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 much have you got in there? The more you have the more chance you have of winning.

40k for a year in premium bonds should win £350 in a year:

www.moneysavingexpert.com/savings/premium-bonds-calculator/#result

Though obviously it's not guaranteed!

Thank you everyone. So if you have 40k what would everyone do? I have fairly good benefits - public sector but DH's are terrible so we might need to keep more than one month's worth of savings. How much do people usually have in easily accessible cash. We live in London so min. repayment on our mortgage is 600 per month (interest only). So assumed we would need mind 20k in easily accessible. My parents are immigrants and DH is wc so we have little idea of what to do with savings.

That's less than a guaranteed savings account at 1.5% though.

There is a key amount to invest to be certain of winning anything - someone posted the calculator further up. But basically if you want to match an ordinary savings account you'd need 35-40k in premium bonds.
Where they do work is when you earn more than the personal savings limit on interest and have to start paying tax on your interest, as Premium bonds prizes are not taxable. Of course using up your ISA allowance saves you that liability too.

I never got a single win on mine until I increased my holdings to nearly 40k, now i regularly get £25-£75 in wins per month on them.

Do you have the option to overpay/borrow back on your mortgage? That is what we have done as our mortgage % is higher than any current savings %

I'm another one to recommend the Chase 1.5% savings account.
A little more complicated to set up than other online accounts as it is all app based and you have to first open a current account (that you don't need to use) with them but it was not difficult and was all done in less than 10 mins work on my part. Though their current account is worth using too as you get 1% cash back on card transactions and 5% interest on 'round up' amounts on spends.

A slightly simpler account to open, with 1% rate is the Marcus savings account by Goldman sachs

I would say an offset mortgage too and then premium bonds once you have matched your savings/mortgage. We have both. Re premium bonds we have won £950.00 in the past 7 draws.

So at the moment our interest rate on mortgage is slightly lower than say Chase account. Maybe we should open one. At this rate, probably makes more sense than keeping it in our current account. I dont feel like we have enough to start to invest it properly.

Do you have a monthly budget to have an idea of how much you need for a six month emergency fund?

Have you got an interest only mortgage? How do you plan to pay off the capital? You must be fairly financially literate to have decided to take out an interest only mortgage?

And for "How much do people usually have in easily accessible cash?" I would say most people definitely don't have 40k kicking around.

My spare cash goes into extra pension contributions atm, because I want to retire 'early' (before I'm 68).

I would look at an offset mortgage option as this could save you interest every month (and presuming your mortgage rate is higher than the highest 1.5% savings account rates) and pay your mortgage off quicker - this has worked really well for us and money is instantly accessible if needed

I have £50k in premium bonds and have won an average of £800 year

£20k each in stocks and shares ISA - post Ukraine war these are looking lower but over time should still work out

Some invested in property (we used a redundancy payment for deposit as thought was a good option to replace the pension benefits that was lost)

Rest is in shares, which DH manages - you need to be able to spend some time on this though, so not a good idea if you are busy

To the poster asking how they have two premium bonds accounts, I assume they (as a couple) have one each.

I really need to take the plunge with some shares to build up a pension type fund (in addition to workplace pension) but am so risk averse I'm not an ideal candidate!

Chase savings account. 1.5% interest.

There are many good suggestions on this thread. I too would go on Money Saving Expert website.

I am in awe that you have £40k of savings. We have never been able to put away three to six months salary/monthly outgoings. Something always comes up and eats into the savings; car maintenance, household maintenance etc.

869p555
Can I ask how long it took you to save £40k?

It would take us 8 years providing the car or house requires no maintenance and there are no other unexpected surprises.

Another one with a Chase savings account, but I have a stocks and shares ISA with Vanguard too - if I had £40K floating about loose I'd be inclined to stick half of it in that.

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

One is DH’s! He also has a cash ISA I think but not much in it.

I have put £10k of mine into an ISA and £10k into stocks and shares - both via Hargreaves Lansdown. Its gone down in value for now but will hopefully increase over the long term.
No idea what to do with the rest, although I do like to know I could access it at a moments notice if needs be.

That sounds like a good plan and pretty much where we are. Our mortgage interest rate is 1.1% so I feel no need to pay it off any faster than the basic payment.

For the last 10 years or so, we've pretty much been 50-120% offset into savings and/or PBs as spending on things like cars and home improvements have come and gone but now rates have risen a little, I need to rethink, but it feels nice to have all the money to pay off the mortgage, not do so, but have all the money sitting there making a small profit.

When it comes to ISAs and stocks and shares how quickly could you access them if needs be? And do you get much of a return? Am soooo ignorant

You can access them immediately in the stocks and shares ISA actually, by cashing them out.
My £20k went up by about £3k in the first 2 months and is now down by about £5k from that! I have no idea what I'm doing - I just know that you need to play the long game...

Stocks and shares ISAs are not the place to put money that you might need in the near future/can't afford to lose.

They are a good idea to look into if you can do without that money for at least five years, and have a goal for what the money is actually for. There's not much point in investing it for the sake of investing, and when you have a mortgage you would most probably be better off paying some of that off.

You can use robo investors like wealthify which have calculators to give you an idea of what sort of return you might get, but nothing is definite and you might lose money.

premiumbonds maxed out, my dad wins every month sometimes its £25 othertimes its £75. I used to win alot but I am not maxed out and I havne't for a while now. As he has the full amount no wonder he does!

Yes, I was sort of assuming that when it comes to investments we should initially just pay off the mortgage. Although I guess in theory - we could get more if we invest over five years and then put some of that money towards the mortgage.

Potentially. Or you could invest the money for five years and find that it is worth less than what you put in after those five years.

With overpaying the mortgage you are guaranteed to save yourself money in interest - though I'm not sure how it works with an interest only mortgage and you've suggested that you have an interest only mortgage rather than a repayment mortgage?

With a repayment mortgage, making a one off payment of 20k would probably save you over 20k in interest in the future, and shave a few years off the overall term.

Ours are in several pots, including premium bonds.