Got £20,000 to deal with and don't know where to start

[LindorDoubleChoc]

I've never had a lot of money or savings so this is just sitting in my account earning nothing and I don't know what to do with it.

I will see a financial advisor as there are all sorts of variables to saving or investing this sort of sum of money depending on circs and age - I fully understand that.

But for now I just want it earning the maximum amount of interest while I dither around deciding what to do. I can also save around £250 pcm at the moment.

Does anyone know of a simple easy access (or reasonably easy access) savings account with a high interest rate where you can start with a large lump sum and add to it with regular savings? I'd want this for a year or two.

I understand it's not necessary to go down the ISA route unless you're going to be earning over £1000 pa in interest, is that right?

Thanks wise MN!

Moneysavingexpert is the easiest for all this info. It has a section on regular savers, and one on the highest interest paying accounts.

You can stick it all in the highest interest account, then have a regular saver for your £250 per month.

Are your plans for the money long term (10-15 years away, retirement etc) or medium term (5-8 years, for house deposit or kids uni etc?) or short-term?

A bunch of easy access savings have just gone up yesterday in the wake of the bank of England interest rate hike so worth looking into them. The best way to maximise would be to have multiple regular savers that you drip feed into (for example first direct is 7%, club Lloyds 5.25%). If you don't want the hassle of that you could put your £20k into a one year fix and put the £250 into a regular saver. I can't think of any account where there would be a benefit to adding to the lump sum regularly rather than a dedicated regular saver though.

Be careful about the interest though - at £20k plus £250 a month you'll be in danger of passing it if you get the best interest rates.

I understand it's not necessary to go down the ISA route unless you're going to be earning over £1000 pa in interest, is that right?

Yes, as long as your not a higher rate tax payers. But if you have 20000 and will be adding to it, you could get close to the 1000 interest, so something to keep an eye on.

Chip are easy to use and have 3.4% instant accesss while you decide.

the best rates you can only put so much in, like the first direct one mentioned you need a first direct current account and can only put £300 a month in.

If you put it in an issue you don’t pay tax on interest. You’ll get over 4% on a one year fix just now or about 3.25 on instant access isa. Check money supermarket and Martin Lewis for the current best deals.

Does your bank have a savings account that you can pop something into (although it seems that higher rates are paid on lower amounts at the moment) .my banks current digital saver option is offering 6.17% on balances up to £5k. For balances up to £2m in a 12 month account they are paying 4% (if I had £2m I'd want it to work a bit harder than 4%! ) . If you aren't going to want to spend it I'd stick some into an ISA before end of month, and then once new tax year starts add the rest and maybe do the standing order into that as well?

https://www.boringmoney.co.uk

This is a website another mumsnetter recommended which I find very interesting

Hi, forgive the stupid question but I am trying ti correct my woeful ignorance on these things. Is it different for higher rate tax payers? Do they not get to earn the £1000 without tax? I am in a similar position to op and don’t want to make any mistakes. Happy to pay the tax if the higher interest rates mean it’s still better financially than an ISA (which all seem to have kind of low rates).

Income Tax band Personal Savings Allowance
Basic rate £1,000
Higher rate £500
Additional rate £0

https://www.gov.uk/apply-tax-free-interest-on-savings

No one has had to consider any of this because interest rates have been so poor but now its time to start thinking about ISAs again

Also lower earners also get up to £5000 starting rate for savings interest which is often not mentioned but if you earn £12570 or under up to £17570 there is up to £5000 extra untaxed interest you can earn on savings so for example someone earning 16570 can earn an extra £1000 in interest or something like that

Do you own a home/have a mortgage?

Thank you @Sarahconnor1 - really useful

Do you have any debts, for example a mortgage? If so, the money could be well spent there.

You can find an IFA on unbiased.co.uk but do be aware some require a larger some of money to take you on.

I think you only need a financial advisor for larger amounts of money (and they also cost a lot). Read up on Money Saving Expert, and think about the different things you could put h to e money towards - deposit, pension, savings etc.

Sorry, I just re-read the post - you could put the money in Premium Bonds.

Chip, chase, atom, Zopa. I wouldn't bother with a financial adviser to be honest.

I believe that you can put between £25 & £50K per person into NS&I Premium Bonds, you have a chance to win prizes each month

The prizes are tax free for everyone

£50k per person.

Chase is 3.1% very easy access plus you can have a current account that will give you 1% cash back on your debit card spends.

Halifax have a regular saver at 5.5% at a max of £250pm.

You'd have to tie some up for longer to get rates of 4%+

That's very interesting. I am a lower earner.

These replies are so incredibly helpful - thank you everyone!