Your Money: Windfall Special - Make that windfall grow
Planning to put your building society bonanza away for a rainy day? Neil Baker tells you how
Wednesday 21 May 1997
That might not be good news for the travel agents, yacht chandlers and DIY store chiefs hoping for a bonanza - but it suggests that the majority of windfall collectors have half an eye to the long term in deciding what to do with the cash.
For many, the money offers an opportunity to kick-start a savings account or start setting aside some cash for the first time. While fund managers and stockbrokers are eager to promote the merits of their personal equity plans, many savers will undoubtedly prefer to stay with savings accounts.
You will get better rates if you are prepared to tie your money up for a while - although you should keep some cash available for instant access.
One of the best instant-access rates on offer is 6.4 per cent gross from Nationwide. The minimum deposit is pounds 500. Cheltenham & Gloucester is paying 6 per cent on deposits of at least pounds 1,000. If you can top your windfall up with other savings, Northern Rock is offering 6.35 per cent on deposits of at least pounds 5,000.
Among the notice accounts, Nottingham Building Society is offering 6.4 per cent on deposits of at least pounds 2,500 with its 30-day account. The Cheltenham & Gloucester 30-day account pays 5.5 per cent on deposits of just pounds 100.
For those who are able to lock away windfall cash for five years, consider a Tax-Exempt Special Savings Account, or Tessa. These pay interest tax- free - as long as you do not withdraw any of your capital and not more than 75 per cent of the interest until the end of the five-year term. You can still get your money if you really need it, but you lose the tax benefits. You can invest up to pounds 3,000 in a Tessa in the first year and up to pounds 1,800 in each of the subsequent four years, to a maximum of pounds 9,000.
Remember that the returns on Tessas are tax-free, whereas the rates on other accounts are normally quoted gross. So for a basic-rate taxpayer, 7.7 per cent from a Tessa would be equivalent to 10 per cent gross from a regular taxable savings account.
Some of the best deals require a high starting deposit - because they are aimed at attracting people who already have a Tessa with another bank or building society. But there are some good deals around for first-timers. The West Bromwich is offering 7 per cent on starting deposits of pounds 3,000. For smaller deposits, Monmouthshire society is offering 7 per cent on pounds 1,000 and Principality is offering 6.8 per cent on pounds 500.
Unfortunately, you are only allowed to have one tax-exempt account. So if you have one already, it might be worth considering other forms of risk-free savings, such as National Savings Certificates.
Index-linked National Savings Certificates currently pay 2.5 per cent tax-free above the rate of inflation when held for five years. The minimum investment is pounds 100. You need to give eight days' notice to get your money back, and lose your interest and index-linking if you want your money back in the first year.
Banks and building societies also offer fixed-rate bonds, which repay your capital plus a fixed amount of interest at the end of a set period or at the end of each year. The Nationwide one-year fixed-rate bond pays 7 per cent on deposits of at least pounds 500. It also offers a two-year bond paying 7.3 per cent. The Halifax is offering 7.4 per cent on its three- year bond with a minimum deposit of pounds 2,000.
Lightning is not supposed to strike twice, but if you fancy your luck you might decide to invest your windfall cash in another building society which could opt to convert from a mutual. That would bring another windfall your way.
A lot of the societies have said that they want to maintain their mutual status, but just for the record, the possibilities would include: Nationwide, Birmingham Midshires, Bradford & Bingley, Britannia, Coventry, Newcastle, Norwich & Peterborough, Skipton, West Bromwich and Yorkshire. Some of these pay good rates on their Tessas and may be worth considering for that reason alonen
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
How couples can protect their financial interests when cohabiting
Money alert: Overdrafts at HSBC and First Direct
'Dismal' eurozone data sparks concerns
How to protect your assets if the stock markets begin to head south again
Child Maintenance Service to replace Child Support Agency - but is it better?
- 1 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 3 Kajieme Powell: Missouri police release video footage of second man killed by officers
- 4 Paul Scholes: Manchester United need five experienced players who can turn round a desperate situation
- 5 James Foley 'beheading': Met police warn public watching murder video could be criminal offence
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Crisis? What crisis? A visiting US doctor gives the NHS a rave review
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Scottish Independence Referendum: Salmond described as 'arrogant, ambitious and dishonest' by Scottish women
iJobs Money & Business
£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...
£30000 - £35000 per annum: Harrington Starr: Service Desk Engineer-(Support, S...
£55000 - £75000 per annum + excellent benefits: Harrington Starr: Service Deli...
Highly Competitive Salary: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL ...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony