What to do with a pile of cash.

[SteamyTea]

Having just sold my Mother's house to pay for her care, what is the best, but safest way to look after a substantial amount of money.

I know £85k can safely be put into a bank account, but seem to remember that the banks must be separate companies i.e. Lloyds and Barclays, not Lloyds and TSB.

Is there a list for this.

As we have no idea how long we will be paying this for, but do know the costs, a combination of easy access, 90 day access and longer term is viable.

Just to complicate matters, we have a Family Trust that was set up around 2006/7.  Half of it is in my Father's name, and he dies in 2014.  That side seems fairly simple, just put the maximum in it, but is it possible to have a combination of cash and assets (which may go up or down in value).

I assume that we do a similar thing with my Mother's 'half' of the sales proceeds.  The company we deal with suggests we meet up and have a chat about it, but so far every chat with them has been a sales meeting, so rather skewed to their, and I have this term, products.

 

Thanks in advance.

[joe90]

4 minutes ago, SteamyTea said:

Is there a list for this.

+1 🤷‍♂️

[Sparrowhawk]

14 minutes ago, SteamyTea said:

Having just sold my Mother's house to pay for her care, what is the best, but safest way to look after a substantial amount of money.

I know £85k can safely be put into a bank account, but seem to remember that the banks must be separate companies i.e. Lloyds and Barclays, not Lloyds and TSB.

Is there a list for this.

 

Moneybox yesterday (24 June 2023) covered how to hold the proceeds of a house sale safely: if you don't want the hassle of multiple saving accounts then National Savings & Investments is the way. Guaranteed up to £1m for one of their offerings and £2m for another.

 

As to the list of separate banks, the FSCS website is a nightmare so I use this MSE tool. There's also a 2021 list from the Bank of England.

 

14 minutes ago, SteamyTea said:

As we have no idea how long we will be paying this for, but do know the costs, a combination of easy access, 90 day access and longer term is viable.

Just to complicate matters, we have a Family Trust that was set up around 2006/7.  Half of it is in my Father's name, and he dies in 2014.  That side seems fairly simple, just put the maximum in it, but is it possible to have a combination of cash and assets (which may go up or down in value).

I assume that we do a similar thing with my Mother's 'half' of the sales proceeds.  The company we deal with suggests we meet up and have a chat about it, but so far every chat with them has been a sales meeting, so rather skewed to their, and I have this term, products.

This is territory for talking to an accountant, who will know what is most tax efficient to do (my father is a chartered accountant, taxation specilist and helped many clients with trusts, but is now retired). You could try an independent financial advisor but unless you hit a good one you're more likely in my experience to get the 'salesy' info like your current company.

Edited June 25, 2023 by Sparrowhawk

[SteamyTea]

3 minutes ago, Sparrowhawk said:

Moneybox yesterday (24 June 2023) covered how to hold the proceeds of a house sale safely: if you don't want the hassle of multiple saving accounts then National Savings & Investments is the way. Guaranteed up to £1m for one of their offerings and £2m for another.

 

As to the list of separate banks, the FSCS website is a nightmare so I use this MSE tool. There's also a 2021 list from the Bank of England.

Thanks, I missed Moneybox yesterday, but knowing that my Sister is also a R4 listener, I shall send her the links.

 

Who would have thought having too much money causes problems.

 

4 minutes ago, Sparrowhawk said:

You could try an independent financial advisor but unless you hit a good one you're more likely in my experience to get the 'salesy' info like your current company.

Even with my limited knowledge, it seemed to me that I was explaining the options better than the advisor.

When we all met up in 2006 to sign this trust thing, it was very theatrical, fake sincerity and too many long faces.  No one had actually died, but those (expletive deleted)ers walked off with a few thousand each. 

[Sparrowhawk]

3 minutes ago, SteamyTea said:

When we all met up in 2006 to sign this trust thing, it was very theatrical, fake sincerity and too many long faces.  No one had actually died, but those (expletive deleted)ers walked off with a few thousand each. 

 

And it's common to find out later that what you chose to set up isn't doing what you thought it was going to. You've not been missold, oh no, but it'll now cost you a few thousand in fees to unpick the mess that exists.

[AliG]

My mum does this.

 

My personal view is that I would not worry about it for a large reputable bank. If banks start to go bankrupt with no coverage for depositors then the whole country will likely be in dire trouble.

 

In the recent bankruptcy of First Republic in the USA all US depositors were made whole over and above the guaranteed deposit coverage.

 

If a bank gets into financial difficulty first the shareholders should be wiped out, then the bondholders, only then would depositors take a hit. Something absolutely catastrophic would have to happen to wipe out all the equity of the bank and all the bonds then eat into deposits. I'm not saying this has never happened but it would be very very unlikely.

 

So I would balance the low likelihood of this versus the hassle of multiple accounts.

 

As mentioned NS&I is a safer option but their rates are very poor nowadays. They were quite competitive a few years ago.

 

Personally I like TescoBank for a combination of safety and decent rates.

