I have £120,000 to invest in the short term. Where should I put my cash?

9 July 2014

Q

I have sold my house and it may be a few weeks or months before my prospective purchase is finalised. In the interim, I have around £120,000 to invest on a short-term basis - I will need instant access to it. I am in full-time work and a basic-rate taxpayer. Where is the best place to invest my money?
From
RT/Surrey

A

As you're only looking to invest for a short period, it is most important that your money is safe and you can access it when you need it.

You should therefore avoid anything with risk, so your money won't fall in value and don't tie your money up so you cannot get hold of it quickly.

You should therefore look at putting your money into easy-access or instant-access savings accounts.

A consideration is that you are looking to invest more than the Financial Services Compensation Scheme (FSCS) limit of £85,000. The FSCS will ensure your money up to this limit is protected if the organisation you save with fails and is unable to repay you.

This isn't a problem if you have a joint account because you'll both benefit from the £85,000 limit.

If the savings will be held in a single name, you might want to consider two separate accounts with different organisations, making sure that neither exceeds the FSCS threshold.

Alternatively, use the NS&I Direct Saver Account. This is currently paying a gross interest rate of 1.1%, you can access your money whenever you want and your savings are 100% secure as they're backed by the government.

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