If you had a sum in excess of 85K, would you risk it with one provider if the interest rate was sufficiently favourable?
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Nope, is the short answer.
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Given that the best rates are often with less mature organisations then no, I wouldn’t risk it. I’d feel a bit happier with Santander, though, with whom I’m still getting 5.2% AER.
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Assuming that a rate at or close to the top rate was also available elsewhere, as it generally is because banks mostly get quite competitive once a good rate is around, I would spread it over multiple banks as needed (taking the small cut in interest for safety).
If a comparable rate wasn’t available elsewhere at all, then that might be a red flag in itself (of a possibly unsustainably managed bank, or a bank in desperate need of deposits - possibly to service loans they couldn’t afford) so I would again avoid risking it.
TL;DR
No, pretty much ever, and it simply wouldn’t be worth it in my view.
If I suddenly won the lottery, I may risk the sum in a major “too big to fail” bank for a short time only.
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Depends how much in excess it is.
A few thousand? Probably
Ten thousand? No.
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I’ve had more than this amount of money in an account, briefly, but if this is your savings, then you’d be better off with it in shares and ISAs than chasing the highest rate of the day.
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Depends on the circumstances. If it was someone like Lloyd’s, yeah. Probably not Starling, I know the bloke who bankrolled it is rich but probably not rich enough to inject capital sufficient to save it and avoid a bank run should it be really shitting itself.
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I don’t think any “major” bank (including Starling & Monzo but obviously all the main high street names too) has much chance of failing now that regulators are much more vigilant than the pre-2008 days, but I still wouldn’t want to risk it.
If, for some reason, it wasn’t practical to stick to the limit entirely for a brief period, I would trust a traditional high street name the most just because they are too big to fail.
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I assume when it comes to investments people must do this all the time? (I am aware investment protection is different to deposits though)
I might go a little over, depending on which bank it is, what the interest rate is, and for how long.
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Not really. It gets too complicated to do that. Even if you were talking in the millions, I don’t know that you’d want to have more than two or three investment firms.
When I win the lottery, my plan is to pop the first two million into NS&I as it has unlimited protection.
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I guess you’d have one fund manager who spread it around for you.
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Yes, I would (and have) though it depends on who the financial provider in question is
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I wouldn’t be OK about having a single conduent for my money be it an advisor or fund manager. Granted, you’d be covered by FSCS but it could be a while before you regained access to your money. So, for example, although I could have the whole lot with one manager, in practice I separate out pension, ISA and savings.
I know over in the Monzo forum there seems to a fair number of people who want everything in Monzo. Personally, I think that’s crazy as you never know when something will go wrong.
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