Maximising interest with flexibility

Hi,

Congratulations on expecting your 2nd child.

Sorry about the delay in answering. I’m going through forum messages & looking for ones that have not had a reply (like yours).
I think that I can add some value to your entry.

I cannot give you advice regarding whether an online bank account would be the BEST option for you to temporarily park your money in whilst you look for a home to buy and I cannot give you advice on which online bank account would be the best.

What I can say is that I’ve used one before and it worked well for my needs (one from the major 4 banks). I am fairly certain that most of the leading banks have a similar working online bank account setup so I wouldn’t be too concerned. I think that it would be wise to read the online info about them as you may find one that suits you best, maybe one from your current bank is more convenient for you.

If you decide to go down this path and use an online account, think about who’s name you will want to open the account in. If you open the account in the name of the spouse that earns the least amount of income then the interest, that you earn on the account, will be taxed at the lower income earners tax rate (which is advantages for both of you). So, if you are both earning a similar income you may want to open the account in both your names. If one of you is earning less now (or will be earning less in the future because they are staying home and looking after kids instead of being traditionally employed) then you may want to open the account in their name alone.

That brings me to the next point, I am sure that you could put your money elsewhere and possibly get a higher return on it, however, would you be able to take out that money if you needed it quickly?…….and does the higher return, on your investment, mean that you are also absorbing unnecessary risk? Online accounts seems like a pretty good option for you if you are trying to minimize unnecessary risks.

Food for thought: The only time that I wouldn’t park all of my money, in an online account of the spouse earning the least income, is when that spouse is at more risk of being sued etc. Asset protection is paramount. I don’t think that anyone can completely protect everything that they have but they can certainly minimize the severity of the event if their assets were protected before any trouble started. I mean “higher risk” spouses for example, persons working as surgeons etc (they may have more risk of being sued as compared to a person working in an office job for an IT company). All things being equal, the office job employee would have less risk of being sued.

Cheers & good luck. More happiness & wealth to you.

• This reply was modified 9 years, 9 months ago by  Pimobpi.