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Old 28-06-2020, 10:25   #1
AdamBrunt
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Investing a large sum of money ?

Hi all,

In these times of low interest rates what are the best options when investing a large sum ( 6 figures ) of money ?

The cliche is to put it in property but I am at the age where having only just been able to become mortgage free I have no intention of getting another one.

Is there a limit on how much you can put in an ISA ? Also, what is the maximum amount covered by the FSA (?) you can have in a bank account ?

Dump some of it in an existing pension pot perhaps ? Is that even allowed ?
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Old 28-06-2020, 10:39   #2
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£20k in an isa. I am using rare setter now for my cash isa (it’s not cash isa, it’s riskier)

Pension is an option, depending on your salary, you can stick in max £40k per annum (plus unused 40k allowance for past 3year) but you’d need that much in salary to save the tax and make it a better option than just putting it in savings.

Then you have premium bonds for £50k

Or just put it outside an isa in unit trusts. (And move £20k into the isa each year)

Depends on your future needs really? Saving for retirement? Planning on keeping working and having more income to save each year?


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Old 28-06-2020, 10:51   #3
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Quote:
Originally Posted by AdamBrunt View Post
Also, what is the maximum amount covered by the FSA (?) you can have in a bank account ?
£85,000 per person, per financial institution. Financial Services Compensation Scheme (FSCS). https://www.fscs.org.uk/
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Old 28-06-2020, 11:19   #4
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Quote:
Originally Posted by cjanderson View Post
£20k in an isa. I am using rare setter now for my cash isa (it’s not cash isa, it’s riskier)

Pension is an option, depending on your salary, you can stick in max £40k per annum (plus unused 40k allowance for past 3year) but you’d need that much in salary to save the tax and make it a better option than just putting it in savings.

Then you have premium bonds for £50k

Or just put it outside an isa in unit trusts. (And move £20k into the isa each year)

Depends on your future needs really? Saving for retirement? Planning on keeping working and having more income to save each year?


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£85,000 per person, per financial institution. Financial Services Compensation Scheme (FSCS). https://www.fscs.org.uk/
Thanks - I thought that's what the limits are.

It's an inheritance windfall. A large portion of it will be used to pay off my existing mortgage ( freeing up about £650 per month in itself ) leaving about £100k.

My salary is enough for the 40k pension limit to not be a problem. But is there a

I would say that even with this I am approximately 10 years away from retiring. And in that time our 2 kids ( currently 16 and 14 ) would have gone through university so we are probably looking at something that could possibly be used to help either of them in the future ( student loans, car, house deposit, etc ) as well as ramp up the pension pot come retirement. So reasonably quick access would be required or not something that locks you out for more 5 years.

Premium bonds is an option but - with regained income from being mortgage free - we are not in any particular need for something that possibly increases monthly income if that makes sense ?
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Old 28-06-2020, 11:25   #5
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My premium bonds just rev invest in premium bonds when I win (I have £45kish so have £5k capacity for wins)

Think your pension part is missing a question? Once in there you can’t get it out until retirement age.


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Old 28-06-2020, 11:52   #6
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Quote:
Originally Posted by cjanderson View Post
My premium bonds just rev invest in premium bonds when I win (I have £45kish so have £5k capacity for wins)

Think your pension part is missing a question? Once in there you can’t get it out until retirement age.
Good spot

It should have said "My salary is enough for the 40k pension limit to not be a problem. But is there a risk in dumping such large sums in a single vehicle ?"
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Old 28-06-2020, 11:57   #7
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There is a risk of dumping money into any non cash investment but pensions have sabe risk of that as picking shares (actually they are better, my shares went down 25% from April 2019 to April 2020 and my pension went down 10% as that is more managed)


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Old 28-06-2020, 15:27   #8
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Yeh Premium Bonds are not taxable so pretty good when you've got a few quid to invest, the rate isn't massive but there is no tax. As CJ says, I stuck £40k in mine so no worry about meeting the max really, and if you've got a wife you can stick £40k in her name.

You're not going to get too much in the current climate, depends how risky you want things to be. It's not the worst time to be buying a few shares for the long term, a fair few give fairly steady dividends.
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Old 02-07-2020, 15:13   #9
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So Premium Bonds only pay 'interest' if you win a prize right ?

So it is feasible that, for a person with less than average luck, they are worse than putting the lot in a savings account ?
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Old 04-07-2020, 11:33   #10
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They chuck out the prizes in £25 chunks, there is a premium bond checker somewhere, you could win a million or £500 as my Mother in Law just did, but mostly you're gonna pick up an average of so many £25 in a year. I was doing slightly better than expected for the first 4 months, £75 a month on a £40k investment which would be 2.25% but only got £25 this month.

Martin Lewis seems to have a downer on them, I'm guessing they don't pay click through fees.

Decent savings rates are getting impossible, I cling to about 1.25% on my Marcus but I've been with them a while, don't think a newbie gets that.

Even if you chucked it away for five years, you're not getting much more of a return.

So admittedly you could have terrible luck and win no prizes, but in reality it's designed that anyone with a decent chunk in there is gonna do about right.
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Old 20-07-2020, 12:44   #11
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Regarding paying a lump sum into a pension pot ....

As I understand it any pension contributions over £40k ( in a year ) don't get tax relief and are actually liable to Income Tax.

Are there protocols in place so that if you whack, say, £35k in to a work pension at the beginning of the tax year then contributions are stopped, towards the end, so as not to go over the limit ? Or is that something I am responsible for that ?

Also if you have multiple pension pots can you only put the 3 year rollover amount into a pot that you've had for at least 3 years ?
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Old 21-07-2020, 11:37   #12
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how it works with my work one (as its taken from pre=tax income) is that you get the tax relief automatically

THEN you would pay it back IF you ticked the box on your tax return to say you had paid in too much. So yes, the onus is on you to check it.

If you do it via net payments to a non workplace pension, then you claim the extra via your tax return.

I track the £40k per year allowance, 3 year c/f so i knew i was okay if HMRC ever queried the amount. And my pension company did warn me i had paid more than £40k and needed to ensure that was okay.

i think you can put into any pension, even a new one, even using the 3 year ago allowace. the HMRC checker doesn't make any mention of that as a factor.

NB: you would also need to have the salary to be able to get tax relief in first place.

So to get tax relief on £40k you must have earned at least that in the year. and to get the best tax relief you need salary of £50k plus (AFTER PENSION PAYMENT) so it saves tax at 40%.

tax is fun lol
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