Where to put cash earmarked for renovations?

[Babamamananarama]

Hi

So we are buying a house that we are going to need to spend a hefty chunk (£75k-£100k) on in renovations and improvements. Our plan is to go in hard and get most of it done over the next couple of years.

The renovation money will come from our house sale as we are buying cheaper than we sell.

Can anyone suggest a plan for where we put the money? We will only need a proportion of it as instant access as the bigger chunks of money (eg kitchen renovation) we will have plenty of notice on.

Ethical investment funds preferred, and we don't want a risky investment that might see our funds disappearing.

I just used the highest instant access savings accounts I could find with a max. of £75k in each up to fsa compensation limit. At the time these were marcus and cynergy paying just over 1% interest.

I’m using premium bonds

Would also say Premium Bonds. There are no decent interest paying accounts left now. My DF has 50k invested and regularly wins £50-100, way more than any savings accounts and it's risk free! I think any stocks/shares related investments have really suffered this year.

Definitely no investment products if you need the money in the next year or two. You could double your money, but you could just as easily lose half of it, or more.

As well as Premium Bonds, there's another NS&I product called an income bond, I believe, which despite the name is an instant access account, albeit you have to move money in or out in chunks of £500 or more, interest rate 1.15% which is the best you can get for instant access. You might be able to get slightly more in a fixed rate or notice account, try moneysupermarket for details.

With NS&I, you'll have to decide whether lending money to the Government is ethical, but they do really need it right now, hence the market leading rates.

I'm using premium bonds to save up for our kitchen refurb whilst also hoping I might win the jackpot and be able to get a new house instead

Premium Bonds - 2 x personal allowance
Santander 123 - 1 each
any other instant access savings

No investment product as you have a short timescale.
NS&I is useful due to not having the £85k limit on protection. Direct Saver is currently 1%. Premium bonds gives no interest but a chance to win. Income Bond is worth a look though have a plan for the money that is paid out.
With Notice accounts can be useful if you can stick to the terms, rates are quite poor though even for 90+ days notice... 1.1% gross is typical at the moment.

Thanks everyone for this.

What is personal allowance in premium bonds?

Marcus isn't opening new accounts but I'll look into Santander 123 (what's the advantage?) and Cynergy.

£50k is the max you can have in Premium Bonds. I've got my emergency fund stashed in there and this month is the first one this year I haven't won at least £25, on a maximum holding.

Santander 123 account is dropping the interest rate again soon. Really miss the 3% days!

I don't think there's much of an advantage to a full Santander 123 any more unless you have a Santander mortgage.

There is the Santander 123 lite which has a lower fee, which means that you make a couple of quid a month in profit, but pays no interest, but I think in most cases it's best to just keep enough money in there to pay your bills and save any spare money elsewhere, National Savings being the least worst option at the moment.

user I also miss the 3% days. We received just enough cashback to cover the £5 fee and our mortgage overpayment pot sat in there, earning 3% interest while our mortgage interest rate was less than half that. Obviously not sustainable so you can't argue when they take it away.

user
I do not have a mortgage
but I moved most of my Utility direct debits into my 123 account and the cashback earns me about £14 a month separate from the interest and offsets the fee

Yeah, good point about the cashback. I've earned a whopping £7.47 this month, still its better than a kick.

Plus anything you win with premium bonds is tax free.