£90k investment 5 years on?

[Amislytherin]

If you invested 90k in a savings account 5 years ago what would
you expect it to roughly look like now if you hadn’t taken any out of it?
it’s a long sad story I won’t go into here but my much older cousin received an inheritance of around that amount 5 years ago and seems he invested it in a fixed rate savings account and it’s now sitting at around £107000. He has dementia which we didn’t clock for a long time until he suddenly deteriorated last month and got the diagnosis. All paperwork is a mess and he dealt with all financial matters and his wife is simply lost trying to get her head around it. She says from what she can tell, the balance is no £107000, does this sound likely to you?
I earn very little and have a total of £900 to my name in savings and have never had enough to invest so have no clue whether this is likely or not! She’s worried he’s moved some money around and is trying to start
the process of taking financial control. thank you.

I'd say based on a fixed rate cash savings account that's probably about right - in fact, given the very low interest rates we had 5 years ago, it's not bad at all. Good opportunity to it review now, and look for better rates if it's not needed for spending straight away.

Also, be aware of the FSCS guaranteed amount of £85000 per institution; so if you are looking to keep it all invested in cash accounts, might be worth splitting it across 2 different banks or building societies.

Do you know the interest rate of the savings account? Looking at a quick compound interest calculator, would seem to be slightly north of 3%

I'd agree, that sounds reasonable though not thrilling. Even at current rates where it's fairly easy to get 4% or more, you'd make less than £20k over 5 years, and given that rates until recently were much less than that, I think it's fine.

Great thank you. I think her initial worry is that he’s moved money around while
not being “with it” and is starting by wondering if that’s a likely balance today given the last few years climate. she’s got a long process to
go through to get access to the accounts I think as he’s literally done all their finances forever and she’s got no idea ☹️and I’m no help as earn low so have never been able to have a big savings account.

I think it’s an M&S account with 3.5% but she’s not sure of this

Oh you are all so smart! Thank you. So am I right in thinking interest rates were low until recently?

Yes, interest rates were at record lows for many years until about a year ago.

Thanks, I thought this but just wasn’t sure. Sorry if I sound so naive.

Just checking that you are in the UK as you're asking that question, interest rates have been the lowest in living memory for years until just recently, I'm slightly surprised that's a question

But if you are thosw figures sound perfectly reasonable

Yes, I've also just run that calculation and 90k compounding at 3.5% for 5 years comes out pretty close to 107k.

It's right- you can check for yourself here https://www.thisismoney.co.uk/money/saving/article-1633419/Monthly-lump-sum-savings-calculator.html

This is a graph showing the Bank of England interest rate from 2020 until now - so you can see how low they were, and how much change there has been in the last year and a half ish. (This is from the Bank of England website, which is worth a quick look if you are interested 😊)

Yes we are Uk- thank you. I’m sorry I am aware I sound naive but I genuinly
don’t know much about interest rates other than on my mortgage as have never had enough savings to invest so I didn’t know how much interest would be on savings accounts was all.

Thanks so much. Really appreciate you taking thentome
to do this.

• taking the time

oh wow thanks! I’ll show this to her.

Wow, I was thinking that's a pretty good deal. £10,700 for doing nothing for 5 years? The interest rates have been at an all time low, so it seems like a reasonable deal. I think my savings give me tiny amounts of interest - like 1/2 or 1%. I'd be delighted with that unearned ten grand.

Usually fixed rate accounts are time limited so you'd get the initial fixed rate for a set period (usually 1-3 years max) and then it reverts to a lower rate instant access account. Even currently with higher rates my older account only offers 1% or so interest compared to 6.1% I have on a one year fixed account.

He would have also been taxed on it. You can only earn £1k per tax year from savings tax free.

So do you think that amount should likely be lower? Does £107000 sound too much?

£17,000

Bottom line: £107k is what you'd expect to see based on what you've told us, OP. No sign that he messed around with it.

Oh great thank you

This isn't meant to sound patronizing but if you were unaware of the crazy low interest rates you might be in for a shock on your mortgage, what kind of deal are you currently on

it’s Ok, I was aware I likely sound naive
😔i know about my mortgage (sadly nothing good there!) but I just didn’t know anything about savings accounts or ISA’s as I’ve never had enough to explore them so had no idea what £90k should/ could look like after 5 years.