once you have save 6months living expense - where keep them?

[869p555]

We are lucky to have saved/got around 40k worth of savings which we have decided are our 6-12months worth of living expenses. Any advice on what to do with them? At the moment, they are sitting in our current account but my sister just told me that was stupid. I am not very financially literate - so whats best to do with them? Its not such a large amount of money but I get that this money sitting in my usual account is not great. Beside our house (mortgaged) and pensions that all the money we have. Any suggestions?

How about premium bonds? Like doing the lottery without losing any money! (you can win a million but more likely to win the smallest prize of £25 more frequently)

Look at the money saving experts saving advice. Also consider an offset mortgage too.

I have most of mine in an instant access ISA account and given how low interest rates have been recently I've opened a premium bonds account. I transfer a fixed amount into the ISA each month and any extra I put in the PB.

It's not stupid, more that you're missing out on a small amount of interest.

You can get 1.5% in a Chase savings account.

Or you could gamble that by buying Premium Bonds. Your money is safe and it would take a few days to get it back if you need it, but you will win prizes, likely at a similar rate to what you would receive in interest each year. I have a similar amount, and have received 8 x £25 prizes in the first 4 draws of the year. You could win less than this, but also a lot more.

The majority of my emergency fund is in premium bonds, and I have a small amount in a regular savings account. Premium bonds can take up to 3 working days to take money out of, so if you are likely to need a bit of cash of unexpected expenses, like car repairs etc, then you might want some emergency money that is quickly available.

But with inflation at 7%, your 40k is shrinking. Do you really need 40k in an emergency fund? Do you have outgoings of £3333 per month?! Are you both self employed or have an unpredictable income to need 12 months worth put away?

I'd work out how much you actually need in an emergency fund, put that into premium bonds, and then overpay some of your mortgage with the rest. You could potentially save thousands on interest with a one off overpayment. That or extra pension contributions. 40k is a lot of money, but you need to use it wisely instead of leaving it to waste away in a normal savings account.

We have some in an instant access ISA and the rest tucked away in ‘locked in’ accounts (don’t know the proper name- you get marginally better interest but have to give 3 and 6 months notice to withdraw). There’s enough in the ISA to keep us going while we waited on the others.

There is a safety aspect here too. Your current account is the account you use all the time? Online? Have bank cards for? Therefore it is the easiest one to defraud too. Move the money you don't need for this month into a savings account. Even if that is a linked saver to your current account it is better than the current account.

Once you've done that you can look at interest rates and returns/risks of other investments.

I keep ours in premium bonds

We keep around £3k in our standard savings account for any emergencies that needed cash right then. The rest are in premium bonds. It's quick and easy to withdraw your money from premium bonds, I've done it a few times but it does take a few days so I like having a smaller amount readily available.

We have premium bonds too. Makes the beginning of each month a bit more exciting! Yes I have a sad life 😂

Following out of interest

Following out of interest
Decent pun.

This overpayment calculator is good for looking at how mortgage overpayments can save you interest and take time off your mortgage:

www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

If you have a stable job with sick pay etc then I wouldn't worry about putting 12 months worth of living expenses away 'just in case', I'd overpay some of your mortgage. If you are self employed though then 12 months is sensible.

Small amount in a savings account (say enough to pay the mortgage for a month), the rest in ISAs, anything over the ISA limit in an investment account. I have a bit in premium bonds, but the returns are very poor, not worth it.

Mine is in premium bonds and has increased slightly with some small wins.

I’m wondering what to do at the moment with this. Have £30k earning fuck all in an instant access ISA, £20k in a shares ISA that’s lost £600 since I opened it 3 months ago. Then about £50k in premium bonds across two accounts. I could definitely be managing things better!

I agree that your current account is the most risky place of all to have all your money!
I have a months worth in another bank entirely in a current account (in case of a frozen bank account for whatever reason but also my saving to spend account for holidays, christmas etc, but I never use my card or pay online from this account), then some in an interim savings account (things I will want the savings for within a year), and then premium bonds. I do have a S&S ISA with Vanguard, but that is intended for very long term

Like pp I do premium bonds. Easy and safe. So far, have won more than I would have earnt in interest elsewhere. National saving bonds were quite good for awhile too. Both easy to access. I keep a months wages back in my savings account which can be transferred into my current account within hours as it can take several days from premium bonds.
I like safe, very very very low risk investments. You may find higher returns (v higher risk) elsewhere?

Another vote for Premium Bonds. I have the maximum amount and win something pretty much every month, even if it's just £25. Much more than a savings account would pay.

How have you got two PB accounts? I thought you could only have one.

I have had premium bonds since 1982 and never received a penny. Are you all super lucky or is there a minimum amount worth investing?

You haven't lost £600 unless you cash out, hopefully it will pick up again and give you a good return eventually.

I haven't started any investing yet because I'm the sort of person who would freak out and cash out at the first sign of a loss!

@NeedAHoliday2021 no idea! But thinking back, I did have premium bonds as a child - never won a thing. As an adult I put away a fixed sum monthly. Looking at my statements, it would seem that once a couple of thousand have accrued, the winnings started to trickle in…. You may have a point about a threshold!!

I've got some savings in a Chase 1.5% interest a/c. The app is really slick, and unlike some savings accounts you can move money rapidly if the need arises. Premium bonds have been a waste of money for me. The rest of our savings is also in the Chase a/c but a chunk is invested monthly into a stocks and shares ISA which has outperformed anything else by far. Buying monthly smooths out the cost over a year.

If you only have a small amount, you could indeed go for decades without winning anything. If you have more than around £10k, you should win around the same amount as if the same amount was earning interest in a savings account, but that's not quite true now that interest rates have risen and PBs haven't caught up.