[SteamyTea]

3 minutes ago, AliG said:

My personal view is that I would not worry about it for a large reputable bank

Tends to be my views, and generally, the more trouble a bank is in, the better the saving rates.  I got 6% on my Santander and Barclays current account in 2007/8.

 

Dead Ringers did a nice sketch about Paul Lewis on Friday.

 

[nod]

We’ve had premium bonds for many years and consistently win something each month A couple of £1000 wins over the years also 

Pretty good option with low returns elsewhere 

[Adsibob]

2 hours ago, AliG said:

My mum does this.

 

My personal view is that I would not worry about it for a large reputable bank. If banks start to go bankrupt with no coverage for depositors then the whole country will likely be in dire trouble.

 

In the recent bankruptcy of First Republic in the USA all US depositors were made whole over and above the guaranteed deposit coverage.

 

If a bank gets into financial difficulty first the shareholders should be wiped out, then the bondholders, only then would depositors take a hit. Something absolutely catastrophic would have to happen to wipe out all the equity of the bank and all the bonds then eat into deposits. I'm not saying this has never happened but it would be very very unlikely.

 

So I would balance the low likelihood of this versus the hassle of multiple accounts.

 

As mentioned NS&I is a safer option but their rates are very poor nowadays. They were quite competitive a few years ago.

 

Personally I like TescoBank for a combination of safety and decent rates.

I disagree. The £85k limit is there for a reason. Just to give you an example of a potential scenario: a bank goes bust (RBS, Northern Rock, Lehmans, Kaupthing and others all went bust in the last crisis, and only some of those were saved - complete lottery which get saved and which don’t) and maybe the government chooses to step in but the admin takes ages to reimburse you, maybe a year or so. Meanwhile interest rates have reached 11%, and the reimbursement doesn’t cover interest, just capital, so you lose a chunk of your investment through inflation whilst waiting for the admin on your refund. Unless you have tens of millions to invest, there will be sufficient accounts. Just keep all the details in a spreadsheet and password protect the spreadsheet.

 

UK gilts are your friends. 
 

I wouldn’t hold it all in deposit accounts. I would put a small amount in equities (say 7.5%) as well, and some (say 5% in gold). Vanguard do cheap tracker funds that can be chosen to be fairly low risk.

[SteamyTea]

29 minutes ago, Adsibob said:

RBS

 

29 minutes ago, Adsibob said:

complete lottery which get saved and which don’t

 

29 minutes ago, Adsibob said:

the admin takes ages to reimburse you, maybe a year or so

Most of my parent's cash speculated, with good advice, into RBS shares.

The court cases are still ongoing.  Must check up what is happening.

 

My biggest problem is that I have to deal with my Sister, who not only has Power of Attorney and has set up joint accounts with my Mother, and, though she once worked for Lloyds and HFC (who remembers that American 'disrupter' bank), seems to trust bad advice, thinks that 'hackers' don't exist (found a key logger program on my Mother's PC) and you will always get your money back, even if you email all the personal and bank details to a stranger.

If only I could PGP my Sister, put her in safe storage and only allow her out under secure supervision.

I did raise my concerns with the solicitor that was dealing with the transaction, and I do think he actually called her to confirm the detail, rather than just trust the emails.  Still not sure what I can actually do, except plead, to be sensible and prudent.

 

[DamonHD]

FWIW hl.co.uk does an Active Savings thing that puts everything in one place to reduce admin, and has enough participants at the moment that you can spread over several separate banking licences.

[saveasteading]

I read that we are entitled to ask any representative, whether 'sales' or unstated, if they benefit directly from any transaction  and by  how much. 

So I did that once and it ended the discussion....nufff said.

 

Perhaps a small investment in an independent  advisor's time could be worthwhile.

 

[SteamyTea]

9 minutes ago, DamonHD said:

hl.co.uk

 

Oh dear, not a good start.

 

[ProDave]

https://www.hl.co.uk/  Is fine on my computer.

[joe90]

19 minutes ago, ProDave said:

https://www.hl.co.uk/  Is fine on my computer.

And mine 🤔

[SteamyTea]

1 hour ago, ProDave said:

fine on my computer

 

53 minutes ago, joe90 said:

And mine

Odd.

 

[Marvin]

4 hours ago, AliG said:

My mum does this.

 

My personal view is that I would not worry about it for a large reputable bank. If banks start to go bankrupt with no coverage for depositors then the whole country will likely be in dire trouble.

 

In the recent bankruptcy of First Republic in the USA all US depositors were made whole over and above the guaranteed deposit coverage.

 

If a bank gets into financial difficulty first the shareholders should be wiped out, then the bondholders, only then would depositors take a hit. Something absolutely catastrophic would have to happen to wipe out all the equity of the bank and all the bonds then eat into deposits. I'm not saying this has never happened but it would be very very unlikely.

 

So I would balance the low likelihood of this versus the hassle of multiple accounts.

 

As mentioned NS&I is a safer option but their rates are very poor nowadays. They were quite competitive a few years ago.

