Where to invest £150k for 2-3 years

[LouS84]

If you had £150k savings (on top of 6 months buffer savings), which you may want to use to move house in 2/3 years but won’t need until then, what would you do with it in the meantime? Currently £90k of it is in premium bonds, the rest is just sitting in low interest current accounts which is obviously bad. Nothing yet put into ISAs. TIA for advice and opinions.

I'd talk to an IFA that's a lot of money.

High interest savings accounts. You can get 1-year fixed for higher rates

I’d keep it in cash if you want to use it in 2 years time. Stocks and shares are too up and down due to Putin
Max into cash ISA now and then another £20k on 7th April

Then look for 1 year bonds, or 1 year savings accounts. You can get 3 to 5 % on these, so will be as good as you can do.
Don’t forget you can only get £1k a year from interest before you have to pay tax.
Premium bonds and ISAs are tax free

Options

Fixed duration bonds - lock the money away for a year - NS&I have a 4% fixed bond for example.

Notice accounts - where you give notice before withdrawing the money - coukd get 3 point something % percent. Common to have 30 or 90 day notice periods.

ISAs - cash ISA the interest will be tax free - Although you may not pay tax on savings interest anyway, see what the annual allowance is for savings interest. ISA would be good if you may not use all the money for house purchase, as once it's in the ISA wrapper it can stay there forever, so if you don't use it you have option of switching to a stocks and shares ISA later. Up to 20k per person per tax year.

LISA - if a first time buyer meeting certain criteria - check carefully before putting money in as penalties if you take out for other reasons. Can put 4k of your yearly ISA allowance in, and government will top up by 1k.

Premium bonds- any winnings are tax free, but of course you may win nothing.

None of these will keep up with inflation, but will be better than a low interest account.

Don't have more than 85k per person per institution/ banking licence- check FSCS rules.

Stocks and shares ISA/ LISA - more volatile, so money may be less when you take it out. If holding longer term e.g. over decades, is expected to increase above inflation. But risk for only a few years investment thst it may be less than you put it in if stock market dips.

Money Saving expert website good for looking up different savings rates.

I would definitely not use a financial advisor for this. Research the different options yourself. There are no hidden options for them to tell you about!

This is really good advice. You don't need an IFA.

Thank you very much for this fantastic advice. Very much appreciated!

Slow transition Into yours and your partners isa, at a rate of 20k per person every 7th April, so do 40k before April and then again on 7th.

Use someone like interactive investor or Hargreaves lansdowne. Steer clear of the high street ISA’s, you want a stocks and shares type - but you won’t be buying stocks - you can also open a general investment account with them, for the remainder of the balance and follow the same approach for investment. So it’s all in one place and is also regulated by the FSCS - and they will move it around in the background so multiples of the 78k protections are available.

Investment: in both, you can get about 3-4% return per annum, by buying a short term money market funds from Royal London as well as others, interest is paid daily. The platform will also pay you about 2% pa if you don’t invest and just good straight cash. You can cash out with about 3 days notice. You might get higher returns elsewhere but usually on smaller amounts and can take a lot of juggling, paperwork and of course can also tie up money for a while. This above you can just pop it away and forget. I use it when I’m in cash and not invested in equities. You won’t make crazy returns but it’s very low risk, daily interest, but cash will be eroded by inflation long term, but if you have an 18month window, then now is not the right time to risk equities or bonds, which could lock you in for much longer.

Good question OP.

Ps. steer clear of IFA’s - they will want 1%pa for basically doing nothing but telling you what you can read online. And remember - every time you hear about an investment Scam - there’s always been a financial adviser profiting somewhere among the line.

If you use NS&I you have protection on the whole amount so can be a good option to keep things smple and save opening multiple accounts with different institutions.

If you do opt to split into chunks for the £85k FSCS protection, don't forget to allow for interest received to stay below £85k over time.

Vanguard sterling money market fund within an ISA.

