best accounts to earn interest

[dikkertjedap]

Would be grateful for any advice. Large sum as result of inheritance. What are the best rates available? (bank or gilts/bonds), so far the best I have found is about 3.4% given inflation would be negative interest rate ...

Start with the tax-free deposit options such as Cash ISA. You can put £5340 in those each year and you can find the best rates on comparison sites. Comparison sites are also a good place to look for bonds and generally, the longer you're happy to put your money away, the better the rate you can get. National Savings Bonds are worth a look as they've been offering some products recently that keep pace with inflation and the base rate. But interest on deposits at the moment is basically rubbish wherever you look.

So, depending on how much you have and how long you want to salt it away for, I'd also recommend you consider putting a proportion of your inheritance in unit trusts and managed funds. You can take advantage of your annual stocks and shares ISA allowance so that any profits are tax-free. These are definitely for the long term (10 years+) are more risky, and need careful research with an independent financial advisor. If you use reputable organisations with a good track-record it's a way of spreading the risk - not having all your eggs in one basket - and, over the long-term, managed funds often outperform ordinary deposits.

Good luk

Go to an independent financial advisor- not one tied to an institution A large inheritance should be used to provide you with some security for the future sayfor property(home) purchase or for your retirement.The problem with the latter is that annuity rates have been low for a long time now.

have you looked at the recently-issued index linked national savings certificates. they're for a 5 year term, and pay the RPI plus .5%. you can put in a max of £15k. More information on www.nsandi.gov.uk

Stupid question , but I assume you've already done the obvious thing, which is to clear mortgage and other debts?

Sorry, I know that wasn't what you asked!

Thanks for all the responses. Yes, have cleared everything else. I am just worried that with the low interest rates, the capital will shrink (due to high inflation). I don't want to put it away for more than 2 years as I don't want to lock in poor rates. I had expected to find some 5% interest rates somewhere, but have not managed to find any like it and given inflation of about 5% depending whether you use CPI or RPI that really concerns me. On continent does not seem much better plus there is the awful exchange rate.

How large a sum are you talking about? You can pick up some houses and flats really cheap around here. House like ours went for over 20% below market value to a cash buyer because it was a reposession. Made us sick but shows that there is the potential for real bargains out there.

Or if you want to invest - get good independent advice.

Straight cash deposits have been a poor choice for quite a long time now. It makes sense to have some of your money put aside that way because it's safe and easily accessible, but it makes no sense to have all of it in banks & building societies earning 2 or 3% when inflation is upwards of 4.5%. You're paying for the safety. Really, if the sum is in the tens of thousands or higher, get some professional advice and look at investments which are classed as moderate risk for some of your money. 'Risk' in the financial context means that an investment can go down as well as up (and those of us with investments in 2008 know that only too well) but, as I said earlier, this increased risk also means you could earn rather better returns in the long-term.

"Speculate to accumulate" is a phrase worth remembering. Spreading the risk in cash deposits, bonds & investments means your money is working for you rather than just sitting.

If you do want it in a savings account, then are you able to lock the cash (or a proportion of it) away for a time? You can get 5% with various banks if you are prepared to leave the money for 5 years. Though in that case you are gambling on rate staying low for it tO be worth it.

Thanks all, no don't want to invest in property. Also not keen to fixing for more than two years, because I do not think that interest rates can stay this low ... Also, I want to be flexible and be able to convert to euros when (maybe should say if) exchange rate improves ...

If your criteria are 'short-term' and 'flexible' then you're pretty much stuck with deposit accounts, cash ISAs and relatively low interest rates.