 

Personally I like TescoBank for a combination of safety and decent rates.

Totally agree.

 

In my humble opinion I would add that no more than 85k in each bank for each person (joint account half and half) As said above check with the Bank of England list of banks.

 

With bank risks at the forefront ignore the bank name and go for, is it FSCS protected, is the product your buying FSCS protected, will the money be retained in the UK (if not then not FSCS protected) what interest rate are they offering over what period of time and what are the penalties if you need out. 

 

Remember the 85k limit covers all monies including ISAs. Not sure how it works when you also have a mortgage at the same bank. Best check that out.

 

Work out the most you reasonably would need for the next year and put that amout aside in an easy access account

 

Work out the most you reasonable would need when problems arise like a replacement car, or a bathroom refit or what ever (with older people it can be the cost of ramps, mobility aids, grab rails, stairlifts, care etc) and choose the investment with the least loss of interest for redeeming that amount for the period you wish to fix.

 

The rest of the money go for best rates but bear in mind some have no exit options and the longer your lock in the more sure you need to be of the future demands over that period.

 

Don't forget that if you want to take advantage of ISAs have money ready for each year.. 

 

By the way, if you do pick a bank ( or building society) which sadly fails you have 2 choices when covered by the FSCS guarantee. You can either have your money back (this may include earned interest I can't remember) or wait until the end of the agreement and be paid the lump plus interest as originally agreed.

 

And finally, and shocking to me, is that, as far as I have investigated, savings for pension schemes are under the same 85k protection limit.

 

Good luck everybody. 

 

Marvin

 

[SteamyTea]

@Marvin

 

I have been basically thinking along the same lines.

Outgoings are know as she is in a home. Fee may change, but not drastically.

Never thought about ISAs. Think she has one, but if it is anything like mine, pretty poor rates in it.

 

Wish I knew more about bonds and gilts. 

 

I think initially it will be a case if trying to open up a few accounts. Last time I tried this was just after the banking crisis. Nat West would not allow me to open an account as I had tried to open an account at Nationwide.

[saveasteading]

34 minutes ago, SteamyTea said:

bonds and gilts. 

These  are low earning but safe.

 

With any shares, bonds  isas , unit trusts, there are lots of people taking a cut, sometimes buying and selling on your behalf and your risk, and getting a cut the while. 

[Adsibob]

46 minutes ago, SteamyTea said:

Wish I knew more about bonds and gilts. 

It’s not that complex. A bond is just an IOU issued by a corporation. It’s a way for them to borrow money from the marketplace, as opposed to borrowing it in the form of a loan from one lender. These IOUs are tradeable, like shares. The price and yield of bonds move inversely; as one rises, the other falls and vice versa. Sometimes one factor is the driver, sometimes the other.

 

 The bond will have a maturity date, which is the day the holder gets to redeem it for the cash principal, and a coupon, which is the interest paid periodically (usually annually). 
 

Gilts are just bonds issued by the UK government. 
 

Most bonds and gilts are rated by rating agencies. They supposedly give their independent opinion on how good the issuer will be at servicing the debt during the life of the bond, and repaying the capital principal at the end. If I recall correctly, Truss’s mini budget and Brexit both damaged the UK’s credit rating, which had previously been amongst the best in the world. This made gilts slightly cheaper.

Edited June 25, 2023 by Adsibob

[Adsibob]

10 minutes ago, saveasteading said:

 

 

With any shares, bonds  isas , unit trusts, there are lots of people taking a cut, sometimes buying and selling on your behalf and your risk, and getting a cut the while. 

This is not really significant or a reason for avoiding this asset class. Bonds and shares are tradeable on many investment platforms, including within a trading ISA. Yes, you may need to pay a commission, but if you shop around you will find many low commission options. I use AJ Bell and ii , both of which are quite cheap. I’ve heard Charles Stanley is ok as well. Not sure how they compare to HL. Ultimately, if you keep each transaction to at least £2k in size, the commission is peanuts.

 

 The other financial products will have fees associated with them, but again shop around.

[SteamyTea]

23 minutes ago, saveasteading said:

These  are low earning but safe.

 

With any shares, bonds  isas , unit trusts, there are lots of people taking a cut, sometimes buying and selling on your behalf and your risk, and getting a cut the while. 

Yes, was a bit on the radio a while back about this.

And

Where are all the customer's yachts.

Says publish in 1955, but still true today at 5 to 8.

 

[saveasteading]

When you see the corporate activity at Twickers and Henley, and the restaurants in London City,  you know where the money is coming from, and these are just to entertain and thank the little people.

[DamonHD]

2 hours ago, SteamyTea said:

 

Odd.

 

Somehow you have http rather than https in your address bar.  Most recent browsers will default to https.  Are you running a very old one?

 

[Adsibob]

27 minutes ago, saveasteading said:

When you see the corporate activity at Twickers and Henley, and the restaurants in London City,  you know where the money is coming from, and these are just to entertain and thank the little people.

It’s called corporate entertainment. It is a cost of doing business and is not tax deductible.