Low interest rates

[oilovlam]

Mum has a bit of savings and I'm a bit worried if I'm doing the right thing with her finances.

There is money in an ISA which is earning almost nothing and with inflation increasing this year the 'value' of that cash will fall in real terms.

Does anyone have an idea on where to get safe investment with a reasonable interest rates?

I tried the Santander 123 account but one month after I opened it the rate fell from 3% to 1.5%. Rats!!

I'm tempted to invest in shares but the risk (and worry) is immense. As POA I believe I can make the 'investment' decisions legally but is it morally correct. Gambling on the stock market is a risky business.

If there was a bank offering 3-4% I would be very happy but they don't exist (not even the Icelandic banks....do they have any banks now?).

Recently bought some Capita shares because the dividend yield looked pretty good (6 or 7%). A few days later the share price fell 26%....double rats!! Has rather put me off shares.

 

[Beate]

With interest rates as rubbish as they are at the moment, there is only so much any of us can do. You can always check wwww.moneysavingexpert.com for the best accounts, but quite frankly, I would stick to a bank that knows how to handle POA, because 0.25% more at another bank isn't worth it if their customer service is atrocious. I would also not lock away money for too long and keep it easily accessible just in case you suddenly need it. No one is going to tell you that you've failed your duties just because you didn't change savings accounts every six months or put the money in high-yield but also high-risk investments.

 

[nitram]

Don't forget that ISAs may not be the best cash investment.

First £1000 is tax free without an ISA

https://www.gov.uk/government/publi...llowance-factsheet/personal-savings-allowance

 

[Peirre]

Depending on the £ amount the Santander 123 may still be a safe bet, especially if you want instant access. With the exception of maybe 1st direct, other major banks still don't seem to match the 123 due to restrictions. Also with the possibility of running 3x 123 accounts simultaneously for max effect.

 

[Kevinl]

Premium Bonds, government owned, they quote 8 working days to get your money back when you want to cash them in and it's all tax free.
As the pay out is linked to interest rates it's not that great (1.25%) but if you get lucky...it's a bit like playing the lottery, but if you don't win you still get your money back. Best year I've had (in 8 years) was just over 10% back as prizes, worst will probably be 2016 as I've barely won £1k this year but the January 2017 winners get published on line this week so fingers crossed.
You can never lose money unlike the stock market and you can manage your account on line with payments sent direct to your bank and as I say no tax implications.
K

 

[nitram]

"Also with the possibility of running 3x 123 accounts simultaneously for max effect."

Not obviously applicable in the OP's case as attorney.
There is also cashback on utility bills, again maybe not applicable to OP.

 

[theunknown]

My mum has enough coming in to pay a top-up fee for her care home. As her deputy I've moved her money around (she had far more than was sensible in a current account) to be covered by the £75000 (?) government failsafe if a bank goes under. I didn't want to put any money in shares, and I've been very cautious with what I've done with my mum's money. All that concerns me now is that there's enough money to look after her; with her income investments aren't on my agenda.

 

[nitram]

"As her deputy I've moved her money around (she had far more than was sensible in a current account) to be covered by the £75000 (?) "

The ? on the FSCS scheme is well placed.

Although the amount is tied to €100000 with an automatic five year review it can be changed in the interim.

There is a proposal to revert to the £85000 on 30/01/2017.
http://www.bankofengland.co.uk/pra/Pages/publications/cp/2016/cp4116.aspx

 

[oilovlam]

Premium Bonds, government owned, they quote 8 working days to get your money back when you want to cash them in and it's all tax free.
As the pay out is linked to interest rates it's not that great (1.25%) but if you get lucky...it's a bit like playing the lottery, but if you don't win you still get your money back. Best year I've had (in 8 years) was just over 10% back as prizes, worst will probably be 2016 as I've barely won £1k this year but the January 2017 winners get published on line this week so fingers crossed.
You can never lose money unlike the stock market and you can manage your account on line with payments sent direct to your bank and as I say no tax implications.
K

Kevinl, I had a quick look at Premium Bonds. I think the government has been reducing the payouts over the years & they are far less attractive then they used to be. The 'MoneySavingExpert' site has a calculator that can work out how much you can expect based on how lucky you think you are....in my case No Luck. Even in a very lucky year the payout wasn't that impressive. A 10% payout means that you had a very lucky year.

 

[oilovlam]

My mum has enough coming in to pay a top-up fee for her care home. As her deputy I've moved her money around (she had far more than was sensible in a current account) to be covered by the £75000 (?) government failsafe if a bank goes under. I didn't want to put any money in shares, and I've been very cautious with what I've done with my mum's money. All that concerns me now is that there's enough money to look after her; with her income investments aren't on my agenda.

Theunknown, you pay a top-up fee for your mum's care home. Which suggests that the local authority is paying for some of her care. I thought if you have greater than a certain amount the council class you as self-funded? £23,000 rings a bell but that probably isn't the cut off figure.

I think the assets the council use include any property in their calculation.

I was toying with the idea of renting my mum's house and making up the care home shortfall from her cash savings. Hampshire is an expensive place for care homes (I'm thinking £60K for a half decent place) and her cash reserves will decline rapidly. I think I need to win the lottery....even a £10 win would be nice!!