Where would you go for advice on inheritance tax planning? IFA? Solicitor? How to find someone who isn’t just trying to line their own pockets?

Wary of posting this as do not want to get into morals of IHT, just looking for advice on how to minimise within legal framework.

For transparency, this relates to both me planning for my kids and DP planning.

Thank you.

You don't want a stocks and shares ISA if your investment horizon is 2-3 years as the OP indicates.

Rather bizarre way to put it. You don't want to pay for professional expertise?

No, I’m willing and expecting to pay for professional advice. I am not sure where to find that advice hence asking where would be best place to start ie should I be looking for a solicitor for legal planning, or an IFA for investment planning or other professional.

Do you have any helpful comments in that regard @DeeHellem ?

My comment around ‘lining their own pockets’ is related based on how do I find the right level of advice without getting into costly and complex ongoing charges.

Ideally I would want personal recommendations from friends but not comfortable having those conversations so asking where others would go.

A good starting point is a site called VouchedFor. It's a bit like TripAdvisor for financial advisers. You can see how they are rated by their existing clients.

Find a couple near you offering a free initial chat and go and speak to them about your requirements.

If it's something simple like writing some life assurance in trust, making sure your pension expression of wishes are up to date etc then that would be part of their remit.

If it's something more complicated like gifting, setting up trusts, changing ownership etc then most decent IFAs will have trusted professional connections they use and can refer you on to.

That would be my guidance, and when using VouchedFor make sure they are Independent Financial Advisers and not Restricted Financial Advisers.

Hope that helps.

You do if you want access to low risk overnight interest cash funds and want a tax wrapper. They have been a source of much profit for me the past 12 months.

Thank you @DeeHellem and apologies, I thought I had started a new thread rather than adding a post so appreciate this may have looked like a bizarre post! Thank you for taking time to reply. I think it is more likely to be the more complicated end of things from what you have described, who are they likely to refer onto? As in what types of role, perhaps I should be contacting those people instead of IFA? 🤔

Sorry too OP for adding random comment to your post!

Santander 18m ISA: 4.25%

Plenty attractive cash ISA wrappers, was my point.

I disagree. Cash ISA’s generally are high street names and the best rates found elsewhere.

Also where someone has multiples of isa limits to start with, using Gia’s alongside tax wrappers in a simple to use website or app and keeping it away from bank accounts, which can be targeted more easily by fraudsters - is good practice.

But we can agree to disagree - there’s no wrong answer unless the OP loses their money to a fraudulent FA or pays fees for standard advice (eg. Open X and dump it in vanguard). Ideally we are debating degrees of return. :)

Who have you used, at what cost and for what returns?

Started with high street many years ago - these days I’d recommend HL, AJB, II depending on funding levels, and returns…. Found fundsmith over a decade ago, so that averaged 18%pa, am a fan of Vanguard index funds so those vary between 6-8% and I’ve been using Royal London for past 12 months money market funds. Not without my errors though - got sucked in by the bond/equity mix for a few years with a DC that was run by Aviva and had limited range and Jupiter bonds did nothing but lose me money. So I wasn’t anywhere near those when we went into Covid. Best return has been Ballie Gifford, 89% in one year, cashed in and didn’t look back.

You said 'low risk overnight interest cash funds' instead of Cash investments for such a short period.

That's your alternative to my suggestion that someone avoids stocks and shares ISAs.

I'm interested in your return and costs for that type of investment specifically. You've gone off on your long term investment strategy. That's not what's being discussed here.

I am currently using Vanguard's sterling Money Market fund for my accessable cash within my stocks and shares ISA wrapper on Vanguard's own platform.
Yield is close to 4% at the moment, it does move up and down with the base rate so if interest rates come down then so will the return.
I prefer this to cash ISAs with Lock in period's and if the stock market dives I can move some straight into my global index fund.
Money market funds are not a safe as cash but they are cash like and are were big institutions tend to park there surpluses as they are very liquid.