We’re expecting to be selling our house and moving into a rented place in a few weeks time, which will leave us with about £50K in capital. We’ll look to buy somewhere in about 6-12 months time so will need reasonably easy access to the funds at that point.

At the moment I’m thinking max out the cash and share elements of ISAs for my wife and I, and then stash the remainder in as high an interest account as I can find. We’ve got two kids (5 years and 5 months) – is there any way I can legally use their savings potential or is that a bit dodgy?

And no before you ask, I don’t want to invest the money in guaranteed quick win Nigerian lottery schemes … but I might buy a new bike!

Any tips?

The tax benefit of the ISA seems moot if you’re going to spend it on another house in 6-12 months. Just go with the best easy access savings account on MSE or moneysupermarket – lots have a bonus rate for the first year which will suit nicely. Nationwide, ING, Santander all do about 3%.

The share bit of your ISA allowance can go down as well as up, the likelihood of that will vary according to how risky a product you take out. You could spread it around a few things, but as it’s short-term and you get government-backed protection of up to £85k per account these days, there’s really no need.

unfortunately, no savings accounts offer good returns at the moment. Even with ISAs you’re losing money as the interest rates are lower than the rate of inflation.

Best bet is to get onto moneysupermarket and have a look at what they recommend.

Or, whack £30k into premium bonds and hope that you hit the £1mill!

I would steer clear of shares for a short term investment. Any drop in prices will see you lose money. Typically you need to look at 5+ years to be more secure. Again give the pathetic rates of interest you won’t get much in a cash account even if you do but the full ISA allowance in.

Premium bonds migh not be such a bad idea for a short term deposit…

Shovel the lot on Alberto for the tour – currently 4/6. Free money. If that’s too sedate for you, double it up with David Haye over Wlad Klitshko (Haye is currently 6/4) for a bit of excitement.

When I say ‘the lot’, maybe a grand or so might be more prudent 🙂

Some of the offshore accounts might pay out better on that.

I’m in a similar position myself. Shares are way to volatile over the short term imo(see here, albeit speculative, but isnt that what shares are all about?).

Ask yourself if you saw your dream house in 6 months time would you be prepared to accept a potential loss on your investment to buy said house?

I’ve maxed my cash ISA, then my premium bond allowance, which is just about keeping track with an instant access savings account (after tax).

I will max my daughters premium bond allowance also, as IIRC the prizes are paid to the parent / guardian.

Rates are pretty paltry (~3.05% best instant access atm) especially after tax, so I’m taking my chances on one reasonable hit on the premium bonds, even a £1k prize would be better than I’ll see in a bank.

Keep a track of the finance/money sections of the broadsheets. Usually has the latest info.

Even with ISAs you’re losing money as the interest rates are lower than the rate of inflation.

While this is true, if the money is earmarked for a house, and house prices are still falling (depending on which statistics you believe) you could argue you’ll see more for your money in 1 years time*

*thats how im viewing it anyway, I’m no economist however. 🙂

give it to me, i’ll treasure every penny like it’s my own 😆

@thekingisdead

I agree on the thinking around house prices dropping. Certainly no sense in rushing to spend the money.

thanks for all the advice …

Nationwide, ING, Santander all do about 3%.

+1 ING – rates not as good as they used to be but customer service is excellent if you need to go beyond the internet-only model

IME avoid Santander at all costs – bunch of wholly incapable fecktards.

And check out Northern Rock – very decent folk.

Other than that, just look for the best rates blah blah and bear in mind how soon you might want access to it.

Not good time for shares: ‘sell in May and go away’….they drift in the summer. However, keep a beady eye out for Graphite Enterprise Trust. I’ve been in and out of them for years, they’ve never let me down.

As Wesley would say, “always bet on black”

Even with ISAs you’re losing money as the interest rates are lower than the rate of inflation.

While this is true, if the money is earmarked for a house, and house prices are still falling (depending on which statistics you believe) you could argue you’ll see more for your money in 1 years time*

*thats how im viewing it anyway, I’m no economist however.

Spot on, if he’s not spending it on food or fuel then the current rate of inflation is meaningless in this case. House prices certainly won’t be going up in the short term (silly bits of London and the South aside). If the European or American sovereign debt train wreck comes to a head anytime soon they could take a significant hit. I think that’s more a 1-2 year timescale than 6 months-1 year.

What about one of them Nigerian schemes, they offer some good returns.

Shares too much of a gamble given the expected time. As others have said, pick best cash rate you can find. Make sure it’s protected by UK FSCS.

Cash ISA rates are poor compared to instant access accounts because the ISA bureaucracy and paperwork costs. So shop around carefully.

Shovel the lot on Alberto for the tour – currently 4/6. Free money.

But will the bookies pay out before he gets disqualified?

Spunk it on coke and hookers, investing over that term is pointless.

Greek bonds…

premium bonds.. even with the reduced value of prizes with 50k you should win twice per month me the mrs and the kids are max’d out on them.. you get nowt in the BS and you only need to be really lucky once. in five years we ve won 25 or 50 quid as it was every month usually three or four times we once won 9 times in one draw we have been lucky once unfortunatley not really lucky ….. yet

spend 1k on lottery tickets.

it’d be interesting to see whether or not you get a positive return on your money. it’s an idea i’ve been toying with. but go to a bookies as you’ll get over 14m/1 on each set of numbers and it is probably more than the jackpot for any given week,

or you could buy something cool like this

1,000,000 Acres of land in Argentina

illegal drugs are by far the highest yield investment for the layman..

Live the dream, eat, sleep, surf.

If the European or American sovereign debt train wreck comes to a head anytime soon they could take a significant hit. I think that’s more a 1-2 year timescale than 6 months-1 year.

short sell the euro!

illegal drugs are by far the highest yield investment for the layman..

But wholesale prices have gone through the roof the last few years.

In a very simiular position but with a tad more 😉 house prises in Kendal are hopefully going to take a hit so waiting 12/18months unless a bargin project comes up.
Planning on dumping First Direct due to the fees they have charged us for a period when we were paying a mortgage and renting @ the same time

Saver accounts are still taxed. I’d go premium bonds. As said above you should win every month which gives a comparable rate to a good saver account, but you never know, you might win big!

If you can live with locking the cash away for 12 months then get £15K each of NS&I saving certs. They’re a 5 year issue but you can cash in after 12 months and still benefit from year one interest (RPI + 0.25% tax free i.e currently > 5% )

http://www.nsandi.com/savings-index-linked-savings-certificates?ccd=NQZAAE

FORGET premium bonds.

FORGET premium bonds.

Why?

We have £50-55k in them (no other savings really) and they do OK. We once had £800 in a month (years ago before the drop from £50 to £25) and last month we had 6 x £25. It only takes one recent win and your miles ahead of the BS.
Sold the few shares I did have a few months ago – had them for about 8 years and did nothing but lose money.

Double your money!

I was a bit tempted by Premium Bonds and then I read this – http://www.moneysavingexpert.com/savings/premium-bonds

Some good nerdy stats in there!

FORGET premium bonds.

Why?

See surfdad’s post.

Pah… just numbers. It’s exciting opening up the letters to see what you’ve won – even if it is just £25 😥

+1 for premium bonds. That email from Ernie saying ‘we have news about your PBs’ and my fat fingers can’t log into NS&I fast enough…

+1

http://www.nsandi.com/savings-index-linked-savings-certificates