 

[Peirre]

"Also with the possibility of running 3x 123 accounts simultaneously for max effect."

Not obviously applicable in the OP's case as attorney.
There is also cashback on utility bills, again maybe not applicable to OP.

This falls into the "how long is a piece of string" scenario.
However I'm aware of some, *coughs prior to the rate reduction achieving £1-£2k interest / profit since 123 account opening for hold max £'s.

As for premium bonds, imo they're now in the "put £1 in, get £1 out" category, as the odds of achieving the maximum prize is around the same as winning the lottery

 

[Kevinl]

I was toying with the idea of renting my mum's house and making up the care home shortfall from her cash savings.

Remember the income from the rental will be liable to Income Tax if (combined with her pension and other incomes) takes her over the £11k threshold at 20%, should it take her over the £43K limit then it will be taxed at 40%.
I understand that once she's rented it out Capital Gains Tax can come into play 3 years after she vacated the house so down in Hampshire that may be a consideration too.
K

 

[love.dad.but..]

I had to find a home for the funds from dads house sale last year, he is a tax payer so topped up his ISA and premium bonds so although could be lucky and win at least won't pay tax if he does then opened mixture of easy access accounts and 1 year fix bonds up to 75k protection on each. I got the best rates I could with 6 accounts and won"t be moving any to gain a minimal increase I feel I have been diligent enough. Except topping up his isa again in April. I hear protection limit is rising to 85k and of Jan. However I had substantial funds to take care of for dad as poa and a self funder in care, if your pwd is funded I really would"t be too worried trying to get a minimal increase on her limited savings by keep moving around you have done what was needed and I personally wouldn't have risked dads money investing. Also I found some online higher interest BS wouldn't deal with pos so limited with high street ones

 

[Ihtl]

I was toying with the idea of renting my mum's house and making up the care home shortfall from her cash savings.

Remember the income from the rental will be liable to Income Tax if (combined with her pension and other incomes) takes her over the £11k threshold at 20%, should it take her over the £43K limit then it will be taxed at 40%.
I understand that once she's rented it out Capital Gains Tax can come into play 3 years after she vacated the house so down in Hampshire that may be a consideration too.
K

Only any amount over £43k will be taxed at 40%. So earnings in the £11,001-£43,000 will still be taxed at 20%.

 

[Pinkys]

No idea how much you are talking about...but we had some money to invest and talked to a financial advisor (at the Nationwide, but all banks will offer a service like this) the money is now invested in a range of things, including stocks and shares. It is risky, but not so much. They discuss your attitude to risk, and then work out a spread of investments which match your confidence. You can get the money back promptly. They say that you should expect to leave the money there for about 5 years to really see gain, as you pay fees up front etc. Having said that, we have had money with them for 3 years and are getting at least 6% yearly.

Then when we needed to deal with my MiL's house sale proceeds, we did the same thing through a private Financial Advisor, (personal recommendation led us to her). we put the money away, and they pay a certain amount every month into her account, for care fees. This is a mixture of capital, dividends and interest from investments. This has not been running for long, so I do not know how much capital has gone, but it is anxiety free!

We paid the private person £60 for an hour and a half chat about what we wanted to achieve and how best to do it, no strings. We obviously now pay fees for the continuing service. Worth every penny to us. We were not remotely knowledgeable about money, and had found both kind of advisor terribly clear and helpful.

 

[maryw]

Hargreaves Lansdown have a list of Wealth 100 recommended investments. Agree, 5 years' minimum, spread the risk and take the rough with the smooth and you will almost certainly exceed high st rates.



Sent from my iPhone using Talking Point

 

[love.dad.but..]

No idea how much you are talking about...but we had some money to invest and talked to a financial advisor (at the Nationwide, but all banks will offer a service like this) the money is now invested in a range of things, including stocks and shares. It is risky, but not so much. They discuss your attitude to risk, and then work out a spread of investments which match your confidence. You can get the money back promptly. They say that you should expect to leave the money there for about 5 years to really see gain, as you pay fees up front etc. Having said that, we have had money with them for 3 years and are getting at least 6% yearly.

Then when we needed to deal with my MiL's house sale proceeds, we did the same thing through a private Financial Advisor, (personal recommendation led us to her). we put the money away, and they pay a certain amount every month into her account, for care fees. This is a mixture of capital, dividends and interest from investments. This has not been running for long, so I do not know how much capital has gone, but it is anxiety free!

We paid the private person £60 for an hour and a half chat about what we wanted to achieve and how best to do it, no strings. We obviously now pay fees for the continuing service. Worth every penny to us. We were not remotely knowledgeable about money, and had found both kind of advisor terribly clear and helpful.

Although I didn't want to risk dads money in investments stocks and shares I was told by Nationwide and 2 other institutions that at dads age...86...he was not eligible as ethically they are regulated to have a duty to expect the investor would live long enough to reap any benefit on a 5 year investment....seemed harsh but I suppose a best interest decision for dad.

 

[cragmaid]

Luckily, for financial reasons, Mum did not live long enough after her house sale for me to worry about interest rates.

I have increase my holding in Premium Bonds during the past 12 months from £1... held since 1957 and never won a fathing...... to £15000 due to juggling our funds and have managed a return of approx 4%.... better return than banks or Post Office, and my capital is safe. I am not a savings gambler.