What should I do with my redundancy payment?

[MrsFogi]

I'll need it to live on so can't tie it up too much at the same time it will be a decent sum so I don't want it to be eaten away by inflation/earn nothing with the low interest rates over the coming year or so. My intention is to try to live off it for as long as possible (ie spend much less than I did when I had a job) as it's likely to take me a fair while to find another job. Any ideas?

Will watch with interest as I will be in the same position soon.

...might have some ideas!

But need to ask the ultimate question...

How much?

Still under negotiation but I guess about £50-70K.

wow!!

sorry thats not helpful, i was told that the internet bank accounts are the best interest at the moment but they're not tax free

also how much is your mortgage each month, is it worth paying a chunk off of that and having your repayments reduced

Could you spend it all on a big MN party?

Seriously, spread it over a number of investments.

Much as I'd love to spend it all on a mn party that would then mean that we'd rapidly be repossessed and I'd then be on mn asking where to procure a box big enough to bring the dds up in. I thought about paying it off the mortgage but I don't think that will work as we're going to need to live off it + pay the mortgage so say I used half to pay a lump of the mortgage that wouldn't bring the payments down enough iykwim. But what investments are safe, easy to access etc? My worry about a savings account is that the money gets eroded by inflation and the interest won't be that high after tax.

Hi. I am a financial adviser. Unfortunately this is a common situation that I see quite often nowadays.

Your biggest goal is short term income and, being conservative, I would suggest that you keep it all on short term deposit and once you get a new job, then invest what is left in either long term investments or by paying off part your mortgage.

My suggestion would be only pay off some of the mortgage if your mortgage gives you the facility to borrow it back or can have repayment breaks.

Have a look at this as a suggested plan....

1. My first suggestion would be pay off any credit card debts.

2. Next, open a cash ISA with £3,600 is you haven't already this tax year. Put in an additional £3,600 in April, at the start of the new tax year.

3. Have one year's outgoings on instant access. Look at
   this page for details of rates.

4. Put any remaining in either fixed term deposit in a bank for one year or in a notice account. This is an account where you get a slightly better rate for giving, say, 30 day notice before withdrawing your money. You might find at the moment that these types of accounts don't offer you much more than instant access accounts, so don't disregard having all of the income on instant access. Its a quirk of these low rates at the moment!

If you lock up any of your money now by either putting it into long term investments or paying off your mortgage then you may find that you run out of money - not worth the gamble to earn a little bit more on your money in the short term, in my opinion.

Its a shame that there are such low rates at the moment, but at least your employer is being relatively generous.

Also, note that rates are expected to drop again another 0.5% very soon.

If you want any more specific advice, let me know and I'd be glad to help.

Thanks duke!