Where to put £65k?

[SweetBobby]

I have this amount in a standard savings account. Is there somewhere better I can put it so that it could gain more interest? I probably add 10-20k a year to it.

What is it for?

Give different parts of it a name... emergency fund, short term savings, retirement. When it has a purpose then you can decide easier what sort of account it goes in.

Emergency fund needs to be easily accessible.

Longer term savings could be accessed with some notice.

Retirement could be invested depending on the timescale involved.

Go through this flowchart to help determine what the money goes towards.

ukpersonal.finance/flowchart/

@nannynick it's no really for anything, I like to have access to it because I very occasionally spend from it. But other than that I'm just building it up.

Cash does not grow much. It tends to lose to inflation. So having some cash is fine but also try to have some invested.

Use ISA wrapper to protect some of it from being taxed.

I hold far too much cash, as like you I like being able to spend it when I want. My car is 10 years old so I know I will need a newer one at some point when the current one becomes uneconomical to repair.

However I also have investments within ISA wrapper and have a pension.

Look at the big picture of what you have. Try to void losing money to inflation and tax.

If you want to learn about investing, start with these books:
The Meaningful Money Handbook - Pete Matthew
The Simple Path To Wealth - JL Collins

Have you used your tax free allowance? I would be tempted to put 20k of it in a stocks and shares ISA, I currently have a medium risk one and it is earning me 21% interest. You will need to be happy to lock it away for at least 5 years if you want the bigger returns.

If you are a tax payer, and if it is in a highish interest account @4% earning £2,600 a year interest, then £1,600 of that is taxable.

So I would keep a chunk in an easy access high interest account (check MSE for best rates) , and put the rest in an ISA, where the interest is not taxable, or Premium Bonds where prizes are not taxable. But PBs may soon be less attractive if their overall %that they give as prizes reduces again.

You could always put it in my bank account ?

Thanks for the recommendations I will give those a read. I probably should have added that I'm completely clueless, I don't even know what an ISA is. They really should teach this stuff in schools.

What is a tax free allowance? Earning 21% interest sounds great to me and I'd be happy to lock a chunk away.

I am a tax payer and I didn't know you had to pay tax on savings?

God loves a trier!

You can save up to 20k before the end of the tax year in an ISA any interest earned on an ISA will remain tax free .

separately you may have a personal savings allowance depending on your tax rate.

Standard rate tax payers can earn out to £1000 of interest outside of an ISA tax free

Higher rate up to £500 interest

Special rate payers have no allowance at all.

Anything over these limits is taxable.

So HMRC know about every savings account everyone has? How exactly? Genuine question - I don't understand how that's possible?!

Banks have to notify HMRC how much interest has been earned in the year, your tax code will then be adjusted accordingly.

Personally I would want to avoid paying tax on it so PB’s and an ISA.

God this is confusing, can someone explain am ISA to me like I'm 5 please?

https://www.moneysavingexpert.com/savings/isa-guide-savings-without-tax/

@Wolfpa You are not earning 21% interest. Your investments may be up 21% in whatever period you are considering but this is unrealised gain. You could lose it all (and more) tomorrow.

An ISA is a tax free savings vehicle which a standard savings account won't be. If it's is not in an isa you may be liable to pay tax on the interest depending on circumstances. All tax payers should open one particularly if they pay tax at a higher rate. You can save or invest up to £20k per year.

If you want to invest you need to either educate yourself or employ an IFA as that carries more risks of losing capital but generally long term the rewards are higher.

Paying more into your pension, investing in fixed term savings or overpaying your mortgage are other options on what to do with that amount of money.

An ISA (individual savings account) is just a savings account where you do not need to pay tax on the interest.

You can pay £20k per financial year into an ISA .

They are no more complicated to open than any other savings accounts.

But they have different conditions. Some are flexible, some at fixed rate - Have a look at MSE under savings accounts.

When you open a bank account, you have to give them your National Insurance number so they can then advise HMRC of your earned interest at the end of the tax year.

All this info is on google, OP! Inform yourself.

That's too much for a savings account. Your problem isn't interest, it's tax. I agree with others. Your ability to save 10k+ is excellent but you should either get advice or, better still, wise up. Your final answer will probably be to invest in a combination of your property, pension & ISA. The choice though depends on your situation and needs. If you can't decide now, then park what you can in an ISA for the moment (20k now and 20k after April 6)

But they haven't done that and started a thread on Money Matters instead - which may be useful to someone else too.

Thanks for your input though -

I agree with others it's too much to have in a savings account. In your position, I would try and spread it across an ISA (either cash or a stocks and shares one with someone like Vanguard)
You could put £10k into a longer term bond (higher interest but can't touch it) and then there are also premium bonds which you can hold up to 50k tax free.

If you can save 10-20k a year, it's also worth looking into paying extra into your pension .

@OriginalLilibet i could loose it as that can be the nature of investing but it is also the way to make your money work hardest. I would only put in what I can afford to loose and there is lots of information out there so you can make an informed decision on what you are investing in.