“I have just received £35,000 from a relative’s estate. I have never had so much money in my entire life! I really don’t know where to put the money. At the moment I have 10 £000 in my ISA, £10,000 in my husband’s ISA and £14,000 in a flexible savings account The reason we decided to invest only £10,000 in each ISA is to allow our pensions and our PIPs to be paid monthly into the ISAs until the end of the current tax year.
“We haven’t put more into my ISA as we try to save my PIP money in there, and half of my state pension and if I have any left over after my bills, my other pensions all go in as well My husband’s state pension goes into his ISA.
“I’m worried about having access to the money. It’s our golden wedding anniversary in 2024 and we’d like to spend some money from the £14,000 fund to celebrate.
“Do you have any suggestions, such as options on where to put the £20,000 of our ISAs?”
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Certified Financial Planner Kay Ingram replied: “This inheritance is a godsend and you plan to spend some of it on a golden wedding celebration in 2024. You want advice on how to save the balance.
“You have an emergency fund of £14,000 in a Flexi Saver account. Consider whether this is enough to cover any emergency expenses or major purchases you plan to make over the next two years.
“Are you recovering from an operation that could make you disabled, do you need to put some aside to fit out your home, buy mobility aids or an adapted vehicle? Having this money in an easy-access or notice account would allow you to adjust without having to cash in longer-term savings.
“Generally, cash savings are appropriate for short-term spending needs over the next five years. Leaving too much cash savings will see its value erode while inflation remains high.
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“You can pay into one of each type of ISA in the same tax year, up to the £20,000 annual ISA allowance for over 18s. The split between cash and Stocks and shares can be in any proportion and you can transfer money from one type of ISA to another, but must do so through providers to maintain their tax-exempt status.
“You have identified the short-term goal of funding your golden wedding anniversary and for that money, a fixed rate deposit account may be appropriate.”
Ms Ingram pointed out that “short-term interest rates are on the rise”, explaining that an “alternative approach would be to go for a one-year fixed rate”. She said it would “give the option of switching to a new account after 12 months, if interest rates are then higher than today.”
“Fixed interest rates are only offered for a limited period, with conditions attached.”
She said some of the “most competitive terms are only offered online.”
Ms Ingram continued: “Some require higher initial deposits than others or are only offered to new customers. Do your own research and check the terms and conditions carefully to see if they meet your needs.
“Only choose a bank that offers FSCS protection of up to £85,000 per depositor or capital may be at risk.
“If doing your own research is too difficult, there are several cash savings management services that will do it for you. These include Akoni, AJ Bell, Hargreaves Lansdown and Raisin. Their services may incur fees on your savings and they may only offer a limited range of providers.