Short term and no risk investment.
Discussion
We've sold our home and are in rented for w while looking for somewhere new.
I have £130k in the bank which is earning a not very exciting 0.25%.
I do not want to take a risk with it (to important) or tie it up in a fixed term bond (might find a house we want).
So what to do with it for a few months?
Premium bonds look safe and the winnings average 1.4%.
I have £130k in the bank which is earning a not very exciting 0.25%.
I do not want to take a risk with it (to important) or tie it up in a fixed term bond (might find a house we want).
So what to do with it for a few months?
Premium bonds look safe and the winnings average 1.4%.
TartanPaint said:
Premium bonds will be risk free, but statistically pointless.
If you opt for savings accounts, be aware that amount is over the deposit protection limit for a single person. So either stick it in a joint account, or split it between two or more accounts.
Thanks. It is in a joint savings account, I understand the deposit protection is £70k, so I think its safe. If you opt for savings accounts, be aware that amount is over the deposit protection limit for a single person. So either stick it in a joint account, or split it between two or more accounts.
Why premium bonds statistically pointless?
TartanPaint said:
Premium bonds will be risk free, but statistically pointless.
I can't find it now but there was a good article I read once explaining how your expected return converges to the 'prize rate' the larger your holding is.So you are right to say that for a few £k premium bonds are statistically pointless, but for a couple holding their maximum £50k each, it makes sense.
You get a bit of grace with the FSCS protection when you sell your house but best to split it across at least a couple of institutions in case one fails. Tesco bank do 1.3% for instance.
You can get better than 0.25% in bank accounts so I'd aim to sort that first. Premium bonds are an option but it is 50k max per person and you don't get into the draw of the month you invest.
You can get better than 0.25% in bank accounts so I'd aim to sort that first. Premium bonds are an option but it is 50k max per person and you don't get into the draw of the month you invest.
Badda said:
I feel you like the thought of premium bonds because of the chance to win, just buy a lotto ticket each week.
Not the same at all is it?Premium bonds are 100% safe and might get some small winnings. If you don;t win on the PB's, you can have your money back.
Lottery, stake is lost and might get some winnings. If you don't win on the lottery you can;t have a refund.
NS&I direct saver gets you 0.95%. Easy to open, easy to operate, no teaser rates that will fall off if you end up keeing the money there longer than planned. For six months you wont exceed the individual tax free savings allowance assuming one of you is a basic rate taxpayer and you dont have other interest producing investments.
Every day it is not sitting in a higher-interest account, it is losing money.
The £130k is losing at least £100-150 a month by leaving it sat at a 0.25% rate. Equivalent to a whole month's free food for one person. Should be getting 1-3% interest, and ~£1k every 6 months risk-free, with some careful juggling.
https://www.moneysavingexpert.com/savings/savings-...
Or just buy a Lambo, McLaren or Ferrari.
The £130k is losing at least £100-150 a month by leaving it sat at a 0.25% rate. Equivalent to a whole month's free food for one person. Should be getting 1-3% interest, and ~£1k every 6 months risk-free, with some careful juggling.
https://www.moneysavingexpert.com/savings/savings-...
Or just buy a Lambo, McLaren or Ferrari.
Huntsman said:
I understand the deposit protection is £70k, so I think its safe.
FSCS currently covers £85,000 per person per institution (not per account). Some banks surprisingly fall under the same institution, so check this if spreading it over multiple banks. FSCS allows for temporary 'high balances' of up to £1m in some circumstances, a house sale is one valid one.https://www.fscs.org.uk/what-we-cover/compensation...
Huntsman said:
Badda said:
I feel you like the thought of premium bonds because of the chance to win, just buy a lotto ticket each week.
Not the same at all is it?Premium bonds are 100% safe and might get some small winnings. If you don;t win on the PB's, you can have your money back.
Lottery, stake is lost and might get some winnings. If you don't win on the lottery you can;t have a refund.
Easy access ISA will be around 1.2% ish. Not amazing returns but probably worth it for half an hour setting up.
123 account is 1.5% but you need to have account activity.
NS&I, could be lucky and have a big win but IIRC you are looking at an average on <0.8% PA.
I think it if was me I would chuck £40k in the ISA now, £40k in april and the balance in NSI for a laugh.
123 account is 1.5% but you need to have account activity.
NS&I, could be lucky and have a big win but IIRC you are looking at an average on <0.8% PA.
I think it if was me I would chuck £40k in the ISA now, £40k in april and the balance in NSI for a laugh.
audidoody said:
£60k in three 123 accounts (yours, hers, joint -= £20k each) would get you 1.5 per cent risk free minus £15 a month total service charge.
But you do need some direct debits on each account and a reasonable about paid in every month, and it can't be shunted from another Santander account. However you also then get some cashback on your utility bills.Premium bonds. Quick and easy to set up you would be very unlucky not to win something most months holding the maximum each and 2 people a month have to win a million quid. It’s also far more fun checking the app every month to see if you have won than checking how much the bank hasn’t paid you in interest the tightwads.
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