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Bear Faced Cheek

What Would You Do With £50,000?

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Hello HPCers

My situation in a series of bullet points...

Private sector worker

Renter (largely due to years of looking at this site!)

Just been made redundant (weep not, fellow HPCers, I asked for voluntary redundancy)

New job lined up. Sorted.

Now, my issue is this. I have £50k from savings and the redundancy pay off. Naturally, Mrs. BFC sees this through her 'nesting filter sunglasses' as being a deposit. Fear not, fellow HPCers, I'm staying strong.

Annoyed at what banks offer in terms of interest rates, worried about shares (unless you include shorting!) and with uber fears about the gold stuff, I was wondering what you'd all suggest I do with it?

I have no intention of buying for years, which may affect your answers.

Thanks in advance

BFC

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NS&I index linked 3/5 years paying RPI+1% tax-free and they won't gear up your money to issue new mortgages.

Max is 15K per issue so you and the Mrs are OK up to 60K. I'm maxed out, using kids trusts as well.

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Hard question.

Can you use the money to start your own business?

I am gessing we are in for a long hall of deflation (I may be wrong)

Hey there - thanks for the nice replies. New job has a nice salary and is enough to live happily on (and continue to save rather than waste it on mortgage interest!) and so it's just this lump sum I need to do something with...

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NS&I index linked 3/5 years paying RPI+1% tax-free and they won't gear up your money to issue new mortgages.

Max is 15K per issue so you and the Mrs are OK up to 60K. I'm maxed out, using kids trusts as well.

I'm in a similar situation money wise i.e. I got it, but don't know where to stash it. If the RPI can be trusted, then maybe I should buy into this too. I'm too nervous to touch gold again, and obviously a savings account doesn't cut it anymore. I won't buy till a few years from now. We're heading for a HP gradual decline over at least 5 years if you ask me.

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I'm in a similar situation money wise i.e. I got it, but don't know where to stash it. If the RPI can be trusted, then maybe I should buy into this too. I'm too nervous to touch gold again, and obviously a savings account doesn't cut it anymore. I won't buy till a few years from now. We're heading for a HP gradual decline over at least 5 years if you ask me.

NS&I index linked savings are pretty much a no-brainer IMO. Inflation proof, deflation proof (minimum rate is 1%), not taxed, safe (so long as the UK doesn't default) and fairly accessible.

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Max is 15K per issue so you and the Mrs are OK up to 60K. I'm maxed out, using kids trusts as well.

So is there a cap on the number of 15K issues?

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Annoyed at what banks offer in terms of interest rates, worried about shares (unless you include shorting!) and with uber fears about the gold stuff, I was wondering what you'd all suggest I do with it?

£50k + income from $newjob[1] is plenty to start you off on a low-tax lifestyle. You can eliminate the part they call "income tax", and only pay the part they call "national insurance" (plus consumption taxes, of course).

See this blog entry for basics, and this one for how it's working out a year on.

[1] If that income is very high, you might hit limits on this strategy. But it'll work fine in a normal range from, say, national minimum wage up to well into six figures.

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If you were feeling reckless, I mean really reckless, you could use £50k as a 50% deposit on this

http://www.rightmove.co.uk/property-for-sale/property-26622139.html?premiumA=true

My guess is that house is for sale due to a relationship breakdown, and the incumbent wants to slow the sale and peee off the other party! But seriously, when an agent puts that hovel on the market at 4 times national average earnings (earnings for that street more closely aligned to levels of benefits!) it tells you how mad the market still is.

Summary, keep your wealth in tact. NS&I is my recommendation.

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Hello HPCers

My situation in a series of bullet points...

Private sector worker

Renter (largely due to years of looking at this site!)

Just been made redundant (weep not, fellow HPCers, I asked for voluntary redundancy)

New job lined up. Sorted.

Now, my issue is this. I have £50k from savings and the redundancy pay off. Naturally, Mrs. BFC sees this through her 'nesting filter sunglasses' as being a deposit. Fear not, fellow HPCers, I'm staying strong.

Annoyed at what banks offer in terms of interest rates, worried about shares (unless you include shorting!) and with uber fears about the gold stuff, I was wondering what you'd all suggest I do with it?

I have no intention of buying for years, which may affect your answers.

Thanks in advance

BFC

Well done - putting it down as a deposit would be like flushing it down the toilet, at this moment in time!

I'm in a similar position and have been maxing out all the possible National Savings Products, as well as putting some into shares.

I steer well clear of the banks now and just use our regular account to receive our wages and quickly transfer them out again.

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What happens with these NS&I Index Linked if RPI goes -ve (again)? Are you still guaranteed a minimum return?

Yes 1%.

During each month the Office for National Statistics (ONS) collects prices for a range of goods and services to calculate the RPI, which it then publishes the following month. For example, the RPI figure for January 2010 was published part way through February. To calculate the index-linking we would then use this as the "RPI start level" for any certificates bought in March. We would also use this as the "RPI end level" for any certificates reaching an anniversary or cashed in during March.

So if you buy now you're gauranteed 6% for the next year at least.

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Yes 1%.

Yes.

So if you buy now you're gauranteed 6% for the next year at least.

No, that's not right. If you already had them, you'd have got ~6% for last year; over the next year you'll get whatever RPI is in a year's time + 1%.

Edited by snowflux

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Guest sillybear2

NS&I index linked 3/5 years paying RPI+1% tax-free and they won't gear up your money to issue new mortgages.

No, they'll just invest the money into gilts then the government will use it to prop up RBS or HBOS :lol:

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NS&I index linked savings are pretty much a no-brainer IMO. Inflation proof, deflation proof (minimum rate is 1%), not taxed, safe (so long as the UK doesn't default) and fairly accessible.

NS&I should be compared to other multi year fixed rate saving (though this is taxable while NSI is not). If you believe BoE about pver capacity and not much further inflation then a fixed rate saving is better. If you don't (as I don't), NS&I is OK.

However, water shares such as united utilities have their returned linked to RPI+2%, so slightly better than NSI. Also, I think the way NSI calculate its RPI is not as straight forward as you think. It says:

http://www.nsandi.com/press-room/press-releases/pr201007

NS&I work out index-linking by using the RPI figures applicable at the start and end of each year of an investment, not the monthly changes in between.

I think it is something like if RPI Index is 110 at beginning of the year and 110 at December, you only get 1%. Then if it jumps to 115 in January then the 115 becomes the new baseline for next year.

Further, we know the RPI is fudged...

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No, that's not right. If you already had them, you'd have got ~6% for last year; over the next year you'll get whatever RPI is in a year's time + 1%.

ru sure?

On each anniversary of the purchase date, until the end of the certificate term (known as "maturity"), the RPI index figure is checked. If it is lower than the index figure used at the starting point of the certificate or the previous anniversary, the negative index-linking is ignored. If it is higher, then positive index-linking will be added. At the same time we also add the fixed rate of interest. All of the certificate anniversary values are calculated in this way until maturity to provide the overall certificate value.

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Keep the missis happy and look at houses for sub 100k. That way you can keep her happy looking and hunt down a bargain.

How much do you pay on rent?

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  • 149 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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