What's the best way to invest my cash but still be able to access it?

28 October 2014


I am 55 and have £15,000 to £20,000 that I need to invest. I do not want to tie it up for longer than five years or find I cannot 'get my hands on it'. I have no idea of the most efficient way to invest it. Can you help?


The good news is the majority of this money can be invested in a tax-efficient New Isa (or Nisa). The Nisa is just a standard savings account - except with the advantage that you pay no tax on the interest you earn. The limit is now £15,000 a year and can be used in any combination of cash and shares.

Unfortunately, in an era of extremely low interest rates, deposit rates offered from the banks and building societies do not look particularly attractive to savers after inflation – Skipton offers the best five-year online cash Nisa account at 2.5%. For those looking for more flexibility, the Post Office offers a one-year cash Nisa at 1.7%.

I would say your time horizon is only just long enough to make a market- based investment that has the ability to generate a better return. Any investment made over a period shorter than five years can leave an investor open to fluctuations in the market.

The key thing is that the investor assesses his risk tolerance to check whether a market-based investment is appropriate. If the answer is yes, diversification is key. I would advocate a mix portfolio of relatively low-risk investments across cash, bonds and blue-chip equities but also alternatives that help to even out returns and protect on the downside.

Darius McDermott is managing director of Chelsea Financial Services