You don't mention how old your daughter is, or what the eventual purpose of the money is. However, assuming you're looking for something over 5 years or more, want equity returns with a low level of involvement, then something like the following might be appropriate:
www.fandc.com/new/it/Default.aspx?id=78401
There are similar plans available from other providers (e.g. Witan 'jump').
Both of these invest in the stock market, but are relatively low cost. They've also been around for a while, and are low risk (where risk is defined as 'less volatile' - they may still drop below your initial investment).
If it's shorter term, then fixed-term savings bonds are likely to be the best option. NS&I offer childrens bonds (not really good value though, but utterly safe).
Savings accounts are generally crap, although Halifax has reasonable-ish rates. It all comes down to how long you want to invest for.
You should also consider the source of the cash - if it's you (i.e. the parent), then any interest over £100 in a year is taxable as though it was earned by the parent. If this is from grandparents/legacy/olympic paper round, then be sure to keep an audit trail.
For your £5,000, it depends what you want to do with it - might you need hasty access to it if your car breaks down? Are you happy to take a risk for higher returns?
Options are:
- stick it in a savings account,
- stick it in a fixed-term bond,
- put it in a S&S ISA, and invest in corporate bonds/income fund
- put it in a S&S ISA and invest in equities (FTSE index-tracker)
- put it in a S&S ISA and invest in equities (peruvian tin-mining or something mad)
- Zopa/Fundingcircle
- Premium bonds / the 3.30 at Kempton park
Good luck!
Evilkitten.