start.

If you have a spouse/partner they have the same available. So possible total £60k over the next few weeks.

Don't go near stocks & shares on a short timescale unless you're willing to potentially accept a loss.

[droopsnoot]

Inkyfingers said:

If you haven't already, do open a Santander 123 account and max that, as you can keep up to £20,000 in there at a market leading rate and get cashback etc.

Keep in mind that to get the decent rates there are some rules - need to pay in a certain amount per month, need to have a certain number of outgoing direct debits, and so on. There are ways to do this without having to have salary paid in, I have felt that it's a bit too much of "faff" for the actual amount of money you earn on it - the percentage is nice, but when you calculate the return it's not that much. That said, a couple of hundred quid a year extra is not to be sniffed at, I just worry when the balancing act goes wrong.

[HonestIago]

You can have 3 x BOS current accounts with up to £5k in each paying c.3%. You can also have 2 x TSB Current accounts with up to £2k in each paying 5%. You just have to set up an elaborate chain of monthly direct debits to fulfill the interest criteria for each account. Overall that's £19k accounted for with around 3.4% gross return. Not great but totally safe.

[firemunki]

I think people here are over estimating what I mean by a chunk! About 10 months wages after tax for me so nowhere near the 30k plus figures people are accounting for. It's a fair bit to me though.

I think I'll open a new ISA for it and leave it there until it is needed.

[anonymous-user]

droopsnoot said:

Inkyfingers said:

If you haven't already, do open a Santander 123 account and max that, as you can keep up to £20,000 in there at a market leading rate and get cashback etc.

Keep in mind that to get the decent rates there are some rules - need to pay in a certain amount per month, need to have a certain number of outgoing direct debits, and so on. There are ways to do this without having to have salary paid in, I have felt that it's a bit too much of "faff" for the actual amount of money you earn on it - the percentage is nice, but when you calculate the return it's not that much. That said, a couple of hundred quid a year extra is not to be sniffed at, I just worry when the balancing act goes wrong.

Good point. It takes a little bit of setting up, but once done, it's really not a faff at all.

I have one which I pay £XXX into each month and have all the cashback qualifying direct debits come out. I've had mine 6-7 months and it's earned we over £250. Not earth shattering, but enough over a year to pay for a nice weekend away.

[Ginge R]

firemunki said:

I think people here are over estimating what I mean by a chunk! About 10 months wages after tax for me so nowhere near the 30k plus figures people are accounting for. It's a fair bit to me though.

I think I'll open a new ISA for it and leave it there until it is needed.

A fair bit for anyone, even more reason to be cautious.