Lump sum risk free options

TheStrangler · Post by **TheStrangler** » 03 May 2020, 10:10

Thinking of taking max lump sum of around 40k (section c).
I intend to use this to supplement my pension of 8k so would need to access 4k (6k max) per year.
Any advice or ideas on the best way to utilise it?
Bear in mind I much prefer risk free even for small returns.
I have premium bonds which I know doesn't keep track with inflation but I like the fact that my moneys safe and on average I'm getting around 1.5% return which I'll use just to top up my monthly pension by around £50 a month.
Thanks in advance.

Post by **RobertT** » 03 May 2020, 10:47

Generally some kind of easy access accounts with as high interest as possible is probably best for someone with a risk free profile. But it might be an idea to put some in notice accounts if you can get a higher interest rate, and transfer the cash over to easy access nearer the time you plan to access it.

I've had Premium Bonds for many years and know perfectly well they're probably not the best product from a return point of view. But it's something people in my family have always had and I quite like them!
On average I've have made about 2% return per year, although they can be quite hot & cold.

TheStrangler · Post by **TheStrangler** » 03 May 2020, 12:17

I've maxed out the premium bonds though I notice they also do income bonds and direct saver but will have to look into how they compare with other accounts like you mentioned.
I remember people used to use ISAs but on little research I've done the rates seem very stingy considering you can't access the money!
Thanks again.

grchpo · Post by **grchpo** » 03 May 2020, 12:41

40k lump sum, 50k in premium bonds, where's the problem

Post by **RobertT** » 03 May 2020, 13:48

TheStrangler wrote:I've maxed out the premium bonds though I notice they also do income bonds and direct saver but will have to look into how they compare with other accounts like you mentioned.
I remember people used to use ISAs but on little research I've done the rates seem very stingy considering you can't access the money!
Thanks again.

Cash ISA's are no different to normal building society savings accounts, in as much as some are easy access and some aren't. But ISA interest rates are often lower, so as the first £1,000 of interest earned in non-ISA accounts is free of tax, then they might be a better option?

Post by **Steve_claret** » 03 May 2020, 14:39

I opened a Ford Money Flexible Saver account 3 months ago. You can access your money anytime and they currently pay 1.34% interest although this is going down to 1.24% in June. My other savings account is with the Halifax who reduced their interest from 0.2% to 0.1% in February and are reducing it further to 0.01% in June. Needless to say I am currently emptying this account as fast as I can. I also have a 2 year fixed ISA with the Halifax which pays out 0.75%. As you can see from these rates the Ford Money account is by far the better option for me.

Post by **RobertT** » 03 May 2020, 14:47

I have cash ISA with Kent Reliance paying a fixed 1.5%, which I recently changed from a 0.75% above base rate tracker – just before the base rate was reduced to 0.1%.

I also have a Marcus account paying 1.20% from next week, reduced from 1.30%, due to CV-19.

There's not many decent paying savings accounts around!

Post by **westy23** » 04 May 2020, 07:00

Morning all.
I use Commsave for my cash savings and they paid interest (dividend) of just over 2 per cent recently.
Might be worth a look.

TheStrangler · Post by **TheStrangler** » 04 May 2020, 10:59

That's interesting but is that for current rm employees only?

lordthornber · Post by **lordthornber** » 05 May 2020, 07:29

Did you know that if you have no earned income you can put £2880 into a SIPP, and about 6 weeks later it gets grossed up to £3600?

Yes,£720 for absolutely nothing. You can claim this every year up age 75. You can leave the £2880 in cash, you don't have to invest it.

There is no "catch" other than you must have zero earned income - pension doesn't count.

So every new Tax year £720 thanks very much Mr Tax Man.

Post by **NorthernBoy** » 05 May 2020, 08:56

lordthornber wrote:Did you know that if you have no earned income you can put £2880 into a SIPP, and about 6 weeks later it gets grossed up to £3600?

Yes,£720 for absolutely nothing. You can claim this every year up age 75. You can leave the £2880 in cash, you don't have to invest it.

There is no "catch" other than you must have zero earned income - pension doesn't count.

So every new Tax year £720 thanks very much Mr Tax Man.

Yes this is a very useful way of getting extra cash, especially if your income is under the tax free allowance.

However, if you do pay tax (say from pension income / property etc) and draw the money out from the pension, then you will have to pay tax on this money. Due to the 25% tax free element I think you still end up with an extra £180 a year, so it’s still money for nothing.

This is a great way to get extra cash even more so if you pay no tax

TheStrangler · Post by **TheStrangler** » 05 May 2020, 11:18

Great thanks for the above, I'll definitely be looking into a SIPP!

lordthornber · Post by **lordthornber** » 05 May 2020, 16:11

Of course if you want to, and can afford to, you can leave the £2880 or the £3600 in and do nothing. Bit daft because of the effects of inflation, so even if you're inexperienced you could bung it in a boring dull as dishwater tracker to at least make say 1% to cover inflation.

You of course could have a dabble, whilst it's a lot of money in the hand, in investing terms it's coppers.

heapsy · Post by **heapsy** » 05 May 2020, 21:10

Steve_claret wrote:I opened a Ford Money Flexible Saver account 3 months ago. You can access your money anytime and they currently pay 1.34% interest although this is going down to 1.24% in June. My other savings account is with the Halifax who reduced their interest from 0.2% to 0.1% in February and are reducing it further to 0.01% in June. Needless to say I am currently emptying this account as fast as I can. I also have a 2 year fixed ISA with the Halifax which pays out 0.75%. As you can see from these rates the Ford Money account is by far the better option for me.

Never heard about this before. Very interesting. Btw there's also this https://www.hl.co.uk/investment-services/active-savings" onclick="window.open(this.href);return false;

heapsy · Post by **heapsy** » 05 May 2020, 23:05

Just wondering. If RM stop the AVCs as has been suggested, would it make sense to put the AVC monies in a fixed interest fund, within a SIPP. I know there are costs and the return may not be great, but you would get tax relief and the fund would be less volatile. Any thoughts? Fidelity Cash Class W Accumulation comes to mind.