“I’ve just received £35,000 from a relative’s estate. I have never had so much money in all my 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 into a flexi save account. The reason we decided on only £10k into each ISA, is to allow for our pensions and PIP to go into the ISAs monthly until the end of the current tax year.
“We didn’t put more into my ISA as we try and save my PIP money in there, and half of my state pension and if I have any left after my bills, my other pensions all go in as well. My husband’s state pension goes into his ISA.
“I worry 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 celebrating.
“Do you have any suggestions, such as options on where else to put the £20,000 from our ISAs?”
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Chartered financial planner Kay Ingram replied: “This inheritance is a windfall and you plan to spend part of it on a Golden Wedding celebration in 2024. You would like guidance on how to save the balance.
“You have an emergency cash fund of £14,000 in a flexi saver account. Consider whether this is enough to deal with any emergency spending or any big purchases you plan to make over the next couple of years.
“You are recovering from an operation which could leave you disabled, so do you need to set some aside to make adaptations to your home, buy mobility aids or an adapted vehicle? Having this money in an easy access or notice account would enable 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 in cash savings will see their value erode while inflation remains high.
“You can pay into one of each type of ISA in the same tax year, within 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 via the providers to retain their tax- free status.
“You have identified the short-term goal of funding your Golden Wedding celebration and for this money a fixed rate deposit account may be appropriate.”
Ms Ingram pointed out “short-term interest rates are on the rise”, explaining that an “alternative approach would be to opt for a one-year fixed rate”. She said this would “give the option of switching to a new account after 12 months, if interest rates then are higher than now”.
“Fixed interest rates are offered for a limited period only, with conditions attached.”
She said some of “most competitive terms are only offered online”.
Ms Ingram continued: “Some require higher initial deposits than others or are only offered to new customers. Conduct your own research and check the terms and conditions carefully to see if they meet your needs.
“Only choose a bank which 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 which will do this for you. These include Akoni, AJ Bell, Hargreaves Lansdown and Raisin. Their services may incur a charge on your savings, and they may offer only a limited range of providers.”