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Q&A » Savings
I have 50k to save and I need to know what my options are for it. This is my nest egg for use if I lose my job or have children etc. I have already paid a large sum off my mortgage.
Basically I need to be able to get to some of it in the short term but I am also willing to put a small amount (say 10-20k) for 3-5 years.
Interest rates are rubbish and I am tempted to chuck it all into premium bonds.
I do not want to risk losing the capital.
Any ideas?
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804I would not recommend Premium Bonds as the prizes are equivalent to 1.5% after tax. There are plenty of places where you cam get a better rate.
I assume from the possibility of having children that you are in a long term relationship and that the two of you are working and contributing to the home.
I would suggest jointly having an emergency fund of 3 months joint net pay or 6 months net pay of the higher earner.
This could be invested in an instant access account such as Coventry BS 1st class postal a/c @ 3.30% (including first year bonus) or Investec High 5 account which is a 90-day notice account and pays the average of the best 5 instant or notice accounts.
The balance, I would suggest should be invested in a series of fixed rate bonds maturing at regular intervals. After each lot matures it can be reinvested for 5 years because the others will be filling the intervening period. You can get up to 5% that way, at the moment.
Mike
Posted on 16 February 2010 |
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