What should we do with £1 million?

14 August 2012


We are in the process of selling our family home and buying a much smaller property to live in while we search for another permanent home. We will then let out the smaller house. While, we live in the smaller house we shall have £1.2 million sitting around from the sale of our home. I would like some advice on where to put this money. We cannot put it in long-term investments as we will want up to £1 million for when our dream home turns up. Any thoughts? Someone suggested bank deposits but they sound rather dull. Also, would I have to split the deposits into £85,000 chunks to qualify for the Financial Services Compensation Scheme (FSCS)? That could be a pain. Or are HSBC, Lloyds and Barclays all safe bets for a substantially higher deposits than £85,000?


When investing in the stockmarket, you need to leave your money for at least five years as the peaks and troughs of the markets should be ironed out over that time, plus investment charges should be overcome. This means that “dull” is going to be the most appropriate solution for you, and this does indeed mean deposit-based savings.

You are wise to be mindful of the FSCS limit of £85,000 and this does pose a dilemma for savers with sums that are significantly greater than this limit.

When setting up different accounts with different banks be careful to diversify to ensure you have no overlap within the same banking group because the FSCS applies to savings within the group and not necessarily the individual bank.

To avoid opening many accounts via different banks with balances below £85,000, I would recommend you consider National Savings & Investments (NS&I). The money deposited is secure because it is backed by the Treasury and there is no limit on how much is guaranteed. However, you'll only earn interest of 1.5%.

Finally, remember to utilise your cash ISA allowances each tax year.